The tech market is rapidly growing due to increased cloud computing adoption, cybersecurity needs, and technological innovation, fueled by rising investments in SaaS and cloud-based solutions. Thus, investors could consider investing in tech stocks Nidec Corporation (NJDCY), Zoom Video Communications, Inc. (ZM), and Cellebrite DI Ltd. (CLBT) for future gains.
A significant surge of 57.1% in the NASDAQ Composite over the last year highlights strong growth and exceptional performance in the technology sector, reflecting investor confidence and positive sentiment toward the future of tech companies.
Moreover, in the next five years, the Metaverse is expected to transform social interactions while edge computing boosts cybersecurity and processing speeds. Additionally, advancements in drones, AI, blockchain, and other technologies are expected to reshape industries and societal norms.
Besides, the Consumer Technology Association (CTA) predicts a 2.8% year-over-year rise in U.S. consumer technology industry revenues to $512 billion in 2024, with increased spending on audio and video streaming, gaming hardware, and over 230 million smartphones and PCs incorporating generative AI.
In addition, CTA's research on GenZ shows 86% deem technology essential, 94% own smartphones, and they own an average of 13 tech products per household. They prioritize streaming devices (52%), gaming consoles (58%), and portable gaming consoles (36%), while 73% have a household TV, with 59% personally owning one.
Furthermore, worldwide IT spending is set to grow 6.8% year-over-year to hit $5 trillion this year. IT services are expected to become the largest segment, growing by 8.7% to reach $1.50 trillion, driven by enterprise investments in efficiency projects.
Considering these conducive trends, let’s examine the fundamentals of three tech stock picks.
Nidec Corporation (NJDCY)
Based in Kyoto, Japan, NJDCY is a global leader in the development, manufacturing, and sale of motors, electronics, optical components, and related products. Its diverse range of offerings caters to various industries, including robotics, automotive, home appliances, IT, healthcare, and industrial machinery.
On February 22, 2024, NJDCY partnered with AAR Corp. (AIR) to develop a specialized motor for the AIR ONE eVTOL, advancing consumer-oriented flight in the burgeoning eVTOL market. The collaboration marks a crucial step forward in aviation, blending NJDCY's expertise with AIR's innovative vision.
NJDCY’s trailing-12-month CAPEX/Sales of 5.75% is 91.1% higher than the industry average of 3.01%. Its trailing-12-month cash per share of $2.47 is 7.4% higher than the industry average of $2.30.
During the third quarter, which ended December 31, 2023, NJDCY’s net sales increased 4.4% from a year-ago quarter to ¥594.03 billion ($3.94 billion). The company’s operating profit and profit for the period increased 91% and 138.3% year-over-year to ¥53.56 billion ($355.64 million) and ¥40.27 billion ($267.39 million), respectively.
For the year ending March 31, 2024, the company anticipates net sales of ¥2.30 trillion ($15.27 billion), with an operating profit of ¥180 billion ($1.20 billion). The projected profit stands at ¥135 billion ($896.38 million), and EPS attributable to owners of the parent at ¥234.95.
NJDCY’s revenue and EPS are expected to grow 938.2% and 203.6% year-over-year to $15.42 billion and $0.44, respectively, for the fiscal year ending March 2024. The company surpassed its revenue estimates in three of the trailing four quarters, which is impressive.
The stock declined marginally intraday to close the last trading session at $9.44.
NJDCY’s POWR Ratings reflect this strong outlook. The stock has an overall B rating, translating 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.
It has an A grade for Stability and a B for Growth. Within the A-rated Technology - Hardware industry, it is ranked #16 among 36 stocks.
Click here to see NJDCY’s ratings for Value, Momentum, Sentiment, and Quality.
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.
ZM’s trailing-12-month levered FCF margin of 36.08% is 304.4% higher than the industry average of 8.92%. Its trailing-12-month cash from operations of $1.46 billion is significantly higher than the industry average of $85.05 million.
In the fourth fiscal 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.
As of January 31, 2024, its total liabilities amounted to $1.91 billion, compared to its total liabilities of $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. 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 2.3% year-over-year to $1.13 billion for the fiscal first quarter ending April 2024. Its EPS for the same quarter is expected to be 1.13. The company surpassed the revenue and EPS estimates in each of the trailing four quarters, which is impressive.
ZM’s shares have declined marginally intraday to close the last trading session at $63.12.
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 #13 out of 77 stocks.
In addition to the POWR Ratings stated above, one can access ZM’s additional Momentum, Stability, and Sentiment ratings here.
Cellebrite DI Ltd. (CLBT)
Based in Petah Tikva, Israel, CLBT offers essential solutions for legal investigations worldwide, facilitating the collection, analysis, and management of digital data across various sectors. Its suite of products addresses critical investigative challenges and is trusted by authorities and enterprises globally.
CLBT’s trailing-12-month gross profit margin of 83.63% is 69.8% higher than the industry average of 49.25%. Its trailing-12-month EBIT margin of 10.22% is 111.8% higher than the industry average of 4.83%.
CLBT’s total revenue grew 25.7% year-over-year to $93.01 million in the fourth quarter that ended December 31, 2023. Its non-GAAP net income and EPS rose 43.6% and 37.5% from a year-ago quarter to $22 million and $0.11, respectively. The company's adjusted EBITDA increased 41% from the previous-year quarter to $22.73 million.
For the first quarter of 2024, the company anticipates its revenue to be in the range between $83 million and $88 million, with adjusted EBITDA expected to be between $12 million and $15 million.
Analysts expect its revenue and EPS to grow 15.9% and 3.1% year-over-year to $376.78 million and $0.32, respectively, for the fiscal year ending December 2024. The company surpassed its revenue and EPS estimates in each of the trailing four quarters.
The stock has gained 107.3% over the past year and 106.2% over the past nine months to close the last trading session at $11.96. It also gained 2.1% intraday.
CLBT’s POWR Ratings reflect this robust outlook. The stock has an overall B rating, translating to a Buy in our proprietary rating system.
It has a B grade for Growth and Quality. In the Technology - Services industry, it is ranked #24.
To access additional ratings for CLBT’s Value, Momentum, Stability, and Sentiment, 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.
NJDCY shares were trading at $9.62 per share on Tuesday morning, up $0.18 (+1.91%). Year-to-date, NJDCY has declined -4.62%, versus a 6.44% 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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