The Fed's fight against inflation has turned investors into worrying over the rising borrowing costs, which has led to a massive selloff in the capital-intensive tech industry.

However, technology is necessary to maintain a standardized life. Therefore, new technologies like cloud computing, 5G, Metaverse, and the Industrial Internet of Things should have a crucial impact.

The global cloud computing market is expected to reach $1.37 trillion by 2028, expanding at a CAGR of more than 17.5% between 2022 to 2028.

Moreover, as enterprises push forward with digital business initiatives in response to economic turmoil, demand for IT in 2023 is expected to be strong. According to the latest forecast by Gartner, Inc. (IT), worldwide IT spending is projected to be $4.60 trillion in 2023, indicating an increase of 5.1% from 2022.

Given this backdrop, there might still be advantages left in the tech market. Fundamentally strong but lesser-known tech stocks Celestica Inc. (CLS) and Hackett Group Inc. (HCKT) might be the ones to watch.

Celestica Inc. (CLS)

CLS provides a hardware platform and supply chain solutions in North America, Europe, and Asia. It operates through two segments: Advanced Technology Solutions and Connectivity & Cloud Solutions. The company is headquartered in Toronto, Canada.

On October 18, 2022, the company launched the DS1000 high-performance Gigabit Ethernet Layer 3 switch. This should benefit the company through its contribution to the OCP Enterprise Connectivity Solutions (ECS) group.

On August 2, 2022, CLS launched three new storage arrays. The new generation arrays are expected to offer flexibility and widen the company’s consumer base with customized solutions.

CLS’ revenues rose 31.1% year-over-year to $1.92 billion for the third quarter ended September 30, 2022. Its adjusted gross profit improved 33.5% year-over-year to $171.50 million, while its adjusted EPS came in at $0.52, up 48.6% year-over-year.

CLS’ revenue is expected to increase 27.2% year-over-year to $7.17 billion in the current fiscal year ending December 2022. Its EPS is likely to grow 44.5% year-over-year to $1.88 in the current year. Additionally, the company has surpassed EPS estimates in each of its four trailing quarters, which is impressive.

CLS has gained 31.6% over the past month to close the last trading session at $11.07.

CLS’s POWR Ratings reflect this promising outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

It has an A grade for Value, Growth, and Sentiment and a B for Momentum. The stock is ranked first out of 76 stocks in Technology - Services industry.

In addition to the POWR Rating grades just highlighted, you can see all CLS ratings for Stability and Quality here.

Hackett Group Inc. (HCKT)

HCKT operates as a business and technology consulting firm. The company offers benchmarking, executive advisory, business transformation, and cloud enterprise application implementation.

On September 22, HCKT announced the launch of a new Market Intelligence Service for software and service providers and users. Research reports from the Market Intelligence Service would be offered to its clients and sold individually, with results available for licensing by solution providers for use. This might bolster the company’s income.

HCKT’s total revenue increased 3.7% year-over-year to $75.93 million for the second quarter of 2022. Its S&BT segment’s revenue increased 26% year-over-year to $33.39 million, while its EPS came in at $0.32.

Streets expect HCKT’s revenue for the current fiscal year 2022 to increase 6.6% year-over-year to $297.20 million. Its EPS is expected to rise 10.4% year-over-year to $1.45. Additionally, it has surpassed the consensus EPS estimates in each of the trailing four quarters.

HCKT’s stock has gained 21.3% over the past month to close the last trading session at $21.52.

It is of no surprise that HCKT has an overall POWR Rating of A, which translates to a Strong Buy in our proprietary rating system.

The stock has an A grade for Quality and a B for Stability and Sentiment. It is ranked #1 of 10 stocks in the A-rated Outsourcing – Tech Services industry.

Click here for additional ratings of HCKT (Growth, Value, and Momentum).

CLS shares were trading at $11.06 per share on Wednesday afternoon, down $0.01 (-0.09%). Year-to-date, CLS has declined -0.63%, versus a -18.59% rise in the benchmark S&P 500 index during the same period.

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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