Despite several macroeconomic headwinds hampering the tech sector's performance this year, it continues to level up as we head into 2023 and prepare against any potential slowdown. The sheer magnitude of the industry makes it one of the most dominant industries in the global economy, with countless opportunities springing up as it touches every firm and every industry vertical.
The widespread adoption of new and advanced technologies should drive the industry’s growth. Most firms are adopting a cloud-first strategy. In addition, the development of augmented and virtual reality (AR/VR) technology and the cultural shift brought on by the COVID-19 pandemic have boosted the significance and acceptance of technology.
Businesses have doubled their tech investments, with analysts predicting a market worth $800 billion by 2024. Furthermore, spending on new technologies, such as the internet of things (IoT), robotics, and mixed reality, is predicted to reach $1.36 trillion in 2023.
The global information technology market is expected to grow at an 8.8% CAGR to $13.09 trillion in 2026.
Investors’ interest in tech stocks is evident from the Technology Select Sector SPDR ETF’s (XLK) 6.5% gains over the past six months. Given the industry’s growth prospects, adding fundamentally strong tech stocks Canon Inc. (CAJ), Jabil Inc. (JBL), and Box, Inc. (BOX) to your portfolio could be wise.
Canon Inc. (CAJ)
Headquartered in Tokyo, Japan, CAJ produces and distributes various products, including office multifunction devices (MFDs), printers, and cameras. It operates through four segments, Printing Business Unit; Imaging Business Unit; Medical Business Unit; and Industrial and Others Business Unit. The company also offers supply and maintenance services.
On December 6, CAJ announced the introduction of the FPA-5520iV LF2 Option for semiconductor lithography systems in Japan. This option supports advanced 3D packaging technologies and enables mass manufacturing of dense circuitry with exposure fields up to 100 mm x 100 mm.
CAJ aims to grow its business by supporting further technological innovation by expanding its portfolio of semiconductor lithography systems.
On November 24, the company announced its decision to launch Canon Healthcare USA, Inc as a new subsidiary. CAJ is progressing in the fields of healthcare IT and in-vitro diagnostics. It aims to expedite the expansion of its medical business by enhancing its position in the vast American medical sector.
For the fiscal 2022 third quarter ended September 30, 2022, CAJ’s net sales increased 19.5% year-over-year to $6.87 billion, while its gross profit grew 16.3% from the year-ago value to $3.32 billion. The company’s operating profit increased 38.7% year-over-year to $561.66 million.
Furthermore, net income attributable to CAJ increased 9.7% from the year-ago value to $373.23 million, while its EPS came in at $0.36, a 12.2% increase year-over-year.
The company pays a $0.89 per share dividend annually, which translates to a 3.92% yield on the current price. CAJ’s dividend payouts have grown at a 7.1% CAGR over the past three years, and its four-year average dividend yield is 3.92%.
The consensus EPS estimate of $0.66 for the current fiscal quarter (ending December 2022) indicates a 42.8% year-over-year improvement. Likewise, the consensus revenue estimate of $8.47 billion for the same quarter reflects a rise of 2.3% from the year-ago quarter.
Furthermore, the company’s EPS and revenue for the next quarter (ending March 2023) are expected to increase 2% and 4.5% year-over-year to $0.37 and $7.21 billion, respectively. Shares of CAJ have gained 1.6% over the past month to close the last trading session at $22.78.
CAJ’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has a B grade for Quality, Stability, and Value. Within the Technology - Hardware industry, it is ranked #4 of 42 stocks.
Beyond what we stated above, we also have CAJ’s ratings for Growth, Sentiment, and Momentum. Get all CAJ ratings here.
Jabil Inc. (JBL)
JBL offers solutions and services for the manufacturing industry. It provides comprehensive electronics design, manufacturing, and product management services to businesses in various industries and end markets. The company operates through two segments, Electronics Manufacturing Services (EMS); and Diversified Manufacturing Services (DMS).
On November 14, JBL inaugurated a brand-new design facility in Wroclaw, Poland, where it will create cutting-edge solutions for various industries, including healthcare and automotive. JBL aims to expand its business, with this 10,000-square-foot design center being one of its many strategic moves.
On October 4, Badger Technologies, a JBL product subsidiary, partnered with BRdata Software Solutions to help retailers get aggregated analytics and actionable data for boosting store profitability, operational efficiencies, and customer experiences.
JBL benefits by integrating its robot-collected data and dashboards with BRdata's corporate retail platform to maximize sales and profits, especially for independent grocers.
For the fiscal 2022 fourth quarter ended August 31, 2022, JBL’s net revenue increased 21.9% year-over-year to $9.03 billion, while its gross profit grew 24.2% from the prior year to $729 million. Its operating income increased 54.3% from the previous year’s quarter to $409 million.
In addition, the company’s net income was $315 million, up 80% year-over-year, while its EPS came in at $2.25, a 94% increase from the year-ago value.
JBL pays a $0.32 per share dividend annually, which translates to a 0.44% yield on the current price. The company’s four-year average dividend yield is 0.8%.
Analysts expect revenue to increase 1.3% year-over-year to $33.93 billion for the fiscal year ending August 2023. The company’s EPS for the current year is expected to grow 8.1% from the previous year to $8.27. Furthermore, analysts expect its revenue and EPS for the fiscal year 2024 to grow 4% and 6.8% year-over-year to $35.28 billion and $8.83, respectively.
Moreover, JBL has surpassed its consensus EPS in all four trailing quarters, which is impressive. The stock has gained 9.9% over the past month to close the last trading session at $72.60.
JBL’s POWR Ratings reflect its strong outlook. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
The stock has a B grade for Value, Quality, and Momentum. Within the Technology - Services industry, it is ranked #4 of 78 stocks.
To see additional POWR Ratings for Growth, Sentiment, and Stability for JBL, click here.
Box, Inc. (BOX)
BOX is a cloud content management platform that enables businesses to manage and share content from any location and device. The company offers its services to the financial, health care, government, and legal industries internationally.
On December 13, BOX announced new capabilities for Box Shield, the company's flagship cloud security product, to reduce the risk of uninvited intrusions and enhance its malware scanning capability. By offering its clientele new and enhanced native security features, BOX intends to benefit from helping businesses lower the risk of malware.
On November 17, the company announced the general availability of an improved Box software for Zoom Video Communications, Inc. (ZM) that will allow users automatically save select Zoom recordings to Box. By constantly striving to enhance its app integrations, BOX intends to help its users become more efficient and productive.
For the fiscal 2023 third quarter ended October 31, 2022, BOX’s revenue increased 11.6% year-over-year to $249.95 million, while its non-GAAP gross profit increased 14.3% from the year-ago value to $191.20 million. Its non-GAAP operating income was $60 million, compared to $46.40 million in the prior year’s quarter.
Furthermore, the company’s net income was $9.91 million, compared to a net loss of $13.86 million in the prior-year period. Non-GAAP net income per share attributable to common stockholders came in at $0.31, up 40.9% year-over-year.
Analysts expect the company’s revenue to increase 13.3% year-over-year to $990.59 million for the fiscal year ending January 2023. The company’s EPS for the current fiscal year is expected to grow 37.6% year-over-year to $1.17. Likewise, analysts expect its revenue and EPS for the fiscal year 2024 to grow 10.8% and 25.3% year-over-year to $1.10 billion and $1.47, respectively.
BOX has surpassed the consensus EPS estimates in three of the four trailing quarters. The stock has gained 10.2% over the past month and 23.8% over the past year to close the last trading session at $31.69.
BOX’s POWR Ratings reflect its promising outlook. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
The stock has an A grade for Growth and Quality and a B for Value. Within the Technology - Services industry, it is ranked #2 of 78 stocks.
Click here to see additional ratings of BOX for Stability, Sentiment, and Momentum.
CAJ shares were trading at $22.36 per share on Thursday afternoon, down $0.42 (-1.84%). Year-to-date, CAJ has declined -7.03%, versus a -17.09% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
3 Tech Stocks to Consider Buying Before 2023 StockNews.com
