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3 Stocks Riding the Year-End Tech Wave

The dynamic tech landscape is propelled by the surge in demand for tech hardware, evolving consumer electronics trends, and the flourishing IT services market. Hence, fundamentally strong tech stocks HP Inc. (HPQ), Teledyne Technologies (TDY), and Bel Fuse (BELFB) might be solid buys for the year-end wave. Read more…

The technology market is experiencing rapid growth due to the widespread adoption of cloud computing, cybersecurity solutions, and digital technologies. The pandemic has further boosted demand, particularly for solutions supporting remote work and cybersecurity measures.

Therefore, investors could consider investing in quality tech stocks HP Inc. (HPQ), Teledyne Technologies Incorporated (TDY), and Bel Fuse Inc. (BELFB) to capitalize on the industry’s tailwinds this year-end.

The tech hardware industry thrives due to continuous technological innovation driven by AI, IoT, and 5G implementation advancements. The surge in remote work, e-commerce, automotive innovations, and sustainability initiatives further propels growth.

Moreover, the global Device as a Service (DaaS) market is thriving due to the rising demand for subscription models and the adoption of cloud services, especially in developing countries. The global device-as-a-service market is anticipated to expand at a CAGR of 29.1% from 2023 to 2030.

In addition, the anticipated expansion of the global consumer electronics market is underpinned by the proliferation of smartphones and technological advancements. The global consumer electronics market is expected to grow at a CAGR of 6.6% from 2023 to 2030.

Furthermore, the ongoing digital transformation across industries propels the demand for IT services to implement and optimize digital technologies, cloud computing, and data analytics. Also, the dynamic evolution of the tech industry necessitates a focus on mobile-first design and a heightened emphasis on optimizing user experience.

This year, the revenue for the global IT services market is expected to reach $1.24 trillion. It is anticipated to expand at a CAGR of 7.4% to reach $1.77 trillion by 2028.

Given such conducive trends, let’s look into the fundamentals of the featured tech stocks.

HP Inc. (HPQ)

HPQ is a global technology company offering personal computing devices, printers, and related services. It operates through three segments: Personal Systems; Printing; and Corporate Investments. The company serves consumers, businesses, and various sectors worldwide.

On November 7, HPQ partnered with Indo-MIM Private Limited to advance metal additive manufacturing, with INDO-MIM investing in three HP Metal Jet S100 printers. The collaboration focuses on material and application development in Bangalore, India, and supports North American clients in Texas.

The partnership aims to qualify new HP Metal Jet materials, use HPQ’s Process Development software for speed, and drive innovation in aerospace, automotive, consumer electronics, healthcare, and other industries.

In the fourth quarter ended October 31, 2023, HPQ reported net revenue of $13.82 billion. The company's non-GAAP net earnings and earnings from operations grew 8.4% and 11.3% year-over-year to $902 million and $1.25 million, respectively. Its net earnings per share amounted to $0.97, compared to the previous-year quarter net loss per share of $0.02.

For the fiscal year 2024, the company projects its non-GAAP EPS to be in the range of $3.25 to $3.65. Additionally, HPQ expects to generate free cash flow in the range of $3.1 to $3.6 billion for the same year.

HPQ’s revenue and EPS are expected to grow 2% and 1.8% year-over-year to $13.17 billion and $0.81 for the second quarter ending April 2024, respectively. The company surpassed the EPS estimates in three of the trailing four quarters, which is impressive.

HPQ’s shares increased 9.8% over the past nine months and 12.2% year-to-date to close the last trading session at $30.15.

HPQ’s POWR Ratings reflect its sound prospects. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

HPQ has an A grade for Value and a B for Growth, Momentum, and Quality. Within the A-rated Technology - Hardware industry, it is ranked #4 of 37 stocks.

In addition to the POWR Ratings stated above, one can access HPQ’s additional Stability and Sentiment ratings here.

Teledyne Technologies Incorporated (TDY)

TDY operates globally, specializing in instrumentation, digital imaging, aerospace, defense electronics, and engineered systems. The company's diverse portfolio encompasses monitoring instruments, digital cameras, electronic components, and cutting-edge solutions for defense, space, and environmental applications.

On October 3, TDY acquired Xena Networks to strengthen its presence in the protocol test market. The move enhances TDY's capabilities in Ethernet system validation amid increasing demand for high-speed data transmission in AI, machine learning, and 5G.

The strategic acquisition aligns with TDY's goal to offer comprehensive solutions for network equipment manufacturers and cloud computing providers.

During the third quarter, which ended October 1, 2023, TDY's net sales increased 2.9% from the prior-year quarter to $1.40 billion. The company reported non-GAAP net income and EPS of $241.90 million and $5.05, up 11.7% and 11.2% year-over-year, respectively. Also, its non-GAAP operating income grew 8.5% from the previous year's quarter to $319.20 million.

Analysts expect TDY’s revenue and EPS to grow 3.8% and 10.8% year-over-year to $1.48 billion and $4.29 for the second quarter ending June 2024, respectively. The company surpassed the EPS estimates in each of the trailing four quarters.

The stock has gained marginally over the past year and 9.8%% over the past month to close the last trading session at $421.90.

TDY’s robust fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.

It has a B grade for Sentiment. Within the B-rated Technology - Electronics industry, it is ranked #11 of 39 stocks.

To see TDY’s additional POWR Ratings for Growth, Value, Momentum, Stability, and Quality, click here.

Bel Fuse Inc. (BELFB)

BELFB designs, manufactures, and sells products for industries like networking and aerospace, offering magnetic solutions, power products, protection solutions, and connectivity products under different brands. The company distributes through direct account managers and authorized distributors.

On November 8, BELFB broadened its portfolio by introducing advanced single-port, 10G, NBase-T, 60W, and 100W Power over Ethernet (PoE) MagJack® integrated connector modules (ICMs).

These modules, designed for applications like industrial controllers, video cameras, and Wi-Fi access points, cater to customers' growing demands for higher speeds and increased power capacity.

BELFB's strategic expansion positions the company to capture a larger market share, boost revenue, cultivate customer loyalty, and play a significant role in overall company growth.

In the nine months ended September 30, 2023, BELFB generated non-GAAP adjusted net sales of $485.38 million, up 4.2% year-over-year. The company's adjusted EBITDA and non-GAAP net earnings amounted to $86.58 million and $65.34 million, up 49.2% and 61.6% from the previous-year period, respectively.

Its cash and cash equivalents at the end of the period grew 41.4% from the prior-year period to $100.23 million.     

Street expects BELFB’s revenue to be $150.50 million for the fourth quarter ending December 2023. Its EPS is expected to grow 4.4% year-over-year to $1.41. The company surpassed the revenue and EPS estimates in each of the trailing four quarters.

BELFB’s shares have gained 92.2% over the past nine months and 89.3% year-to-date to close the last trading session at $62.30.

BELFB’s POWR Ratings reflect a positive outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.

The stock has an A grade for Value and Sentiment and a B for Quality. Within the Technology - Electronics industry, it is ranked #3.

Click here for BELFB’s additional Growth, Momentum, and Stability ratings.

What To Do Next? 

43-year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.  

2024 Stock Market Outlook >

HPQ shares were trading at $31.06 per share on Thursday morning, up $0.91 (+3.02%). Year-to-date, HPQ has gained 19.82%, versus a 24.92% rise in the benchmark S&P 500 index during the same period.

About the Author: Kritika Sarmah

Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.


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