3 Tech Stocks to Watch Closely in 2023
Despite macroeconomic challenges, the tech industry is using digital advancements to support innovation and transformation across sectors, which is expected to boost its growth. Therefore, fundamentally strong tech stocks Salesforce (CRM), Juniper Networks (JNPR), and AudioCodes (AUDC) might be ideal additions to your watchlists. Read on.
The tech industry is in a favorable position to reap long-term benefits due to consistent advancements and the rising need for digital transformation across various industries. As the industry shows solid potential, fundamentally strong tech stocks Salesforce, Inc. (CRM), Juniper Networks, Inc. (JNPR), and AudioCodes Ltd. (AUDC) might be solid additions to your watchlist.
Almost every sector is ramping up their technology investments to enhance their capabilities. Gartner estimates that global IT spending will reach $4.60 trillion this year in 2023, a jump of 5.1% over 2022.
Also, while blockchain technology has revolutionized data storage and transactions, the availability of standard tools such as ChatGPT is making it easier for developers of all levels to work with this technology.
Moreover, the International Data Corporation’s (IDC) Worldwide Artificial Intelligence Spending Guide predicts that the expenditure on artificial intelligence (AI) worldwide, covering AI-focused software, hardware, and services, will increase at a CAGR of 27% from 2022 to 2026. The spending is projected to reach $300 billion in 2026.
Despite the widespread layoffs in the tech industry, the U.S. Bureau of Labor Statistics reported in 2022 that employment in the computer and IT sector is expected to grow 15% from 2021 to 2031.
Take a look at the stocks mentioned above:
Salesforce, Inc. (CRM)
CRM provides customer relationship management technology that brings companies and customers together worldwide.
The company’s service offerings include Sales to store data, monitor leads and progress, forecast opportunities, gain insights through analytics and relationship intelligence, and deliver quotes, contracts, and invoices; and Service that enables companies to deliver trusted and highly personalized customer service and support at scale.
On March 7, CRM launched Einstein GPT, the world’s first generative AI CRM technology, which delivers AI-created content across every sales, service, marketing, commerce, and IT interaction at a hyper-scale. With Einstein GPT, Salesforce will transform every customer experience with generative AI.
On January 12, CRM announced a series of new innovations to help retailers grow and optimize advertising sales, gain a single view of transactions across digital and physical stores, and unlock value from their customer data.
Its trailing-12-month EBITDA margin of 17.34% is 54.6% higher than the 11.22% industry average. Its trailing-12-month gross profit margin of 73.34% is 49.9% higher than the 48.94% industry average.
CRM’s total revenues increased 14.4% year-over-year to $8.38 billion in the fiscal fourth quarter, which ended January 31, 2023. Its gross profit increased 18.3% year-over-year to $6.28 billion. Also, income from operations came in at $357 million, compared to a loss from operations of $176 million in the previous-year quarter.
CRM’s revenue is expected to rise 10.2% year-over-year to $8.17 billion for the fiscal first quarter ending April 2023. The company’s EPS for the same quarter is expected to increase 64.5% year-over-year to $1.61. Additionally, the stock has topped consensus EPS and revenue estimates in each of the trailing four quarters, which is impressive.
The stock has gained 32.1% over the past three months to close the last trading session at $173.18.
CRM’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates 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.
CRM also has an A grade for Growth and Sentiment. It is ranked #17 out of 134 stocks in the Software – Application industry.
To access additional ratings for CRM’s Value, Stability, Quality, and Momentum, click here.
Juniper Networks, Inc. (JNPR)
JNPR designs, develops, and sells network products and services worldwide. The company offers routing products, such as ACX series, MX series Ethernet routers, wide-area network SDN controllers, and session smart routers.
On March 8, JNPR announced a new cloud-hosted campus fabric workflow that facilitates the successful deployment of enterprise networks to expedite time-to-service and minimize troubleshooting costs.
In addition, the new JNPR EX4400-24X distribution switch delivers the power of Mist AI and the cloud to enterprise campus distribution deployments and low-density data center top-of-rack environments.
On the same day, JNPR announced that Shaare Zedek Medical Center, Jerusalem’s largest and fastest-growing multi-disciplinary medical center, has embarked on a total digital transformation of operations to provide superior experiences and exceptional care to its patients using JNPR’s data center solutions. This should boost the company’s revenue streams.
JNPR’s trailing-12-month EBITDA margin of 14.28% is 27.3% higher than the 11.22% industry average. Its trailing-12-month gross profit margin of 55.80% is 14% higher than the 48.94% industry average.
On January 31, JNPR announced a quarterly dividend of $0.22 per share, payable on March 22, 2023.
JNPR pays $0.88 annually as dividends which translates to a yield of 2.86% at the current price. Its 4-year average dividend yield is 2.99%. Its dividend payouts have grown at 3.6% and 12.1% CAGRs over the past three and five years, respectively.
During the fourth quarter of fiscal 2022, which ended December 31, 2022, JNPR’s total net revenue increased 11.5% year-over-year to $1.45 billion, while non-GAAP operating income increased 13.5% year-over-year to $276.5 million.
The company’s non-GAAP net income increased 12.1% year-over-year to $213.80 million, and non-GAAP net income per share increased 12.1% year-over-year to $0.65.
Street’s EPS estimate of $0.43 for the current quarter (ending March 2023) reflects a rise of 38.9% year-over-year. The company’s revenue estimate for the current quarter of $1.34 billion indicates a 14.6% improvement from the prior-year quarter. Additionally, JNPR has topped consensus revenue estimates in three of the trailing four quarters.
The stock has gained 6.9% over the past nine months, closing the last trading session at $30.80.
It is no surprise that JNPR has an overall rating of B, which equates to a Buy in our POWR Ratings system.
It has a grade B for Quality, Momentum, and Growth. JNPR is ranked #7 among 49 stocks in the B-rated Technology – Communication/Networking industry.
In addition to the POWR Ratings above, we have also rated JNPR for Value, Stability, and Sentiment. Get all the JNPR ratings here.
AudioCodes Ltd. (AUDC)
AUDC vides advanced communications software, products, and productivity solutions for the digital workplace. The company offers solutions, products, and services for unified communications, contact centers, VoiceAI business line, and service provider businesses.
AUDC’s trailing-12-month EBITDA margin of 12.47% is 11.2% higher than the 11.22% industry average. Its trailing-12-month gross profit margin of 64.99% is 32.8% higher than the 48.94% industry average.
AUDC’s total revenues increased 6.9% year-over-year to $70.66 million in the fourth quarter that ended December 31, 2022. Its net income increased 4.1% year-over-year to $7.55 million. It reported non-GAAP net earnings per share of $0.36.
Analysts expect AUDC’s revenue to rise marginally year-over-year to $66.88 million for the fiscal first quarter ending March 2023. The company’s EPS for the same quarter is expected to be $0.27.
AUDC has declined 3.5% intraday to close its last trading session at $15.14.
AUDC’s POWR Ratings reflect its robust outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
AUDC also has an A grade for Quality and a B for Momentum, Value, and Stability. It is ranked #4 in the Technology – Communication/Networking industry.
For additional ratings for AUDC’s Growth and Sentiment, click here.
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CRM shares were trading at $175.19 per share on Monday afternoon, up $2.01 (+1.16%). Year-to-date, CRM has gained 32.13%, versus a 1.59% 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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