The tech industry faced significant challenges, owing to reasons such as stubbornly high inflation, aggressive rate hikes by the Fed, employment cutbacks in the sector, and recessionary concerns. The tech-heavy Nasdaq Composite plunged 16.1% over the past year.
However, the tech industry is well-positioned to witness remarkable growth in the foreseeable future, thanks to the increased inclination toward advanced technologies and higher spending.
Moreover, the global information technology market is forecasted to grow from $8.18 trillion in 2022 to $12 trillion in 2027 at a CAGR of 7.9%.
In addition, the Technology Select Sector SPDR Fund (XLK) has gained 14.2% over the past three months, outpacing the S&P 500’s gains of 8.8% over the same period, substantiating the enhanced investor interest in tech stocks.
Given this backdrop, investors could add fundamentally sound tech stocks Canon Inc. (CAJ), Jabil Inc. (JBL), and Juniper Networks, Inc. (JNPR) to their portfolios to garner good returns.
Canon Inc. (CAJ)
Headquartered in Tokyo, CAJ produces and markets a broad range of goods, including office multifunction devices, printers, and cameras. It operates through four segments, Printing Business Unit; Imaging Business Unit; Medical Business Unit; and Industrial and Others Business Unit.
On December 6, 2022, CAJ launched the FPA-5520iV LF2 Option for semiconductor lithography systems in Japan. This option allows bulk production of dense circuitry with exposure fields up to 100 mm by 100 mm and supports advanced 3D packaging technologies. With this launch, CAJ intends to expand its semiconductor lithography system portfolio to enable continued technological progress.
On November 24, the company announced its decision to establish Canon Healthcare USA, Inc. as a new subsidiary. CAJ is progressing in the fields of healthcare IT and in-vitro diagnostics and aims to accelerate the growth of its medical business by strengthening its position in the medical market.
In terms of forward P/E, CAJ is trading at 11.60x, 52.92% lower than the 24.65x industry average. The stock’s forward EV/EBITDA multiple of 5.52 is 60.1% lower than the industry average of 13.83.
For the fiscal fourth quarter that ended December 31, 2022, CAJ’s net sales increased 21.1% year-over-year to ¥1.16 trillion ($8.82 billion), and its operating profit increased 29.2% year-over-year to ¥97.34 billion ($742.12 million). Net income attributable to CAJ increased 41.9% from the year-ago value to ¥84.84 billion ($646.82 million)
For the fiscal year that ended December 31, 2022, net income attributable to CAJ came in at ¥243.96 billion ($1.86 billion) or $1.78 per share, up 13.6% and 15% year-over-year, respectively.
CAJ’s EPS and revenue for the fiscal first quarter (ending March 2023) are expected to increase 30% and 8.7% year-over-year to $0.47 and $7.50 billion, respectively.
The stock has lost marginally over the past three months to close the last trading session at $21.94.
CAJ’s solid prospects are reflected in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has a B grade for Quality, Stability, and Value. Within the 44-stock Technology – Hardware industry, it is ranked #2.
Beyond what we have stated above, we also have CAJ’s ratings for Growth, Sentiment, and Momentum. Get all CAJ ratings here.
Jabil Inc. (JBL)
JBL offers products and services for manufacturing all over the world. The company operates in two broad segments: Electronics Manufacturing Services and Diversified Manufacturing Services.
On January 26, 2023, JBL announced that its board of directors declared a quarterly dividend of $0.08 per share of common stock payable to shareholders on March 2, 2023. This reflects its cash generation abilities.
On January 18, JBL, in cooperation with ams OSRAM and Artilux, announced that its renowned optical design center in Jena, Germany, is currently demonstrating a prototype of a next-generation 3D camera with the ability to seamlessly operate in both indoor and outdoor environments up to a range of 20 meters. This innovation would strengthen the future growth prospects of the company.
On November 14, JBL inaugurated a new design facility in Wroclaw, Poland, where it is expected to create cutting-edge solutions for various industries, including healthcare and automotive. JBL aims to expand its business with this strategic move.
In terms of forward non-GAAP P/E, JBL is trading at 9.96x, which is 53.2% lower than the 21.25x industry average. The stock’s forward EV/EBITDA multiple of 5 is 63.9% lower than the industry average of 13.83.
JBL’s net revenues came in at $9.64 billion for the first quarter (ended November 30, 2022), up 12.5% year-over-year. Its gross profit increased 10.1% year-over-year to $743 million. Also, its core operating income increased 15.3% year-over-year to $461 million.
Its core earnings increased 12.3% year-over-year to $319 million, while its core earnings per share increased 20.3% year-over-year to $2.31 for the same quarter. The company also raised the core EPS projection for the year (the fiscal year 2023) to $8.40.
Analysts expect JBL’s revenue to increase 7.3% year-over-year to $8.10 billion for the fiscal second quarter (ending February 2023). Its EPS is estimated to rise 10% year-over-year to $1.85 for the same quarter. It surpassed EPS and revenue estimates in all four trailing quarters, which is impressive.
Over the past six months, the stock has gained 36.1% to close the last trading session at $82.46. Moreover, it has gained 29.8% over the past three months.
JBL’s POWR Ratings reflect this promising outlook. It has an overall A rating, equating to a Strong Buy in our proprietary rating system.
It has an A grade for Momentum and a B for Value and Quality. Within the Technology – Services industry, it is ranked #5 out of 79 stocks.
To see the additional POWR Ratings for Growth, Stability, and Sentiment for JBL, click here.
Juniper Networks, Inc. (JNPR)
JNPR designs, develops, and sells network products and services worldwide. The company’s product offerings include routing products, switching products, and security products.
On January 23, 2023, JNPR announced that Virgin Media O2, one of the United Kingdom’s largest fixed and mobile service providers with approximately 50 million online media connections, successfully upgraded its IP core backbone network with JNPR – capable of supporting 800G. This demonstrates the company’s efficiency.
JNPR’s board of directors declared a 5% increase in its quarterly dividend to $0.22 per share, to be paid to stockholders on March 22, 2023. This reflects the company’s ability to pay back its stockholders.
On November 30, 2022, PT IndoInternetTbk (Indonet), an Indonesian digital infrastructure provider, chose JNPR’s Juniper Apstra to assist in the automation, modernization, and facilitation of a pioneer network infrastructure expansion. This could help JNPR strengthen its global presence.
In terms of forward non-GAAP P/E, JNPR is trading at 13.59x, 36.1% lower than the 21.25x industry average. The stock’s forward EV/EBITDA multiple of 9.16 is 33.7% lower than the industry average of 13.83.
In the fiscal fourth quarter that ended December 31, 2022, JNPR’s total net revenues increased 11.5% year-over-year to $1.45 billion. Non-GAAP operating income increased 16.1% year-over-year to $276.5 million. Non-GAAP net income came in at $213.80 million, while its non-GAAP net income per share stood at $0.65, up 15.8% and 16.1% from their year-ago values, respectively.
For the fiscal first quarter (ending March 2023), analysts expect JNPR’s revenue to come in at $1.34 billion, representing an increase of 14.5% year-over-year. For the same quarter, the consensus EPS estimate of $0.43 indicates a 38.7% year-over-year increase. The company surpassed the consensus revenue estimates in three of the trailing four quarters.
The stock has gained 10.5% over the past six months and 3.4% over the past three months to close its last trading session at $31.06.
It’s no surprise that JNPR has an overall B rating, which equates to Buy in our proprietary rating system.
JNPR has a B grade for Growth, Value, and Quality. Within the B-rated 49-stock Technology - Communication/Networking industry, it is ranked #4.
Click here to see the additional POWR Ratings for Momentum, Sentiment, and Stability for JNPR.
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CAJ shares were trading at $22.28 per share on Thursday morning, up $0.34 (+1.55%). Year-to-date, CAJ has gained 2.77%, versus a 8.34% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
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