3 technology companies ready for a bullish June

The technology industry is evolving in the face of rapid change and digitization across sectors. Moreover, growing IT spending creates new opportunities for companies in this sector. Thereforeinvestors could consider buying shares of technology companies with fundamentally sound fundamentals, TD SYNNEX Corporation (SNX), AvePoint, Inc. (AVPT) and Benchmark Electronics, Inc. (BHE), for a bull June.

There are many factors currently driving the development of information technology (IT), such as the increasing digitization of enterprises, advances in cybersecurity and the rapid development of online commerce. As a result, the IT market is expected to grow to $12.42 trillion by 2028. CAGR of 8.3%.

Moreover, according to the latest forecast from Gartner, Inc. predicts that global IT spending will increase by 8% year-on-year, reaching a staggering $5.06 trillion in 2024. This growth exceeding previously forecast growth of 6.8% this quarter, estimates that technology spending will exceed $8 trillion well before the end of the decade.

The growing preference for cloud-based software and increasing emphasis on automating business operations continues to drive global demand for IT services. From 2022, cloud-based IT services are experiencing rapid growth among SMEs and this trend is expected to increase by 2025 over 80% market share.

In addition, there is demand for shares of technology companies, as evidenced by the good performance of the stock exchange Vanguard Information Tech ETF (VGT), which has returned a staggering 38.5% over the past year.

Given these favorable industry trends, let’s take a closer look at the fundamentals of leading technology companies:

TD SYNNEX Corporation (SNX)

SNX operates as a distributor and aggregator of solutions for the IT ecosystem. The company offers personal computing devices and peripherals, mobile phones and accessories, printers, consumables and endpoint technology software; and data center technologies.

On May 21, SNX launched MSP Evolve, a collection of its resources and tools designed specifically to optimize operational excellence and accelerate business development for the unique needs of managed service providers (MSPs). The program will initially be available to North American SMEs.

Additionally, on April 16, SNX launched a High Growth Technology Center of Excellence (CoE) to enhance its partners’ ability to address increasingly complex digital transformation initiatives. CoE facilitates the incorporation of AI in a number of key areas that should help partners and increase the company’s popularity.

SNX for the last 12 months ROCE of 7.72%, is 99.4% higher than the industry average of 3.87%. Its 12-month ROTC of 6.51% is 155.7% higher than the industry average of 2.55%. Similarly, the company’s stock’s 12-month ROTA of 2.27% is 45.6% higher than the industry average of 1.56%.

For the first quarter ending February 29, 2024, SNX revenue was $13.98 billion. Non-GAAP gross profit was $1.01 billion. Similarly, the company’s non-GAAP net profit was $266.20 million. Additionally, non-GAAP EPS increased 2% year over year to $2.99. Additionally, as of February 29, 2024, the company’s total liabilities were $19.70 billion compared to $21.23 billion as of November 30, 2023.

Street expects SNX to report revenue of $14.08 billion for the second quarter (ended May 2024), which represents marginal year-over-year growth. The company’s EPS is expected to grow 15.9% year-over-year to $2.82 in the same quarter. Moreover, it has surpassed consensus EPS estimates in three of the four consecutive quarters, which is impressive.

SNX shares have gained 47.5% over the past year, closing at $130.25 in the most recent trading session.

SNX POWR Ratings reflect its promising prospects. The stock has an overall rating of B, which translates to “buy” in our proprietary rating system. POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted optimally.

SNX has a B grade on Value, Growth and Sentiment. It ranks 11th among 78 companies in the ranking Technology – Services industry.

click here to access additional SNX ratings (Momentum, Stability and Quality).

AvePoint, Inc. (AVPT)

AVPT provides a cloud-native data management software platform in North America, Europe, the Middle East, Africa and the Asia-Pacific region. The company also offers software-as-a-service solutions and productivity applications, as well as modularity and cloud service architecture.

On April 9, AVPT launched new analytics capabilities in tyGraph, which is specific to Copilot for Microsoft 365. These capabilities enable organizations to measure and optimize the use and impact of Copilot for Microsoft 365. This should benefit the company by helping organizations realize their full potential investing in artificial intelligence.

On February 21, AVPT announced the addition of three new products to its FedRAMP authorization as a software-as-a-service (SaaS) company as part of its AVPT Confidence platform modernization package. These products enable organizations to remove barriers to innovation in the workplace by unifying data, optimizing business processes and improving the employee experience.

AVPT’s trailing-12-month gross profit margin of 72.10% is 45.3% higher than the industry average of 49.64%. Its trailing 12-month leveraged FCF margin of 16.39% is 65.8% higher than the industry average of 9.88%.

In the first quarter ended March 31, 2024, AVPT’s total revenues increased 25.1% year-over-year to $74.53 million. Non-GAAP gross profit increased 29.6% from a year ago to $55.20 million. The company’s non-GAAP operating income was $6.61 million, compared to a non-GAAP operating loss of $329,000. USD in the previous year’s quarter.

For the second quarter of 2024, the company expects total revenues of $73.80 million to $75.80 million, representing 15% year-over-year growth at the mid-year mark, and non-GAAP operating income of $3.60 million USD to USD 4.60 million.

AVPT raised its full-year 2024 guidance. AVPT expects full-year total revenue in the range of $314.30 million to $320.30 million and non-GAAP operating income in the range of $30 million to $32 million.

Analysts expect AVPT’s third-quarter (ended September 2024) revenue to increase 13.6% year-over-year to $82.68 million, while EPS is expected to increase 69.5% year-over-year, according to $0.05. Moreover, the company has exceeded consensus revenue estimates in all four consecutive quarters.

AVPT shares are up 50.2% over the past year, closing at $9.16 in the latest session.

AVPT’s strong fundamentals are reflected in its POWR Ratings. It has an overall grade of B, which equates to a “Buy” in our proprietary rating system.

The stock is rated B for quality, growth and sentiment. AVPT ranks 10th in the ranking Technology – Services industry.

In addition to what was stated above, we also evaluated AVPT for value, stability and dynamics. Get all your AVPT assessments Here.

Benchmark Electronics, Inc. (BHE)

BHE offers product design, engineering services, technology solutions and manufacturing services in the Americas, Asia and Europe. The company provides engineering services and technology solutions, custom testing and technology solutions; and services in the design and construction of automation devices.

BHE’s trailing 12-month ROCE of 6.22% is 60.8% higher than the industry average of 3.87%. Similarly, the company’s stock’s 12-month ROTC of 4.99% is 95.9% higher than the industry average of 2.55%. BHE’s trailing 12-month ROTA of 2.98% is 90.9% higher than the industry average of 1.56%.

In the first quarter ended March 31, 2024, BHE sales were $675.58 million. Non-GAAP gross profit increased 5.4% from the prior-year quarter to $67.83 million. The company’s non-GAAP net income and non-GAAP EPS increased 8.3% and 7.8% year-over-year to $20.19 million and $0.55, respectively.

In the second quarter of 2024, the company expects revenue in the range of $615 million to $655 million. Additionally, it forecasts non-GAAP EPS to fall between $0.48 and $0.54.

The Street expects BHE’s EPS and revenue for the year ending December 2025 to increase 17.5% and 6.5% year-over-year to $2.53 billion and $2.79 billion, respectively. Additionally, the company has surpassed consensus EPS estimates in each of the four consecutive quarters.

BHE shares are up 72.7% over the past nine months, closing at $43.49 in the latest session.

BHE’s POWR Ratings reflect a strong outlook. The stock has an overall rating of B, which translates to Buy in our proprietary rating system.

BHE is rated A for momentum and B for sentiment. It ranks 8th out of 43 companies in the ranking Technology – Electronics industry.

In addition to the POWR Ratings highlighted above, you can access BHE Ratings for Growth, Value, Stability and Quality, Here.

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On Monday afternoon, SNX stock was trading at $130.25 per share, up $1.65 (+1.28%). Year-to-date, SNX has gained 21.93% compared to the benchmark S&P 500 Index’s gain of 11.73% over the same period.

About the author: Nidhi Agarwal

Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. He holds a bachelor’s degree in finance and marketing and is in the CFA program. Its fundamental approach to stock analysis helps investors identify the best investment opportunities. More…

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