Layoffs, record-high inflation, rising interest rates, and an economic slowdown roiled the tech industry in 2022. The tech-heavy Nasdaq Composite tumbled more than 28% over the past year. However, sustained demand for tech products and services is expected to drive the industry’s growth this year.
Companies and individuals are increasingly adopting new, emerging, and advanced technologies, including cloud computing, artificial intelligence (AI), virtual reality (VR), 5G, and blockchain. Furthermore, businesses continue to increase their tech investments.
“Enterprise IT spending is recession-proof as CEOs and CFOs, rather than cutting IT budgets, are increasing spending on digital business initiatives,” said John David Lovelock, Distinguished VP Analyst at Gartner Inc. (IT).
According to a forecast by Gartner, worldwide IT spending is expected to reach $4.60 trillion in 2023, up 5.1% year-over-year. Moreover, worldwide end-user spending on public cloud services is projected to increase 20.7% year-over-year to $591.80 billion this year.
Given the industry’s bright growth prospects, it could be wise to invest in under-the-radar tech stocks Vishay Intertechnology, Inc. (VSH), TTM Technologies, Inc. (TTMI), and Socket Mobile, Inc. (SCKT) this month.
Vishay Intertechnology, Inc. (VSH)
VSH manufactures and supplies discrete semiconductors and passive electronic components in Asia, Europe, and the Americas. The company operates through six segments: Metal Oxide Semiconductor Field Effect Transistors (MOSFETs); Diodes; Optoelectronic Components; Resistors; Inductors; and Capacitors.
On October 31, 2022, VSH acquired MaxPower Semiconductor, Inc., a fabless power semiconductor provider dedicated to delivering innovative and cost-effective technologies. MaxPower will be incorporated into VSH’s MOSFETs reportable segment. This acquisition will provide attractive opportunities to expand VSH’s product portfolio and strengthen its competitive positioning.
For the fiscal third quarter ended October 1, 2022, VSH’s net revenues increased 13.7% year-over-year to $924.80 million, while its gross margin was $289.54 million, up 28.3% year-over-year. The company’s adjusted EBITDA increased 38.3% from the prior-year period to $223.74 million.
In addition, VSH’s adjusted net earnings grew 47.2% from the year-ago value to $134.12 million, and its adjusted earnings per share came in at $0.93, up 47.6% year-over-year.
Analysts expect VSH’s revenue and EPS for the fiscal year (ended December 2022) to increase by 8.3% and 40% from the previous year to $3.51 billion and $3.25, respectively. Furthermore, the company has surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past six months, the stock has gained 21.2% to close the last trading session at $22.32.
VSH’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR ratings assess stocks by 118 different factors, each with its own weighting.
VSH has an A grade for Growth and Value. It is ranked #7 out of 44 stocks in the Technology-Electronics industry.
We have also provided VSH grades for Quality, Sentiment, Momentum, and Stability. Get all VSH ratings here.
TTM Technologies, Inc. (TTMI)
TTMI manufactures and sells printed circuit boards (PCBs) worldwide. The company operates through two segments: PCB and RF&S Components. It focuses on producing high-tech PCBs and backplane assemblies and also designs and produces high-frequency RF and microwave parts.
On December 6, 2022, TTMI and Raytheon Missiles & Defense, a Raytheon Technologies Corp. (RTX) business, reached a multi-year agreement to provide radio frequency assemblies, electronic hardware, and printed circuit boards (PCBs) for the SPY-6 family of radars. This agreement has the potential to reach $500 million over five years.
In September, TTMI announced a distribution agreement with RFMW, a premier radio frequency (RF) and microwave components and semiconductors distributor. TTM is expected to offer its complete line of RF&S products through RFMW, including its proven signature lineup of Xinger® brand products.
For the fiscal 2022 third quarter ended October 3, 2022, TTMI’s net sales increased 20.5% year-over-year to $671.08 million, while its non-GAAP gross profit increased 37.8% from the year-ago value to $132.30 million. Its non-GAAP operating income was $68.21 million, a 43% rise year-over-year.
Furthermore, the company’s non-GAAP net income increased 58.5% year-over-year to $57.92 million, while its non-GAAP EPS stood at $0.56, up 64.7% year-over-year.
Analysts expect the TTMI’s revenue to increase 12.8% year-over-year to $2.54 billion for the fiscal year ended December 2022. The company’s EPS for the same year is expected to grow 34.2% year-over-year to $1.72. Moreover, the company has surpassed the consensus EPS estimates in all four trailing quarters, which is impressive.
Shares of TTMI have gained 36.4% over the past six months and 5.4% over the past year to close the last trading session at $16.08.
TTMI’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 a B for Momentum, Sentiment, and Quality. Within the Technology – Electronics industry, it is ranked #2 of 44 stocks. Click here to see additional ratings of TTMI for Value and Stability.
Socket Mobile, Inc. (SCKT)
SCKT provides data capture and delivery solutions in the United States, Europe, Asia, and internationally. The company’s products are incorporated into mobile applications for commercial services, asset tracking, transportation and logistics, medical, and education use.
On November 1, SCKT announced that its CaptureSDK and an entire line of barcode scanners and NCF readers/Writers had achieved full compatibility with iPadOS 16. iPadOS 16 compatibility across the Socket Mobile product line ensures that Apple iPad users can maximize the utility of both their data reader and their Bluetooth-paired Apple device.
CaptureSDK’s compatibility with Apple devices might extend SCKT’s market reach and boost its profitability.
In the fiscal third quarter ended September 30, 2022, SCKT’s sales from its distribution partners to end users were $4.80 million, nearly 30% higher than its reported revenue of $3.7 million. As of September 30, 2022, the company’s total assets came in at $28.20 million, compared to $25.58 million as of December 31, 2021.
Analysts expect SCKT’s revenue for the fiscal year (ending December 2023) to increase 7.1% year-over-year to $22.77 million. The company’s EPS for the current year is estimated to grow 155.6% year-over-year to $0.05. SCKT’s stock has gained 6% over the past five days to close the last trading session at $2.07.
SCKT’s overall B rating translates to a Buy in our proprietary rating system. The stock has a grade A for Value and Sentiment. It has a grade of B for Quality.
Within the B-rated Technology-Hardware industry, it is ranked #20 among 49 stocks. Click here for the additional POWR Ratings for Momentum, Stability, and Growth for SCKT.
VSH shares were unchanged in premarket trading Tuesday. Year-to-date, VSH has gained 3.48%, versus a 1.42% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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