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Back-to-School Season to Drive Laptop, PC Sales: 4 Winners

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The coronavirus pandemic has made working and learning form home the new norm. The remote working and learning culture has also been a boon to tech companies, which have been cashing in on the crisis.

The work-from-home and distance-learning trends, spurred by the coronavirus pandemic, gave a boost to the sales of PCs and peripherals, laptops, video conferring apps and other network solutions in the first half of 2020. Now, many of these companies could get a lift from back-to-school shopping as students continue to learn at home.

Back-to-School to Help Tech Companies

Although several retailers have been complaining of a slow start to the second half of the year on weak back-to-school sales, tech companies might get a further boost as more students are likely to choose remote learning on fears of getting infected.

According to data from S&P Global, based on imports of ordered products entering the United States, kids’ apparel sales have failed to bounce back from the second-quarter slump. Compared to last year, imports of kids’ footwear fell 44% in July, while apparel imports declined 29%. Meanwhile, backpack imports were down 23% in the second quarter, bouncing just 5% in July.

However, laptop computers have seen a boost, with imports up 14% in the second quarter, followed by 6% in July. Also, according to data from Education Week, 17 of the 20 largest school districts in the country are planning for remote learning to be their primary back-to-school model, which will impact more than 4 million students.

Moreover, many of the school districts that are planning to reopen would be adopting a hybrid model of in-person and remote classes to allow for physical distancing. This is a clear indication that technology will be the backbone of education in the days to come, or at least till fears of the virus spread subside.

Demand for Laptops, PCs Grow

Sales of PCs, laptops and peripherals have been on the rise since the remote working and learning culture became the new normal. However, one new problem being faced by schools across the United States is shortages and long delays, of up to several months, in getting this year's most crucial back-to-school supplies such as laptops and other equipment needed for online learning. This once again shows the massive demand for these distant-learning tools.

Sales of computers and related equipment have been further soaring in the second quarter. Although demand for computers, laptops and other peripherals required to work and learn remotely gained traction following the coronavirus, it was difficult to buy one given that lockdowns imposed by the countries halted shipments. However, with countries now lifting lockdowns, sales have once again bounced back.

According to International Data Corporation (IDC), PC shipments grew in the second quarter despite an economic slowdown. The new report says global shipments grew 11.2% year over year reaching a total of 72.3 million units.

Traditional PC shipments posted double-digit growth in the second quarter of 2020 compared to the same period a year ago. While the first quarter was record breaking for the lowest PC shipments seen in over a decade, the second quarter was record breaking for the opposite reason. IDC also predicts that volumes are expected to surpass 21 million units this year, the highest since the end of 2009.

Our Choices

With no signs of the pandemic easing, more students are likely to adapt to the remote learning culture. Demand for PCs, laptops, tablets and other peripherals will only grow in such a situation, helping these four stocks to gain.

Logitech International (LOGI - Free Report) is a global leader in peripherals for personal computers and other digital platforms, which develop and market innovative products in PC navigation, Internet communications, digital music, home-entertainment control, video security, interactive gaming and wireless devices.

The company’s expected earnings growth rate for the current year is 16.3%. The Zacks Consensus Estimate for current-year earnings has improved 10.6% over the past 60 days. Logitech carries a Zacks Rank #2 (Buy).

Lenovo Group Ltd. (LNVGY - Free Report) is dedicated to building PCs and mobile internet devices. Lenovo's business is built on product innovation, a highly-efficient global supply chain and strong strategic execution.

The company’s expected earnings growth rate for the current year is 37.6%. The Zacks Consensus Estimate for current-year earnings has improved 4.2% over the past 60 days. Lenovo has a Zacks Rank #2.

Apple, Inc. (AAPL - Free Report) designs, manufactures and markets smartphones, personal computers, tablets, wearables and accessories worldwide. Its signature products include iPhone, Mac and iPad.

The company’s expected earnings growth rate for the current year is 8.7%. The Zacks Consensus Estimate for current-year earnings has improved 4.9% over the past 60 days.  Apple has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank  stocks here.

Digi International Inc. (DGII - Free Report) is a leading global provider of business and mission-critical IoT products and services. They help their customers create next-generation connected products, and deploy and manage critical communications infrastructures in demanding environments with high levels of security.

The company’s expected earnings growth rate for next year is 77.3%. The Zacks Consensus Estimate for current-year earnings has improved 100% over the past 60 days.  The company carries a Zacks Rank #2.

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