While macroeconomic uncertainty could hinder near-term growth, the tech industry’s long-term prospects remain bright amid government spending and advancements.
Given the industry’s solid growth prospects, investors could consider buying fundamentally sound tech stocks such as Logitech International S.A. (LOGI), Iteris, Inc. (ITI), and Daktronics, Inc. (DAKT) for solid returns. These stocks could be solid buys as per our POWR Ratings system.
Before delving deeper into their fundamentals, let’s discuss what’s happening in the tech industry.
According to the most recent Gartner, Inc. prediction, worldwide IT spending would hit $4.7 trillion in 2023, a 4.3% increase from 2022. Increased investments in cloud computing, artificial intelligence, and digital transformation programs across businesses are primarily driving this expansion.
Rising demand for new technology and innovative solutions is projected to increase IT investment in the coming years.
The digital transformation market is anticipated to be worth $2.37 billion by 2030, growing at an 18.6% CAGR. The growing digitization trend, as well as the increasing requirement for effective resource utilization, are likely to fuel market expansion.
Moreover, the global IT hardware market is expected to grow at a 7.9% CAGR to $177.11 billion by 2028. Investors’ interest in tech stocks is evident from the Technology Select Sector SPDR ETF’s (XLK) 30% returns over the past nine months.
In light of these encouraging trends, let’s look at the fundamentals of the three top-rated Technology – Hardware stocks, beginning with number 3.
Stock #3: Logitech International S.A. (LOGI)
Headquartered in Lausanne, Switzerland, LOGI designs, manufactures, and markets products that connect people to working, creating, gaming, and streaming worldwide. The company offers pointing devices, such as wireless mouse; corded and cordless keyboards, living room keyboards, and keyboard-and-mouse combinations; PC webcams; and keyboards for tablets and smartphones, as well as other accessories for mobile devices.
LOGI’s forward EV/Sales of 2.30x is 10.3% lower than the industry average of 2.57x. Its forward non-GAAP PEG of 1.47x is 16.1% lower than the industry average of 1.75x.
LOGI’s trailing-12-month ROTC of 12.37% is 480.9% higher than the industry average of 2.13%. Its trailing-12-month ROCE of 14.23% is significantly higher than the industry average of 1.01%.
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