Concerns over the Federal Reserve’s prospective interest rate hikes this year, multi-decade high inflation, and ongoing supply chain issues culminated with a market sell-off last month. The interest rate-sensitive Nasdaq Composite even entered correction territory. However, a strong economic outlook for this year and a continuing surge in demand for tech products and solutions should drive the tech industry’s growth.
Increased funding for the technology sector should enable prominent large-cap tech companies to grow substantially. Furthermore, an easing of the semiconductor chip shortage should drive the industry's long-term growth prospects. Investors’ interest in large-cap tech stocks is evidenced by the Technology Select Sector SPDR ETF’s (XLK) 3.3% returns over the past six months versus the SPDR S&P 500 Trust ETF’s (SPY) 1.2% gains. U.S. tech spending is expected to exceed $1.8 trillion in 2022.
VMware, Inc. (VMW), Telefonaktiebolaget LM Ericsson (publ) (ERIC), Corning Incorporated (GLW), Fair Isaac Corporation (FICO), and Citrix Systems, Inc. (CTXS) were the best performing tech stocks last month. So, we think it could be wise to add these stocks to one’s watchlist.
Click here to check out our Software Industry Report for 2022
VMware, Inc. (VMW)
With $54.98 billion in market capitalization, VMW in Palo Alto, Calif., develops and applies virtualization technologies with x86 server-based computing, separating application software from the underlying hardware. The company’s products and technology solutions include multi-cloud, virtual cloud networking, digital workspace, application modernization, and intrinsic security solutions. It sells its products through distributors, resellers, system vendors, and systems integrators.
On Jan. 20, 2022, VMW announced an agreement with BT Group plc, a British multinational telecommunications provider, to help customers accelerate their digital transformation by providing more secure, flexible, and reliable access to cloud-based applications and services deployed in public and private clouds, SaaS, or at the enterprise edge. Combining BT’s extensive networking capabilities and in-depth security expertise with VMware technology will help BT offer VMware Secure Access Service Edge (SASE) as a global managed service to its customers. This should nurture a long-term partnership between both companies.
For its fiscal 2022 third quarter, ended Oct.29, 2021, VMW’s total revenues increased 11.3% year-over-year to $3.19 billion. The company’s non-GAAP operating income came in at $935 million, representing a 5.3% increase from the prior-year period. Its non-GAAP net income came in at $725 million for the quarter, up 3% from the year-ago period. And VMW’s non-GAAP EPS increased 3.6% year-over-year to $1.72. The company had $12.50 billion in cash and cash equivalents as of Oct. 29, 2021.
Analysts expect the company’s EPS to remain unchanged from the prior-year period at $7.20 for its fiscal year 2022 ended Jan. 31, 2022. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The $12.88 billion consensus revenue estimate for the same fiscal year represents a 9.45 rise from the prior-year period. VMW’s EPS is expected to grow at a 5.2% rate per annum over the next five years.
The stock has gained 9.6% in price over the last month and closed yesterday’s trading session at $129.97.
Telefonaktiebolaget LM Ericsson (publ) (ERIC)
With a market capitalization of $41.68 billion, ERIC is a Stockholm, Sweden-based company that provides telecommunication equipment and related services. The company operates through four segments—Networks, Digital Services, Managed Services, Emerging Business, and Others. It offers its products and services to mobile and fixed network operators and provides communications networks, telecom services, and multimedia solutions.
On Feb. 2, 2022, ERIC and Mobily, a Saudi Arabian telecommunications services company that owns the Etihad Etisalat Company brand, signed a Memorandum of Understanding (MoU) to expand the cutting-edge 5G for use in different industries in the Kingdom of Saudi Arabia. ERIC’s Ericsson Private 5G offers secure and simple 4G LTE and 5G standalone (SA) connectivity that optimizes and simplifies business operations with a cloud-based network management portal and a troubleshooting application. This will enable ERIC to meet enterprise Information Technology (IT) and Operation Technology (OT) users' self-management needs while keeping sensitive data safe on site.
ERIC’s net sales came in at SEK71.33 billion ($7.83 billion) for its 2021 fourth quarter, ended Dec. 31, 2021, representing a 2.5% rise from the prior-year period. The company’s gross income was SEK30.82 billion ($3.38 billion), indicating a 9.1% year-over-year improvement. Its EBIT came in at SEK11.86 billion ($1.30 billion), up 7.8% from the year-ago period. While its net income increased 41.1% year-over-year to SEK10.15 billion ($1.11 billion), its EPS increased 33.6% to SEK3.02. The company had SEK54.05 billion ($5.93 billion) in cash and cash equivalents as of December 31, 2021. ERIC’s EPS is expected to increase at 13.1% rate 13.1% per annum over the next five years.
ERIC’s shares have gained 13.2% over the last month and ended yesterday’s trading session at $12.50.
Corning Incorporated (GLW)
GLW does business in display technologies, automotive, optical communications, environmental technologies, specialty materials, and life sciences worldwide. The Corning, N.Y. company produces optical fiber, cable, and photonic components for the telecommunications industry and manufactures glass panels, funnels, liquid crystal display glass, and projection video lens assemblies for the information display industry. It has a $35.37 billion market capitalization.
On Jan. 24, 2022, GLW launched a new glass composition to advance the development of augmented and mixed reality (AR/MR) diffractive waveguides for wearable devices. GLW’s Corning Advanced Optics’ new 2.0 high-refractive-index glass will enable a wider field of view (FOV) and enhanced optical clarity, including best-in-class light transmission for blue wavelength in wearable devices. This breakthrough should help GLW to achieve widespread recognition in the industry in the coming months.
For its fiscal 2021 fourth quarter, ended Dec. 31, 2021, GLW’s non-GAAP net sales increased 11.6% year-over-year to $3.71 billion. The company’s non-GAAP gross profit came in at $1.36 billion, representing a 5.6% rise from the prior-year period. Its non-GAAP net income came in at $465 million, representing a marginal year-over-year improvement. GLW’s non-GAAP EPS increased 3.8% year-over-year to $0.54. As of Dec. 31, 2021, GLW had cash and cash equivalents of $2.15 billion.
Analysts expect the company’s EPS to increase 14% year-over-year to $2.36 in its fiscal 2022, ending Dec. 31, 2022. It surpassed the Street’s EPS estimates in three of the trailing four quarters. The $15.09 billion consensus revenue estimate for the same fiscal year represents a 6.9% rise from the prior-year period. GLW’s EPS is expected to grow at a 22.1% rate over the next five years.
GLW stock has gained 13% in price over the last month to close yesterday’s trading session at $42.61.
Fair Isaac Corporation (FICO)
With a $13.26 billion market capitalization, San Jose, Calif.-based FICO develops analytic, software, and data management products and services that enable businesses to automate, enhance, and connect decisions internationally. The company operates through two segments—Scores and Software. FICO markets its products and services primarily through its direct sales organization and indirect channels and online.
On Dec. 9, 2021, FICO and Sistemas Críticos, a global IT company, launched BSafe Platform SaaS, which combines FICO Falcon Fraud Manager's fraud prevention technology TenS, a proprietary Sistemas Críticos platform, on the Cloud. This comprehensive fraud prevention, security, and compliance management solution should see great demand from enterprises and businesses in the coming months.
FICO’s total revenues for its fiscal 2022 first quarter, ended Dec. 31, 2021, increased 3.2% year-over-year to $322.36 million. The company’s operating income came in at $115.59 million, representing a 22% rise from the year-ago period. Its non-GAAP net income was $101.93 million for the quarter, up 25% from the prior-year period. And FICO’s non-GAAP EPS increased 35% year-over-year to $3.70. The company had $162.16 million in cash and cash equivalents as of Dec. 31, 2021.
The $15.52 consensus EPS estimate for its fiscal year 2022, ending Sept. 30, 2022, represents an 18.7% rise from the prior-year period. It surpassed the Street EPS estimates in each of the trailing four quarters. Analysts expect FICO’s revenue to increase 4.5% year-over-year to $1.38 billion for the same fiscal year. FICO’s EPS is expected to grow at an 18.3% rate per annum over the next five years.
FICO shares have gained 13.2% in price over the last month to end yesterday’s trading session at $495.22.
Citrix Systems, Inc. (CTXS)
CTXS is an enterprise software company that provides workspace, app delivery and security, and professional services worldwide. The company serves healthcare, financial services, technology, manufacturing, consumer, and government agencies. It markets and licenses its products through resellers, distributors, systems integrators, independent software vendors, OEMs, and service providers. It had a market capitalization of $12.77 billion. CTXS is headquartered in Fort Lauderdale, Fla.
On Jan. 31, 2022, Vista Equity Partners, a leading global investment firm focused exclusively on enterprise software, data, and technology-enabled businesses, and Evergreen Coast Capital Corporation, an Elliott Investment Management L.P. affiliate, announced their plan to acquire CTXS in an all-cash transaction of $16.5 billion. The combination of CTXS’ secure digital workspace and application delivery suite with Vista’s TIBCO real-time intelligent data and analytics capabilities will empower users with the secure application and information access and insights needed to accelerate digital transformation and navigate the hybrid workplace.
For its fiscal 2022 second quarter, ended Sept. 30, 2021, CTXS’ total net revenues increased 5.1% year-over-year to $850.85 million. The company’s gross profit came in at $677.37 million for the quarter, marking a marginal year-over-year improvement. While its non-GAAP net income increased 2% year-over-year to $186.32 million, its non-GAAP EPS increased marginally to $1.47. It had cash and cash equivalents of $513.99 million as of Dec. 31, 2021.
Analysts expect CTXS’ revenue to increase 3.3% year-over-year to $3.32 billion in its fiscal year 2022, ending Dec. 31, 2022. It surpassed the Street EPS estimates in three of the trailing four quarters. The company’s EPS is expected to grow at a 2.2% rate per annum over the next five years. CTXS stock has gained 6.5% in price over the last month and ended yesterday’s trading session at $102.25.
Click here to check out our Software Industry Report for 2022
VMW shares were trading at $131.23 per share on Friday afternoon, up $1.26 (+0.97%). Year-to-date, VMW has gained 13.25%, versus a -5.14% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
5 Best Performing Large-Cap Tech Stocks in January StockNews.com
