In the ever-evolving tech landscape, I present three quality tech stocks Quantum Corporation (QMCO), Dell Technologies Inc. (DELL), and Iteris, Inc. (ITI), which stand out as must-see options appearing to be golden opportunities.
The IT hardware market has experienced substantial growth, primarily propelled by the rapid expansion of the IT industry. With the ongoing expansion and transformation of the IT landscape, there is a rise in the demand for IT hardware components and solutions.
Moreover, the rising number of computers in households indicates a rise in computer hardware demand. The global computer hardware market grew from $658.32 billion in 2022 to $705.17 billion in 2023, at a 7.1% CAGR.
In addition, the computer hardware market is poised for significant growth, driven by a surge in investments in smart city initiatives worldwide. Looking ahead, the computer hardware market is expected to reach $909.80 billion in 2027, expanding at a CAGR of 6.6%.
Furthermore, the rapid pace of innovation in the electronics industry continues to drive consistent demand for newer and faster electrical and electronic products. Also, digital technologies like the Internet of Things (IoT) and the latest communication technologies, such as 5G, are expected to contribute significantly to the development of innovative electronic products.
As a result, the electrical and electronics market is expected to grow to $4.99 trillion in 2027 at a CAGR of 7.5%.
Considering these conducive trends, let's take a look at the fundamentals of the three best Technology – Hardware stocks, starting with number 3.
Stock #3: Quantum Corporation (QMCO)
QMCO delivers end-to-end solutions to analyze, enrich, store, manage, protect, and preserve unstructured data across its entire lifecycle. The company specializes in solutions for video data, images, and other large files.
On September 13, 2023, QMCO introduced new pre-configured bundles for Quantum ActiveScale™ Cold Storage, the industry's unique S3-enabled object storage solution designed for active and cold data. These bundles simplify the purchase and deployment of ActiveScale Cold Storage, reducing cold storage costs by up to 60 percent.
As organizations are turning to both public and private cloud solutions to manage their data efficiently, DELL’s ActiveScale enables customers to create their own cost-effective cloud storage resources, ensuring rapid and compliant data access for analysis and business insights.
QMCO’s trailing-12-month asset turnover ratio of 1.89x is 204.9% higher than the 0.62x industry average. Its trailing-12-month CAPEX/Sales of 2.91% is 20% higher than the 2.42% industry average.
QMCO reported total revenues of $91.79 million in the first quarter that ended June 30, 2023. Its gross profit increased 2.6% year-over-year to $34.93 million and operating expenses declined marginally from the year-ago quarter to $40.78 million.
The company is projected to announce a revenue of $79.31 million for the fiscal second quarter that ended September 2023. Moreover, the company has exceeded the consensus revenue estimates in each of the trailing four quarters, which is impressive.
The stock has plummeted 7.1% over the past month to close the last trading session at $0.60.
QMCO’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which equates 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.
QMCO also has a B grade for Value. It is ranked #12 in the 41-stock Technology – Hardware industry.
Click here to see QMCO’s additional rating for Growth, Stability, Sentiment, Momentum, and Quality.
Stock #2: Dell Technologies Inc. (DELL)
DELL designs, develops, manufactures, markets, sells, and supports several comprehensive and integrated solutions, products, and services in the Americas, Europe, the Middle East, Asia, and internationally. The company operates through two segments: Infrastructure Solutions Group (ISG) and Client Solutions Group (CSG).
DELL’s trailing-12-month CAPEX/Sales of 3.02% is 24.8% higher than the 2.42% industry average. Its trailing-12-month asset turnover ratio of 1.07x is 73.5% higher than the industry average of 0.62x.
On October 4, DELL announced the expansion of its Generative AI Solutions portfolio to support businesses in their generative AI journeys. This expansion aims to provide a robust data foundation and infrastructure for AI workloads across various environments.
On September 28, DELL declared a quarterly cash dividend of $0.37 per common share, payable on November 3, 2023. The company’s annual dividend of $1.48 per share translates to a 2.323% dividend yield at the current price level. Its four-year average dividend yield is 0.81%.
During the fiscal second quarter that ended August 4, 2023, DELL’s total net revenue stood at $22.93 billion. Its non-GAAP operating income grew 1.3% year-over-year to $1.98 billion. The company’s non-GAAP net income rose 1.3% and 3.6% year-over-year to $1.28 billion and $1.74 per share.
DELL’s revenue and EPS for the fiscal third quarter ending October 2023 are expected to come in at $22.90 billion and $1.45. The company surpassed consensus revenue and EPS estimates in each of the trailing four quarters.
The stock gained 94.2% over the past year and 67% year-to-date to close its last trading session at $67.18.
DELL’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
DELL has a B grade for Growth, Value, and Sentiment. DELL is ranked #6 in the same industry.
Beyond what we’ve stated above, we have also rated the stock for Momentum, Quality, and Stability. Get all ratings of DELL here.
Stock #1: Iteris, Inc. (ITI)
ITI provides intelligent transportation systems technology solutions worldwide. The company offers smart mobility infrastructure solutions, including traveler information systems, transportation performance measurement software, traffic analytics software, transportation operations software, transportation-related data sets, and advanced sensing devices, among other services.
On September 28, ITI launched Vantage Next Max™, a new central control unit (CCU) that doubles the supported sensors on the Vantage Next® platform from four to eight sensors per in-cabinet processor. This expansion is designed to enhance traffic detection in larger or uniquely-configured intersections and save time and effort for traffic engineers and system integrators.
ITI’s trailing-12-month asset turnover ratio of 1.38x is 123.2% higher than the 0.62x industry average.
ITI’s total revenues for the fiscal first quarter that ended June 30, 2023, increased 29.3% year-over-year to $43.55 million. Its gross profit increased 65.4% year-over-year to $16.80 million. Moreover, its adjusted EBITDA of $3.68 million compares to an adjusted EBITDA of negative $2.45 million in the prior-year quarter.
Analysts expect ITI’s revenue to increase 5.8% year-over-year to $41.52 million for the fiscal second quarter that ended September 2023. Its EPS is expected to come in at $0.04 for the same quarter. The company has surpassed the consensus revenue estimates in each of the trailing four quarters.
Over the past year the stock has gained 60.6% to close the last trading session at $4.32. It has soared 11.6% over the past three months.
ITI’s robust fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system.
It has a B grade for Growth, Value, and Sentiment. It is ranked #3 in the same industry.
To see ITI’s additional ratings for Stability, Momentum, and Quality, click here.
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DELL shares were trading at $68.17 per share on Tuesday morning, up $0.99 (+1.47%). Year-to-date, DELL has gained 73.54%, versus a 15.46% 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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