Tech stocks have had a rough start this year, thanks to the historically high inflation and the possible tightening of the monetary policy. However, technology is advancing rapidly, with increasing investments in emerging technologies like Augmented Reality (AR), Artificial Intelligence (AI), Big Data, the Internet of Things (IoT), and the Metaverse.
Moreover, the pandemic has fostered heightened demand for digitization and cloud-based solutions across industries, which is expected to keep benefiting the tech sector. The technology industry is projected to exceed $5.3 trillion in 2022.
Given the industry’s solid growth prospects, fundamentally sound stocks Commvault Systems, Inc. (CVLT), NetScout Systems, Inc. (NTCT), and AstroNova, Inc. (ALOT), which are currently rated 'Strong Buy’ in our POWR Ratings system, are attractive at current prices.
Commvault Systems, Inc. (CVLT)
CVLT develops, markets, and sells a suite of software applications and products that provides data protection and information management services. The company’s offerings are organized into three categories: Data Protection, Data Insights, and Storage. It sells its offerings to large enterprises, small and medium-sized businesses, and government agencies.
In January 2022, Veristor Systems, Inc, a provider of transformative business technology solutions, joined the Commvault Partner Advantage Program as a Metallic Managed Service Provider to offer a complete SaaS backup and recovery data management solution and help companies keep their data protected from deletion or threats. CVLT is expected to benefit from leveraging Veristor’s expertise and advancing Metallic, a CVLT venture established to bring next-generation SaaS data protection to the market. Moreover, this month, CVLT launched its award-winning Metallic® portfolio of Data Management as a Service (DMaaS) solutions in Japan and Qatar.
CVLT’s total revenue increased 7.7% year-over-year to $202.38 million in the fiscal third quarter ended December 31, 2021. Its income from operations grew 363.3% from the year-ago value to $12.36 million, while its net income improved 498.2% year-over-year to $10.00 million over the period. Its EPS increased 600% from its year-ago value to $0.21.
The consensus EPS estimate of $0.64 for the fiscal quarter ending March 2022 represents a 7.6% improvement year-over-year. The consensus revenue estimate of $202.02 million for the fourth quarter represents a 5.6% increase from the same period last year. The company has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in three of the trailing four quarters.
The stock has gained 6.5% over the past year and 1.3% over the past five days to close the last trading session at $64.07, 23.9% lower than its 52-week high of $84.22.
CVLT’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, equating to Strong Buy in our rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
CVLT has an A grade in Quality and a B in Growth and Value. The stock is ranked #1 out of the 165 stocks in the Software – Applications industry.
In addition to the POWR Ratings grades I’ve just highlighted, you can see the CVLT ratings for Momentum, Stability, and Sentiment here.
NetScout Systems, Inc. (NTCT)
NTCT provides service assurance and cybersecurity solutions to protect digital business services against disruption. The company offers solutions to enterprise customers, government agencies, and service providers. The service assurance solutions help optimize network performance and identify and resolve issues that impact application and service quality, while the cybersecurity solutions are used to identify and mitigate distributed denial of service attacks and other network threats.
In February 2022, NTCT launched nGeniusEDGE Server, a comprehensive solution to quickly identify and resolve performance issues and ensure a high-quality end-user experience. As more and more companies embrace the hybrid work models, assessing and correcting performance problems before they affect business productivity is increasingly important as employees are now outside of traditional monitoring tools’ visibility. With NTCT’s new launch targeting, this issue should be in demand.
In January 2022, NTCT announced its collaboration with Amazon Web Services, Inc. (AWS) to support ENGIE IT, an IT subsidiary of worldwide low-carbon energy supplier ENGIE, in seamlessly migrating workloads and services to the cloud to support its digital transformation journey. “We’ve achieved AWS Network Competency and AWS Migration Competency designations, which confirm our expertise in helping customers migrate workloads to AWS safely and securely,” stated Michael Szabados, chief operating officer, NTCT.
NTCT’s non-GAAP revenue increased 14.6% year-over-year to $262.19 million in the fiscal third quarter ended December 31, 2021. Its Non-GAAP income from operations grew 35.1% from the year-ago value to $87.16 million, while its non-GAAP net income improved 36% year-over-year to $66.50 million over the period. Its non-GAAP EPS increased 34.8% from its year-ago value to $0.89.
The consensus EPS estimate of $1.85 for the fiscal year ending March 2022 represents an 8.5% improvement year-over-year. The consensus revenue estimate of $865.75 million for the same period represents a 4.2% increase year-over-year. The company has an impressive earnings surprise history, as it topped Street EPS estimates in each of the trailing four quarters.
NTCT shares have gained 17% over the past year and 17.4% over the past six months to close the last trading session at $31.66, 9.2% below its 52-week high of $34.87.
NTCT’s POWR Ratings reflect this promising outlook. The company has an overall rating of A, translating to Strong Buy in our proprietary rating system.
NTCT is rated A in Value and B in Growth and Quality. Within the Technology – Services industry, it is ranked #1 of 79 stocks.
To see additional POWR Ratings for Momentum, Stability, and Sentiment for NTCT, click here.
AstroNova, Inc. (ALOT)
ALOT designs, develops, manufactures, and distributes specialty printers and data acquisition and analysis systems. The company operates through two segments, namely, Product Identification (PI) and Test & Measurement (T&M), and sells its products under the brand names – QuickLabel, TrojanLabel, and GetLabels.
ALOT’s revenue increased 3% year-over-year to $28.86 million in the fiscal third quarter ended October 30. Gross profit stood at $10.39 million, up 6.7% from its year-ago value. Also, non-GAAP net income came in at $103 thousand, indicating a substantial increase from its prior-year quarter.
The consensus revenue estimate of $29.69 million for the fourth quarter ended January 2022 represents a 0.9% increase from the same period last year.
Over the past year, the stock has gained 27.1% to close the last trading session at $14.63, 21% lower than its 52-week high of $18.52. It has gained 8.3% year-to-date.
The company has an overall rating of A, translating to Strong Buy in our proprietary rating system. ALOT is rated A in Value and Sentiment and B in Momentum and Quality. Within the Technology – Hardware industry, it is ranked #1 of 49 stocks.
Click here to see additional POWR Ratings for Growth and Stability for ALOT.
CVLT shares were trading at $62.33 per share on Monday afternoon, down $1.74 (-2.72%). Year-to-date, CVLT has declined -9.56%, versus a -11.47% rise in the benchmark S&P 500 index during the same period.
About the Author: Subhasree Kar
Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.
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