Because the recent recovery of benchmark stock indexes indicates that investors have digested the Fed’s highly hawkish stance, the tech industry could witness a solid rebound in the coming months. The NASDAQ composite gained 3.7% over the past week. Furthermore, U.S. weekly jobless claims recently hit their lowest level since 1969, thereby highlighting the potential strength of a full economic recovery.
In addition, because demand for technology remains strong with rapid digitization, the industry is well-positioned to rebound. Investors’ interest in tech stocks is evidenced by the Technology Select Sector SPDR Fund (XLK) 6.1% returns over the past month, versus the SPDR S&P 500 Trust ETF’s (SPY) 5.7% returns.
So, we think it could be wise to bet on beaten-down quality tech stocks Microsoft Corporation (MSFT), Taiwan Semiconductor Manufacturing Company Limited (TSM), Broadcom Inc. (AVGO), Cisco Systems, Inc. (CSCO), and Accenture plc (ACN) to benefit from their price rebounds in the near term.
Microsoft Corporation (MSFT)
MSFT in Redmond, Wash., develops, licenses, and supports software, services, devices, and solutions worldwide. Its segments are Productivity and Business Processes; Intelligent Cloud; and More Personal Computing.
On March 15, 2022, MSFT announced advancements in cloud technologies for healthcare and life sciences with Azure Health Data Services and Microsoft Cloud for Healthcare. Tom McGuinness, MSFT’s corporate vice president, Global Healthcare & Life Sciences, said, “At a time when healthcare systems are strained to capacity and researchers are racing against the clock, we believe that data and AI hold the keys to a new world of health and discovery for patients, clinicians, researchers, and administrators.”
MSFT’s total revenue came in at $51.73 billion for its fiscal year 2022 second quarter, ended Dec. 31, 2021, up 20.1% year-over-year. The company’s net income came in at $18.77 billion, up 21.4% year-over-year. Also, its EPS has increased 22.2% year-over-year to $2.48. Its cash and cash equivalents came in at $20.60 billion for the period ended Dec. 31, 2021, compared to $14.22 billion for the period ended June 30, 2021.
For its fiscal year 2022, analysts expect MSFT’s revenue to be $199.07 billion, representing an 18.4% year-over-year rise. In addition, the company’s EPS is expected to increase 17.4% per annum over the next five years. Also, it surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 34.1% in price to close yesterday’s trading session at $315.41. It has declined 7.8% over the past three months.
MSFT’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our POWR Rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has an A grade for Sentiment and a B grade for Stability and Quality. Within the Software-Application industry, it is ranked #20 out of 162 stocks. Click here to see the additional POWR Ratings for Growth, Value, and Momentum for MSFT.
Note that MSFT is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.
Click here to check out our Software Industry Report for 2022
Taiwan Semiconductor Manufacturing Company Limited (TSM)
Headquartered in Hsinchu, Taiwan, TSM manufactures and sells integrated circuits and semiconductors. The company serves customers in the computer, communications, consumer, and industrial and standard segments in North America, Europe, Japan, China, and South Korea.
On Jan. 13, 2022, Wendell Huang, TSM’s VP and Chief Financial Officer, said, “Moving into the first quarter of 2022, we expect our business to be supported by HPC-related demand, continued recovery in the automotive segment, and a milder smartphone seasonality than in recent years.”
TSM’s net revenue increased 21.2% year-over-year to $15.74 billion for the fourth quarter, ended Dec. 31, 2021. Its comprehensive income was $5.88 billion, up 28.7% year-over-year, while its EPS came in at $0.23, up 16.3% year-over-year.
Analysts expect TSM’s revenue to increase 27.9% year-over-year to $72.68 billion for its fiscal year 2022. In addition, its EPS is expected to grow 37.1% year-over-year to $5.65 for its fiscal year 2022. It surpassed EPS estimates in three of the trailing four quarters. And over the past month, the stock has gained 2.1% in price to close yesterday’s trading session at $109.25. The stock has declined by 10% over the past three months.
TSM has an overall B rating, which indicates a Buy in our proprietary rating system. It has an A grade for Quality and a B grade for Momentum and Stability. Within the A-rated Semiconductor & Wireless Chip industry, it is ranked #38 of 97 stocks. Click here to see the additional POWR Ratings for Growth, Value, and Sentiment for TSM.
Broadcom Inc. (AVGO)
AVGO designs, develops, and supplies various semiconductor devices focusing on complex digital and mixed-signal complementary metal oxide semiconductor-based devices and analog III-V based products worldwide. Its two segments are Semiconductor Solutions; and Infrastructure Software. AVGO is headquartered in San Jose, Calif.
On March 3, 2022, Hock Tan, AVGO’s President and CEO, said, “Broadcom's record first-quarter results were driven by strong enterprise demand and continued investments in next-generation technology by hyper-scale and service providers. Our second-quarter outlook projects year-over-year growth to accelerate.”
AVGO’s net revenue for its fiscal 2022 first quarter, ended Jan. 30, 2022, came in at $7.71 billion, up 15.8% year-over-year. Its non-GAAP net income was t $3.74 billion, up 25.8% year-over-year, while its non-GAAP EPS came in at $8.39, up 26.9% year-over-year.
Analysts expect AVGO’s revenue to increase 16% year-over-year to $31.85 billion in its fiscal year 2022. Its EPS is expected to be $35.42 for fiscal 2022, up 26.5% year-over-year. It surpassed the Street’s EPS estimates in each of the trailing four quarters. And over the past year, the stock has gained 35.7% to close yesterday’s trading session at $641.47. It has declined 4.6% over the past three months.
It is no surprise that AVGO has an overall A rating, which equates to a Strong Buy in our proprietary rating system. In addition, it has an A grade for Sentiment and Quality and a B grade for Growth.
AVGO is ranked #7 of 97 stocks in the A-rated Semiconductor & Wireless Chip industry. In addition to the POWR Ratings I have just highlighted, we have also rated the stock for Value, Momentum, and Stability. Click here to get all the AVGO ratings.
Note that AVGO is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.
Click here to checkout our Semiconductor Industry Report for 2022
Cisco Systems, Inc. (CSCO)
CSCO designs, manufactures, and sells Internet Protocol-based networking and other products related to the communications and information technology industry in the Americas, Europe, the Middle East, Africa, the Asia Pacific, Japan, and China. CSCO is headquartered in San Jose, Calif.
On Feb. 16, 2022, Chuck Robbins, CSCO’s chair and CEO said, “We continue to see incredibly strong demand across our portfolio, emphasizing the criticality and relevance of Cisco’s innovation. Our robust order strength, record backlog, and double-digit growth in annual recurring revenue position us well to deliver growth.”
CSCO’s total revenue came in at $12.72 billion for its fiscal year 2022 second quarter, ended Jan. 29, 2022, up 6.4% year-over-year. Its net income came in at $2.97 billion, up 16.8% year-over-year, while its EPS was $0.71, up 18.3% year-over-year.
CSCO’s revenue is expected to grow by 6.1% year-over-year to $52.85 billion in 2022. Its EPS is also expected to grow 8.4% to $3.73 in 2023. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 6% in price to close yesterday’s trading session at $55.67. The stock has declined 13% in price over the past three months.
CSCO has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Quality and a B grade for Stability.
CSCO is ranked #6 of 54 stocks in the Technology - Communication/Networking industry. Click here to see the additional POWR Ratings for CSCO (Growth, Value, Momentum, and Sentiment).
Accenture plc (ACN)
Based in Dublin, Ireland, ACN is a professional services company that provides strategy and consultation, interactive, and technology and operations services worldwide. The company also offers several application services.
On March 17, 2022, Julie Sweet, ACN’s Chair & CEO, said, “We continue to take significant market share as clients increasingly turn to Accenture as the partner uniquely positioned to help them navigate today’s accelerating pace of change. Our core strength is the diversity of our business that enables us to digitally transform across the enterprise through the depth and breadth of our services.”
For its fiscal year 2022 second quarter, ended Feb. 28, 2022, ACN’s revenues increased 24.5% year-over-year to $15.05 billion. Its net income came in at $1.66 billion, up 13.4% year-over-year, and its EPS increased 13.9% to $2.54.
ACN’s revenue is expected to be $56.35 billion in its fiscal year 2022, representing a 25.7% year-over-year rise. The company’s EPS is expected to increase 26.2% year-over-year to $9.84 in fiscal 2022. It surpassed EPS estimates in three of four trailing quarters. And over the past year, the stock has gained 21.9% in price to close yesterday’s trading session at $340.69. It has declined 18% in price over the past three months.
It is no surprise that ACN has an overall B rating, which equates to a Buy in our POWR Ratings system. It has a B grade for Stability, Sentiment, and Quality.
ACN is ranked #3 of 11 stocks in the A-rated Outsourcing - Tech Services industry. Click here to see the additional POWR Ratings for ACN (Growth, Value, and Momentum).
MSFT shares were trading at $312.13 per share on Wednesday morning, down $3.28 (-1.04%). Year-to-date, MSFT has declined -7.00%, versus a -2.92% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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