Analyzing the Profit Potential of 3 Tech Stocks
The tech industry is set for growth due to continued investments in digitization and the adoption of emerging technologies. Therefore, we examine the prospects of quality tech stocks Research Institute (NRILY), Brother Industries (BRTHY), and RADCOM (RDCM). Read more….
The tech industry is booming despite economic challenges, as the growing use of technology in different sectors, higher investments in digitization, and emerging technologies drive demand for tech solutions.
Given this backdrop, it could be wise to invest in fundamentally strong tech stocks: Nomura Research Institute, Ltd. (NRILY), Brother Industries, Ltd. (BRTHY), and RADCOM Ltd. (RDCM).
Before diving deeper into the fundamentals of these stocks, let’s discuss what is shaping the tech industry’s prospects.
The digital revolution and the rising use of advanced technologies like Artificial Intelligence (AI) are the key factors boosting the tech industry’s prospects. With smart devices and advanced computers, the tech industry is a dominant force in the global economy.
After the post-pandemic challenges and struggles with navigating a high-interest rate environment, the tech industry made a strong comeback thanks to the AI wave. The global AI market is projected to grow at a 37.3% CAGR between 2023 and 2030.
Gartner predicts global IT spending to hit $5.10 trillion in 2024, an 8% increase. This growth is expected to be fueled by higher investments in cloud computing, growth of generative AI, and digital transformation of businesses.
Tech stocks have been in the spotlight this year, with the Technology Select Sector SPDR Fund (XLK) gaining 47.2% year-to-date, outpacing the broader SPDR S&P 500 ETF Trust’s (SPY) 17.7% returns.
Considering these conducive trends, let’s analyze the fundamentals of the featured stocks.
Nomura Research Institute, Ltd. (NRILY)
Headquartered in Tokyo, Japan, NRILY offers consulting, financial, and industrial IT solutions and IT platform services. Its segments include Consulting, Financial IT Solutions, Industrial IT Solutions, and IT Infrastructure Services. The company provides management and system consulting, system development, and operational solutions for various sectors, such as finance, manufacturing, and public services.
On April 27, 2023, NRILY announced the acquisition of up to 20 million shares of its common stock, representing 3.38% of total issued shares, with a total acquisition price of up to ¥50 billion ($338.18 million). The purpose is to enhance capital efficiency and align with NRILY’s agile equity policy in response to changes in the business environment.
In terms of the trailing-12-month net income margin, NRILY’s 10.92% is 517.7% higher than the 1.77% industry average. Likewise, its 15.68% trailing-12-month EBIT margin is 234.4% higher than the industry average of 4.69%. Furthermore, the stock’s 0.86x trailing-12-month asset turnover ratio is 38.3% higher than the industry average of 0.62x.
NRILY’s revenue for the six months ended September 30, 2023, increased 6.8% year-over-year to ¥362.07 billion ($2.43 billion). The company’s operating profit increased 6.5% over the prior-year period to ¥58.87 billion ($394.96 million). Also, its profit attributable to owners of parent and EPS came in at ¥37.66 billion ($252.66) and ¥64.09, up 5% and 5.7% year-over-year, respectively.
For the fiscal year ending March 31, 2024, NRILY’s revenue is expected to increase 51.6% year-over-year to $4.98 billion. Over the past nine months, the stock has gained 30.1% to close the last trading session at $28.28.
NRILY’s POWR Ratings reflect strong prospects. It has an overall rating of B, translating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It is ranked #4 out of 9 stocks in the A-rated Outsourcing – Tech Services industry. It has a B grade for Stability and Quality. Click here to see NRILY’s rating for Growth, Value, Momentum, and Sentiment.
Brother Industries, Ltd. (BRTHY)
Headquartered in Nagoya, Japan, BRTHY manufactures and sells communications and printing equipment in Japan, the Americas, Europe, Asia, Oceania, the Middle East, Africa, and internationally. It operates through Printing & Solutions, Machinery, Domino, Nissei, Personal & Home, and Network & Contents segments.
On October 27, 2023, BRTHY introduced the “PureEne” brand, showcasing its dedication to promoting hydrogen use through fuel cell development and hydrogen pillar pipeline projects. The first product, the “AC-UPS Series,” a hydrogen fuel cell and battery hybrid power supply, is now being shipped in Japan and selected as an emergency backup at Narita Airport.
On July 24, 2023, BRTHY announced its 20th consecutive year of co-sponsoring the World Cosplay Summit. They’re offering the ScanNCut DX cutting machine as the “Brother Prize’ for costume making. BRTHY will also demonstrate crafting at Oasis 21 and support the World Cosplay…