3 Tech Stocks Set to Soar Beyond Expectations

The technology sector’s significant growth is fueled by continued technological innovation, Gen Z's mobile habits, and rising demand for versatile devices. Hence, it could be wise to invest in tech stocks Canon (CAJPY), Zoom Video Communications (ZM), and Brother Industries (BRTHY), which are poised to surpass expectations. Continue reading...

The tech sector is set to witness solid growth this year, emphasizing efficiency, innovation, and increased spending on software and IT services, focusing on globalization and generative AI growth. So, investors could consider buying top tech stocks Canon Inc. (CAJPY), Zoom Video Communications, Inc. (ZM), and Brother Industries, Ltd. (BRTHY) for potential gains.

A notable surge of 49.1% in the NASDAQ Composite over the past year underscores robust growth and outstanding performance in the technology sector, demonstrating investor confidence and optimistic sentiment regarding the future of technology companies.

In addition, the U.S. consumer electronics industry is set to bounce back in 2024, with sales expected to rise by 2.8% year-over-year to $512 billion, driven by PC and smartphone refresh cycles. Also, AI is poised to drive device upgrades, with software and services sales forecasted to grow by 3.8% to $163 billion, and hardware sales are projected to rise by 2.3% to $349 billion.

Moreover, Gen Z’s tech habits emphasize mobile and social media use, pushing for personalized experiences and sustainability reshaping work, education, and healthcare. CTA's study highlights 86% tech reliance, owning 13 devices on average, and spending 12 hours daily, preferring smartphones and streaming/gaming devices over TVs.

The IT hardware market is further buoyant, fueled by the rising demand for versatile devices like laptops and tablets, driven by remote work and learning needs during the pandemic. Manufacturers continuously innovate to meet diverse digital needs across sectors, driving market growth. The global IT services market is expected to grow at a CAGR of 9.7% by 2030.

Considering these conducive trends, let’s examine the fundamentals of the three best tech stock picks.

Canon Inc. (CAJPY)

Headquartered in Tokyo, Japan, CAJPY is a multinational company specializing in a diverse range of products, including office multifunction devices, printers, cameras, medical equipment, and lithography equipment. It operates through several business units, including Printing; Imaging; Medical; Industrial; and others.

On March 26, CAJPY expands its ColorStream 8000 series with the ColorStream 8110 and flagship ColorStream 8200, boasting speeds of up to 361 and 656 feet per minute, respectively. These models feature native 1200 DPI printheads, which are highly pigmented water-based polymer inks and can deliver 2,860 impressions per minute with PRISMA production workflow integration.

On March 18, CAJPY launched the CE-SAT-IE micro-satellite, confirming normal operation post-launch and successful communication with ground stations. Equipped with CAJPY's PowerShot S110 compact digital camera, it captured the Gulf of California and aims for high-resolution imaging with CAJPY's EOS R5 digital camera for geospatial information and disaster prevention.

During the fourth quarter, which ended December 31, 2023, CAJPY’s net sales increased marginally from the previous year’s quarter to ¥1.16 trillion ($7.67 billion). The company’s gross profit and operating profit grew 5.7% and 19.2% from a year-ago quarter to ¥548.08 billion ($3.61 billion) and ¥115.99 billion ($764.91 million), respectively.

As of December 31, 2023, the company’s net cash provided by operating activities amounted to ¥451.19 billion ($2.98 billion), compared to ¥262.60 billion ($1.73 billion) as of December 31, 2022.

For the fiscal year ending December 31, 2024, CAJPY projects net sales of ¥4.35 trillion ($28.69 billion), an operating profit of ¥435 billion ($2.87 billion), and net income attributable to CAJPY of ¥305 billion ($2.01 billion).

Analysts anticipate CAJPY’s revenue to increase by 151.9% year-over-year to $28.46 billion for the fiscal year ending December 2024. The stock has gained 32% over the past year and 24.7% over the past six months to close the last trading session at $29.19. Also, it soared marginally intraday.

CAJPY’s POWR Ratings reflect its robust prospects. The stock has an overall A rating, translating to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted optimally.

The stock has an A grade for Momentum and a B for Value, Stability, and Quality. CAJPY is ranked #5 among 38 stocks within the B-rated Technology - Hardware industry.

Click here to see CAJPY’s ratings for Growth and Sentiment.

Zoom Video Communications, Inc. (ZM)

ZM provides a unified communications platform, including video meetings, phone services, and virtual event solutions, serving diverse industries globally. Its services range from individual users to enterprise-level applications.

On March 25, ZM launched ZM Workplace in AWS Marketplace, offering customers seamless access to Meetings, Team Chat, Phone, Whiteboard, Spaces, Contact Center, and Revenue Accelerator products. This collaboration enhances IT teams' abilities to consolidate technology purchasing, leverage AWS resources, and optimize collaboration and communications in the digital-first era.

On the same day, ZM and Avaya collaborated to improve collaboration for enterprises by integrating ZM Workplace with Avaya's Communication & Collaboration Suite. This partnership enhances user experiences, leveraging ZM's interface while preserving investments in Avaya solutions.

In the fourth quarter, which ended January 31, 2024, ZM’s revenue grew 2.6% year-over-year to $1.15 billion. The company’s non-GAAP net income and net income per share increased 21.1% and 16.4% from the prior-year quarter to $443.97 million and $1.42, respectively. Also, its non-GAAP free cash flow rose 81.5% from the prior-year quarter to $332.69 million.

As of January 31, 2024, the company’s total liabilities amounted to $1.91 billion, compared to $1.92 billion as of January 31, 2023.

For the full fiscal year 2025, the company forecasts its total revenue to reach approximately $4.60 billion. Its non-GAAP income from operations is anticipated to range between $1.72 billion and $1.73 billion, and non-GAAP EPS is projected to fall between $4.85 and $4.88. Furthermore, free cash flow is expected to range between $1.44 billion and $1.48 billion.

Street expects ZM’s revenue to grow 2% year-over-year to $4.62 billion for the fiscal year ending January 2025. Its EPS for the same quarter is expected to be $4.89. Additionally, the company surpassed the consensus revenue and EPS estimates in each of the trailing four quarters, which is promising.

ZM’s shares have declined marginally intraday to close the last trading session at $62.94.

ZM’s POWR Ratings reflect its sound prospects. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.

ZM has a B grade for Growth, Value, and Quality. Within the Technology – Services industry, it is ranked #7 out of 81 stocks.

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

Brother Industries, Ltd. (BRTHY)

Headquartered in Nagoya, Japan, BRTHY manufactures and sells communication and printing equipment globally, encompassing segments like inkjet printers; industrial sewing machines; and online karaoke systems. Its products cater to a wide range of markets and regions.

On March 18, 2024, BRTHY introduced a diverse product lineup and expanded into renowned anime and manga from Japan at the FESPA Global Print Expo 2024. The exhibition includes garment printers, sewing and embroidery machines, and merchandise featuring characters from notable anime and manga series, showcasing Brother's innovation and versatility in industrial printing.

BRTHY forecasted an annual dividend of ¥68 ($0.448) per common share for the fiscal year ended March 31, 2024. The company pays $0.94 annually, which translates to a yield of 2.55% on the prevailing price level. Its four-year average dividend yield is 2.95%. Moreover, the company boasts a 33-year record for consecutive dividend payments.

BRTHY reported a total revenue of ¥213.13 billion ($1.41 billion) in the third quarter that ended December 31, 2023. The company’s gross profit and profit for the period increased 11.4% and 39.3% year-over-year, respectively, to ¥90.79 billion ($598.71 million) and ¥17.71 billion ($116.80 million). Moreover, its EPS grew 39.3% from the year-ago quarter to ¥69.11.

For the fiscal year ending March 31, 2024, the company expects its revenue and operating profit to grow marginally and 26.4% year-over-year to ¥820 billion ($5.41 billion) and ¥70 billion ($461.61 million), respectively.

Analysts expect BRTHY’s revenue for the fiscal year ending March 2024 to grow 58% year-over-year to $5.42 billion. Shares of BRTHY have surged 14.3% over the past three months and 33.1% over the past nine months to close the last trading session at $36.97.

BRTHY’s POWR Ratings reflect an optimistic outlook. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.

The stock has an A grade for Value, Momentum, and Stability and a B for Quality. Within the Technology – Electronics industry, it is ranked first among 43 stocks.

For more insights into BRTHY’s Growth and Sentiment ratings, click here.

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 >

CAJPY shares were trading at $29.30 per share on Monday morning, up $0.11 (+0.36%). Year-to-date, CAJPY has gained 14.45%, versus a 9.47% 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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