With digital technology transforming several end-use industries, including telecommunications and networking, healthcare, financial services, automotive, and manufacturing, demand for advanced tech products and services is on the rise. Also, emerging technologies like AI, IoT, quantum computing, and more are propelling the prospects of the tech industry.
Given the industry’s robust outlook, investors could consider buying fundamentally sound tech stocks LiveRamp Holdings, Inc. (RAMP), Gilat Satellite Networks Ltd. (GILT), and AstroNova, Inc. (ALOT) this week for solid returns.
Amid rapid digital transformation worldwide, tech spending will grow significantly this year and beyond. According to the recent forecast by Gartner, global IT spending is anticipated to total $5 trillion in 2024, representing an increase of 6.8% from 2023. IT services will be the largest segment of tech spending this year, reaching $1.50 trillion with 8.7% growth year-over-year.
Spending on IT services is primarily due to enterprises investing in organizational efficiency and optimization projects.
As per Statista, the IT services market has experienced a significant boom in recent times and is projected to reach an impressive revenue of $1.36 trillion in 2024. In global comparison, most revenue is expected to be generated in the United States, which is about $495.30 billion.
Further, the revenue of the IT Services market is expected to expand at a CAGR of 6.7% during the forecast period (2024-2028), reaching a market volume of $1.77 trillion by 2028.
The rapid growth of the overall IT industry would be a primary driver for the IT hardware market. Also, the increasing digitization of the public sector would fuel the market’s growth. The IT hardware market size is estimated to reach $191.03 billion by 2029, growing at a CAGR of 7.9% from 2024 to 2029.
Nowadays, the adoption of new, cutting-edge technology is essential for organizations focusing on reduced costs, higher efficiency, and enhanced user experience. With the introduction of advanced technologies such as AI, machine learning, blockchain, quantum computing, IoT, VR&AR, and 5G, the tech industry continues to evolve rapidly.
Moreover, investors’ interest in tech stocks is evident from the Technology Select Sector SPDR ETF’s (XLK) 10.8% returns over the past six months.
Given the industry’s bright prospects, investing in fundamentally strong tech stocks RAMP, GILT, and ALOT could be wise this week for substantial returns. These stocks are rated A (Strong Buy) rated in our proprietary POWR Ratings system.
Let’s discuss the fundamentals of these stocks in detail:
LiveRamp Holdings, Inc. (RAMP)
RAMP is a technology company that operates a data collaboration platform internationally. Its LiveRamp Data Collaboration platform supports several people-based market solutions like data collaboration, analytics, identify, and data marketplace. The company sells its solutions to enterprise marketers, agencies, and data providers in multiple industry verticals.
On February 1, 2024, RAMP completed the acquisition of Habu, a data clean room software provider that makes sharing data across organizations safe, simple, scalable, and smart.
The combination of LiveRamp and Habu will establish the industry-leading interoperable platform for data collaboration across all clouds and walled gardens worldwide, expanding the company’s collaboration network and driving the adoption of its core identity and connectivity solutions.
On January 25, RAMP became the first company in the industry to be Addressable Media Identifier (AMI)-certified by the Digital Advertising Alliance (DAA), the ad industry’s self-regulatory body for relevant digital advertising.
With this certification, companies can recognize LiveRamp as a partner that is best suited to assist both the buy- and sell-side to connect data better and enhance customer experiences.
On December 13, 2023, RAMP and Ad tech platform TripleLift announced an integration of RampID and TripleLift Audiences to offer marketers limitless and scalable first-party audience solutions.
The association brings together TripleLift Audiences, which delivers first-party data from publishers, with RampID, a durable, privacy-centric connectivity identifier, to offer lookalike addressability across the open web without relying on cookies, IDFAs, IP addresses, or other device IDs.
In the fiscal 2024 second quarter that ended September 30, 2023, RAMP’s revenues increased 8.7% year-over-year to $159.87 million. Its non-GAAP gross profit grew 9% year-over-year to $121 million. The company’s non-GAAP operating income was $32 million, indicating a growth of 88.2% from the previous year’s quarter.
In addition, its non-GAAP net earnings came in at $29.13 million, or $0.43 per share, up 96% and 95.4% from the prior year’s quarter, respectively. The company’s total current assets as of September 30, 2023, were $727.85 million, compared to $714.56 million as of March 31, 2023.
Street expects RAMP’s revenue to increase 9% year-over-year to $172.83 million for the third quarter that ended December 2023. The company’s EPS for the same quarter is expected to grow 41.9% year-over-year to $0.40. Moreover, RAMP topped the consensus EPS estimates in each of the trailing four quarters.
RAMP’s stock gained 38.3% over the past six months and 47.5% over the past year to close the last trading session at $39.48.
RAMP’s bright outlook is reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has a B grade for Growth, Value, Quality, and Sentiment. RAMP has topped among the 75 stocks in the Technology - Services industry.
Click here to access additional RAMP ratings for Stability and Momentum.
Gilat Satellite Networks Ltd. (GILT)
Headquartered in Petah Tikva, Israel, GILT offers satellite-based broadband communication solutions in Israel, the United States, Peru, and worldwide. The company operates in three segments: Satellite Networks; Integrated Solutions; and Network Infrastructure and Services. It designs and manufactures ground-based satellite communications equipment.
On January 16, GILT was awarded a $17 million contract by Pronatel for the expansion of a regional telecommunications project in Peru. With this activity, Pronatel (Programa Nacional de Telecomunicaciones) will expand the original 2018 agreement with GILT and will include connectivity to 35 new localities and dozens of new public institutions.
This deal will offer network expansion and ten years of services to address the increasing needs for internet in different parts of the Amazonas region.
On January 11, GILT launched a new brand identity, embracing the company’s commitment to the new space revolution and reflecting its vision of the right of all people to be connected.
The new brand identity, with a newly designed logo inspired by Gilat’s global reach, is built to encapsulate the exciting changes in the space industry, with more opportunities for growth and profitability, as demonstrated by the company over the last year.
On January 9, GILT was awarded nearly three million dollars for a multi-year project by a national police force. GILT was chosen for its ability to meet very stringent security requirements and solve complex issues that have hampering communication for years.
“This award is a testament to market demand for our unique capability to provide world-class satellite connectivity in the most demanding operational environments, along with our world-renowned support and maintenance,” said Ori Naor, Gilat’s vice president of sales and business development for defense.
For the third quarter ended September 30, 2023, GILT’s revenues increased 5.9% year-over-year to $63.93 million. Its non-GAAP gross profit grew 12.1% from the year-ago value to $25.91 million. Its non-GAAP net income and non-GAAP EPS were $4.58 million and $0.08, up 51.2% and 33.3% from the prior year’s quarter, respectively.
Furthermore, the company’s adjusted EBITDA increased 29.9% year-over-year to $9.48 million. Its cash and cash equivalents came in at $99.53 million as of September 30, 2023, compared to $86.59 million as of December 31, 2022.
Analysts expect GILT’s revenue for the fourth quarter (ended December 2023) to increase 4.6% year-over-year to $75.99 million. For the fiscal year 2024, the consensus revenue estimate of $291.77 million indicates a rise of 9.6% year-over-year. Further, the company has surpassed the consensus EPS estimates in three of the trailing four quarters.
GILT’s shares have surged 2.9% over the past month and 14.9% over the past year to close the last trading session at $6.33.
GILT’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
The stock has an A grade for Sentiment and a B for Value, Quality, and Growth. Within the Technology - Communication/Networking industry, GILT is ranked first out of 46 stocks.
In addition to the POWR Ratings I’ve just highlighted, you can see GILT’s ratings for Stability and Momentum here.
AstroNova, Inc. (ALOT)
ALOT designs, develops, manufactures, and distributes specialty printers, and data acquisition and analysis systems globally. It operates through two segments: Product Identification (PI) and Test & Measurement (T&M). The company offers products under the QuickLabel, TrojanLabel, and GetLabels brands.
On August 1, 2023, ALOT announced a strategic realignment of its Product Identification (PI) segment. The realignment is designed to streamline the cost structure and enhance its operational efficiencies in the segment to capitalize on the synergies of ALOT’s Astro Machine, Inc. subsidiary, acquired in August 2022.
The restructuring plan is expected to generate cost savings of more than $2.40 million on an annualized basis.
For the fiscal 2024 third quarter that ended October 28, 2023, ALOT reported net revenue of $37.55 million. Its non-GAAP gross profit increased 18.4% from the year-ago value to $14.78 million. The company’s non-GAAP operating income was $4.62 million, up 123.8% from the prior year’s quarter.
Also, the company’s non-GAAP net income and non-GAAP EPS came in at $2.75 million and $0.37, increases of 231.9% and 825% year-over-year, respectively. Its adjusted EBITDA rose 134.5% year-over-year to $5.66 million.
Shares of ALOT have surged 23.9% over the past six months and 33.1% over the past year to close the last trading session at $17.63.
ALOT’s POWR Ratings reflect its promising prospects. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
The stock has a B grade for Sentiment, Growth, Value, and Stability. ALOT is ranked first among 36 stocks in the A-rated Technology - Hardware industry.
To access additional ALOT’s ratings for Quality and Momentum, 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.
RAMP shares were unchanged in premarket trading Thursday. Year-to-date, RAMP has gained 4.22%, versus a 1.59% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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