4 Tech Stocks Rated 'Buy' in the POWR Ratings

Continued digitalization in almost all industries in this 5G era and the adoption of hybrid working models have driven the technology industry’s growth over the past year. This surging demand, along with increasing investments and impressive technological breakthroughs, should help the industry keep growing. Tech spending in the United States is expected to grow by 6.7% in 2022.

Since high inflation and increasing Treasury yields are expected to keep the stock market volatile in the near term, overpriced tech stocks might suffer a price decline. Conversely, fundamentally sound tech stocks could be ideal bets for cashing in on the industry’s long-term growth prospects.

Their solid fundamentals and growth prospects make Microsoft Corporation (MSFT), Qualcomm Incorporated (QCOM), Micron Technology, Inc. (MU), and HP Inc. (HPQ) ideal bets now. Our proprietary POWR Ratings system has rated these stocks ‘Buy.’

Microsoft Corporation (MSFT)

MSFT develops, supports, licenses, and sells various software products, services, and solutions worldwide. The Redmond, Wash.-based company also manufactures and sells PCs, tablets, gaming and entertainment consoles, other intelligent devices, and related accessories through OEMs, distributors, resellers, digital marketplaces, and retail stores.

MSFT announced its partnership with a groundbreaking cyber insurance company, At-Bay, on September 29, 2021. The partnership is designed to help the insurance industry create superior and data-driven cyber insurance products backed by Microsoft 365 and Microsoft security solutions to combat data breaches and ransomware attacks and reduce insurers’ own risk of loss, through increased data visibility and standardized controls. Also in September, Truveta, a healthcare data platform, selected MSFT’s Microsoft Azure as its exclusive cloud platform. MSFT and Truveta will work together to make the world’s largest de-identified health data platform through their strategic partnership. This will enable MSFT to strengthen its own offerings for healthcare customers.

MSFT’s total revenue increased 21.3% year-over-year to $46.15 billion for its fiscal fourth quarter, ended June 30, 2021. The company’s gross profit came in at $32.16 billion, up 25.2% from the prior-year period. Its operating income was $19.10 billion, representing a 42.4% year-over-year improvement. MSFT’s net income came in at $16.46 billion, up 46.9% from the prior-year period. Its EPS increased 48.6% year-over-year to $2.17. As of June 30, 2021, the company had $14.22 billion in cash and cash equivalents.

MSFT’s EPS is estimated to rise 9.2% year-over-year to $8.79 in the current year. It surpassed the Street’s EPS estimates in each of the trailing four quarters. Analysts expect its revenue to be $192.07 billion for the current year, representing a 14.3% rise year-over-year. The stock’s EPS is expected to grow at a 15.5% rate per annum over the next five years. Over the past year, the stock has gained 39.9% and ended yesterday’s trading session at $307.29.

MSFT’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

The stock has a B grade for Quality, Stability, and Sentiment. Click here to see the additional ratings for MSFT’s Growth, Value, and Momentum. Of the 161 stocks in the Software - Application industry, MSFT is ranked #18.

Click here to check out our Software Industry Report for 2021

Qualcomm Incorporated (QCOM)

QCOM, in San Diego, Calif., is a multinational semiconductor and telecommunications equipment company that develops and delivers products and services based on code-division multiple access (CDMA) technology used in digital wireless communications equipment and satellite ground stations.

On October 5, 2021, QCOM, together with ecosystem leaders spanning key platforms and OEMs, collaborated with Microsoft Corporation (MSFT) to redefine wireless expectations for latency-sensitive gaming, productivity, and learning applications on Windows 11 PCs with Qualcomm FastConnect systems. QCOM is looking forward to a long-term partnership with MSFT.

Also, QCOM and SSW Partners, a New York-based investment partnership, reached a definitive agreement to acquire Veoneer, Inc. (VNE) in a $4.5 billion, all-cash transaction. Having already demonstrated a successful partnership with VNE’s Arriver business, integrating Arriver’s assets should accelerate QCOM’s ability to deliver a leading and horizontal ADAS solution as part of its digital chassis platform.

For its fiscal third quarter, ended June 27, 2021, QCOM’s non-GAAP revenue increased 63.5% year-over-year to $8 billion. The company’s non-GAAP operating income has been reported at $2.67 billion, representing a 117.9% year-over-year improvement. QCOM’s non-GAAP net income came in at $2.20 billion, up 124% from the prior-year period. Its non-GAAP EPS increased 123.3% year-over-year to $1.92. As of June 27, 2021, the company had $7.40 billion in cash and cash equivalents.

An $8.26 consensus EPS estimate for the current year indicates a 97.1% year-over-year improvement. Analysts expect its revenue to be $33.01 billion for the current year, representing a 52.5% rise year-over-year. It surpassed consensus EPS estimates in each of the trailing four quarters. QCOM’s EPS is expected to grow at a 32.2% rate from the prior-year period. The stock has gained marginally over the past year and closed yesterday’s trading session at $130.12.

QCOM’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system. QCOM has a B grade for Value, Sentiment, and Quality. Click here to see the additional ratings for QCOM (Growth, Stability, and Momentum).

QCOM is ranked #12 of 97 stocks in the B-rated Semiconductor & Wireless Chip industry.

Click here to checkout our Semiconductor Industry Report for 2021

Micron Technology, Inc. (MU)

MU designs, manufactures, and sells memory and storage products worldwide. The Boise, Idaho, company operates through computer and networking, mobile, storage, and embedded business units. It sells dynamic random access memory chips (DRAMs), static random access memory chips (SRAMs), flash memory, semiconductor components, and memory modules to various end markets.

On October 6, 2021, MU announced the availability of the Micron 7400 SSD with NVMe, delivering industry-leading form factor flexibility, PCIe Gen4 performance, and leading-edge security to meet the storage needs of demanding data center workloads. Featuring seven form factors, the Micron 7400 SSD enables the transition to next-generation server architectures. MU expects to see great demand for this portfolio in the coming months.

On August 3, 2021, MU announced the immediate availability of Crucial P5 Plus PCIe SSDs to expand its award-winning NVMe SSD portfolio to offer consumers high-performance internal Gen4 storage options. By leveraging MU’s 176-layer NAND, these SSDs enable lower power, higher speed, and denser storage solutions. Furthermore, by incorporating MU’s advanced 176L 3D TLC NAND and innovative controller technology that allows 66% faster sequential write speeds, these SSDs should be able to capitalize on the growing demand for high-performance storage solutions, owing to rising data-intensive workloads.

MU’s non-GAAP revenue for its fiscal fourth quarter, ended September 2, 2021, increased 36.6% year-over-year to $8.27 billion. The company’s non-GAAP gross profit came in at $3.96 billion, indicating an 87.8% rise from the prior-year period. Its non-GAAP operating income was $3.07 billion, up 136% from its year-ago period. While its non-GAAP net income increased 126% year-over-year to $2.78 billion, its non-GAAP EPS increased 124.1% to $2.42. As of September 2, 2021, the company had $7.83 billion in cash, cash equivalents, and restricted cash.

Analysts expect the stock’s EPS to improve 46% year-over-year in the current year to $8.85. A $31.94 billion consensus revenue estimate for the current year indicates a 15.3% year-over-year improvement. It surpassed the consensus EPS estimates in each of the trailing four quarters, and its EPS is expected to grow at a 22.3% rate per annum over the next five years. MU has gained 30.3% in price over the past year and ended yesterday’s trading session at $67.26.

MU’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The stock has an A grade for Value, and a B grade for Growth and Quality. Click here to see the additional ratings for MU’s Stability, Sentiment, and Momentum.

MU is ranked #27 in the Semiconductor & Wireless Chip  industry.

HP Inc. (HPQ)

HPQ provides personal computing and other access devices, imaging and printing products, related technologies, software, solutions, and services to individual consumers, small- and medium-sized businesses, and enterprises, including government, health, and education sectors worldwide. HPQ is headquartered in Palo Alto, Calif.

On October 7, 2021, HPQ’s enterprise printers and original HP cartridges gained ISO/IEC 20243 certification, assuring that the products follow the best global supply chain security practices throughout the product life cycle. This certification could help HPQ gain widespread recognition across the industry and generate significant demand from hybrid working structures.

On October 4, 2021, HPQ acquired Teradici Corporation, a global innovator in remote computing software that enables users to access high-performance computing securely. The acquisition will enhance HPQ’s capabilities in the Personal Systems category by delivering new compute models and software-enabled digital services suitable for hybrid work.

HPQ’s net revenue for its fiscal third quarter, ended July 31, 2021, increased 7% year-over-year to $15.29 billion. The company’s non-GAAP earnings from operations came in at $1.50 billion, up 71.1% from the prior-year period. While its non-GAAP net earnings increased 70.7% year-over-year to $1.20 billion, its non-GAAP EPS increased 104.1% to $1. The company had $3.44 billion in cash and cash equivalents as of July 31, 2021.

Analysts expect the stock’s EPS to improve 63.6% year-over-year to $3.73 for the current year. HPQ’s revenue is estimated to be $62.28 billion for the current year, indicating a 10% rise from the prior-year period. It surpassed the Street’s EPS estimates in each of the trailing four quarters. HPQ’s EPS is expected to grow at a 16.5% rate per annum over the next five years. Over the past year, the stock has gained 45.9% in price and ended yesterday’s trading session at $28.60.

It’s no surprise that HPQ has an overall B rating, which equates to Buy in our POWR Ratings system. The stock has an A grade for Value. Click here to see the additional ratings for HPQ’s Growth, Quality, Stability, Sentiment, and Momentum.

Of the 49 stocks in the B-rated Technology - Hardware industry, HPQ is ranked #9.

MSFT shares were trading at $308.23 per share on Tuesday afternoon, up $0.94 (+0.31%). Year-to-date, MSFT has gained 39.49%, versus a 21.64% rise in the benchmark S&P 500 index during the same period.

Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.

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