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The Zacks Analyst Blog Highlights InterDigital, Infineon, NetEase, Perion Network and Vertiv Holdings
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For Immediate Release
Chicago, IL – June 30, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: InterDigital, Inc. (IDCC - Free Report) , Infineon Technologies AG (IFNNY - Free Report) , NetEase, Inc. (NTES - Free Report) , Perion Network Ltd. (PERI - Free Report) and Vertiv Holdings Co. (VRT - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
5 Good Reasons to Buy Tech Stocks Today
If there’s one sector that consistently generates strong capital appreciation, it’s technology.
A quick look at the sector’s performance with the Technology Select Sector SPDR ETF as a benchmark, we see that the ETF has appreciated 14.7% in the last three months, 37.3% year-to-date, 34.4% in the past year, 63.5% in the last three years, 143.7% in the last five years, 440.9% in the last 10 years and 862.4% in the last 20 years. This has included a huge financial meltdown in 2008-09 and a health induced pullback in 2020. Although it would be incorrect to say that the sector isn’t affected by these events, it’s worth noting that it has always bounced back in a V-shaped recovery.
For comparison, let’s see what the S&P 500, which includes some of the biggest technology stocks, did during the same time periods. The index has seen increases of 8.5% in the last three months, 15.0% year-to-date, 15.7% in the past year, 42.4% in the last three years, 63.0% in the last five years, 168.0% in the last 10 years and 351.2% in the last 20 years.
Undoubtedly, the tech sector has solidly beaten the S&P 500 -- consistently and over a significant number of years. Therefore, any time is a good time to invest in technology.
Other than its solid performance, and in order to explain it, here are five good reasons to buy tech today:
Opportunity to Invest in Innovation
While there’s a certain amount of innovation involved in most industries in that we are constantly finding better and more efficient ways to do things, many of these are technological innovations. It is the adoption of technology across various sectors that is making them more efficient.
Additionally, the tech sector itself constantly innovates to be more and do more than it did yesterday. That’s why we are trying to cram more transistors on a chip, that’s why we are moving from EUV to DUV lighting, from 3D NAND to 4D NAND, from traditional software licensing to SaaS, from feature phone to smartphone, from smartphone to IoT, from encyclopedias to Google search, the list is endless.
Anybody looking to invest in the future should be investing in innovation because that’s what builds the future. If you’re invested in the future, chances are your portfolio will be where it needs to be over time.
Growth Opportunity
Technology is one sector that continues to evolve as we speak. The artificial intelligence market for example was not seen nor heard of just 20 years ago. Yet with the advent of generative AI and NLP, that is an important element of every company’s future plans. The development is so significant that companies all over the world have to prepare for it. Similarly for EVs and AVs.
At the same time, there are many tech companies being born today that will be AI giants tomorrow. Companies and governments alike are pouring money into it and will continue to do so in the foreseeable future. Therefore, this is one industry, where you will always have growth. There will always be these new, novel ideas that people come up with. Some will be earth-shattering, paradigm altering. Others may be flops. But this is where the action is.
Opportunity to Tap the Natural Demographic Advantage
In most sectors, there is considerable focus on capturing the imagination of the next generation. Product lines are altered to appeal to younger generations. Promotions are geared towards them. Considerable marketing efforts are expended on future sales plans. The tech sector benefits from the fact that younger generations tend to be more interested in trying new stuff, particularly technology and are totally comfortable in a tech-driven atmosphere. This is a natural advantage that the sector enjoys.
Opportunity to Benefit from Strong Financials
Every successful tech idea generates huge profits for the company that uncovers it. That’s why some of these technology companies have grown so big that they command more resources than many small countries. Because of their platforms, they have tremendous control over people and outcomes, whether financial, social, developmental or political. All of this stems from the huge amounts of cash that technology companies can generate on relatively low fixed asset outlay. This is a model worth investing in.
Tech Stocks for Today
While there are many technology stocks that you may be interested in, here are a few that look good right now:
InterDigital, Inc.
Wilmington, DE-based InterDigital is a technology company that focuses on designing and developing wireless communication technologies, specifically, digital cellular and wireless products and networks, including 2G, 3G, 4G and 5G that are incorporated into consumer electronic products like smartphones, tablets, televisions and gaming consoles. Its AI R&D has expanded its offerings to video coding and transmission technologies.
The company has grown its earnings 15.6% in the last five years and is on track to grow another 13.9% in the next five.
In the last quarter, the company beat estimates by 579.0%, after which its 2023 and 2024 estimates jumped 248.3% and 81.3%, respectively. Although current estimates call for a decline in 2024, these are still early days to be getting firm on that number.
InterDigital shares trade at a 15.95X multiple to its earnings potential in the current year. The shares are currently trading at a slight discount to industry and a 17.7% discount to the S&P 500. Given its track record and growth potential, as well as the cheap valuation, the shares are definitely worth buying.
Infineon Technologies AG
Neubiberg, Germany-based Infineon Technologies AG is a semiconductor company that designs, develops and markets a broad range of semiconductors and system solutions including microcontrollers, sensors, power semiconductors, modules, driver ICs and connectivity solutions. Its products are used in various applications, such as automotive electronics, industrial drives, home appliances, power supplies, robotics, mobile devices, IoT and security systems.
Infineon’s earnings have grown 18.3% in the last five years. Analysts are currently looking for 16.4% growth over the long term.
In the last 60 days, estimates for the current year ending September are up 4.6% while those for the next year are up 5.6%. Earnings came in just ahead of estimates in the last quarter and given the history, there should be a similar report in the current quarter.
The valuation is also supportive. At 13.80X P/E, the shares trade at a 41.1% discount to the industry and a 28.8% discount to the S&P 500, indicating that the share are significantly undervalued.
NetEase, Inc.
Hangzhou, China-based NetEase has a number of online businesses, including online games, music streaming, intelligent learning services and other internet content services.
NetEase recorded 23.3% earnings growth in the last five years and analysts are looking for an average earnings growth of 13.2% in the next 3-5 years.
The company beat analyst estimates by 29.0% in the last quarter, so analysts have raised their estimates 6.2% for 2023 and 11.7% for 2024.
NTES shares are trading at a 35.1% discount to its industry and a 9.0% discount to the S&P 500. Therefore, the valuation is another indication that this is a good time to buy the shares.
Perion Network Ltd.
Holon, Israel-based Perion Network is a digital advertising solutions provider serving brands, agencies and publishers worldwide. The company offers various platforms and tools, including content monetization, search monetization, and cross-channel digital advertising software. Additionally, the company offers AI-based platforms for campaign optimization and an Intelligent HUB connecting the supply and demand sides of the marketplace.
Perion’s average 5-year earnings growth rate is 35.6% and analysts have made a conservative estimate of 25.0% earnings growth for the company in the long term.
In the last quarter, the company beat estimates by 15.4%. In the last 60 days, its estimates have increased by 5.6% for 2023 and by 5.5% for 2024.
PERI shares trade at a 53.6% discount to the industry to which it belongs and a 41.8% discount to the S&P 500. Therefore, the shares are worth considering.
Vertiv Holdings Co.
Westerville, OH-based Vertiv Holdings specializes in designing, manufacturing and servicing critical digital infrastructure technologies and life cycle services. Its offerings cater to data centers, communication networks, and commercial and industrial environments. Its products are used in social media, finance, healthcare, transportation, retail, education and government sectors.
Vertive has grown its earnings 63.3% in the last five years. In the next five years, it is expected to grow 40.8%.
The last quarter’s earnings surprise was a whopping 41.2%. Estimate revisions have however been relatively muted. For 2023, estimates are up a mere 4 cents (3.3%). For 2024, they’re up 10 cents (7.5%).
The shares are trading at a 42.6% discount to the industry and a 10% discount to the industry. Therefore, valuation is attractive.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights InterDigital, Infineon, NetEase, Perion Network and Vertiv Holdings
For Immediate Release
Chicago, IL – June 30, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: InterDigital, Inc. (IDCC - Free Report) , Infineon Technologies AG (IFNNY - Free Report) , NetEase, Inc. (NTES - Free Report) , Perion Network Ltd. (PERI - Free Report) and Vertiv Holdings Co. (VRT - Free Report) .
Here are highlights from Thursday’s Analyst Blog:
5 Good Reasons to Buy Tech Stocks Today
If there’s one sector that consistently generates strong capital appreciation, it’s technology.
A quick look at the sector’s performance with the Technology Select Sector SPDR ETF as a benchmark, we see that the ETF has appreciated 14.7% in the last three months, 37.3% year-to-date, 34.4% in the past year, 63.5% in the last three years, 143.7% in the last five years, 440.9% in the last 10 years and 862.4% in the last 20 years. This has included a huge financial meltdown in 2008-09 and a health induced pullback in 2020. Although it would be incorrect to say that the sector isn’t affected by these events, it’s worth noting that it has always bounced back in a V-shaped recovery.
For comparison, let’s see what the S&P 500, which includes some of the biggest technology stocks, did during the same time periods. The index has seen increases of 8.5% in the last three months, 15.0% year-to-date, 15.7% in the past year, 42.4% in the last three years, 63.0% in the last five years, 168.0% in the last 10 years and 351.2% in the last 20 years.
Undoubtedly, the tech sector has solidly beaten the S&P 500 -- consistently and over a significant number of years. Therefore, any time is a good time to invest in technology.
Other than its solid performance, and in order to explain it, here are five good reasons to buy tech today:
Opportunity to Invest in Innovation
While there’s a certain amount of innovation involved in most industries in that we are constantly finding better and more efficient ways to do things, many of these are technological innovations. It is the adoption of technology across various sectors that is making them more efficient.
Additionally, the tech sector itself constantly innovates to be more and do more than it did yesterday. That’s why we are trying to cram more transistors on a chip, that’s why we are moving from EUV to DUV lighting, from 3D NAND to 4D NAND, from traditional software licensing to SaaS, from feature phone to smartphone, from smartphone to IoT, from encyclopedias to Google search, the list is endless.
Anybody looking to invest in the future should be investing in innovation because that’s what builds the future. If you’re invested in the future, chances are your portfolio will be where it needs to be over time.
Growth Opportunity
Technology is one sector that continues to evolve as we speak. The artificial intelligence market for example was not seen nor heard of just 20 years ago. Yet with the advent of generative AI and NLP, that is an important element of every company’s future plans. The development is so significant that companies all over the world have to prepare for it. Similarly for EVs and AVs.
At the same time, there are many tech companies being born today that will be AI giants tomorrow. Companies and governments alike are pouring money into it and will continue to do so in the foreseeable future. Therefore, this is one industry, where you will always have growth. There will always be these new, novel ideas that people come up with. Some will be earth-shattering, paradigm altering. Others may be flops. But this is where the action is.
Opportunity to Tap the Natural Demographic Advantage
In most sectors, there is considerable focus on capturing the imagination of the next generation. Product lines are altered to appeal to younger generations. Promotions are geared towards them. Considerable marketing efforts are expended on future sales plans. The tech sector benefits from the fact that younger generations tend to be more interested in trying new stuff, particularly technology and are totally comfortable in a tech-driven atmosphere. This is a natural advantage that the sector enjoys.
Opportunity to Benefit from Strong Financials
Every successful tech idea generates huge profits for the company that uncovers it. That’s why some of these technology companies have grown so big that they command more resources than many small countries. Because of their platforms, they have tremendous control over people and outcomes, whether financial, social, developmental or political. All of this stems from the huge amounts of cash that technology companies can generate on relatively low fixed asset outlay. This is a model worth investing in.
Tech Stocks for Today
While there are many technology stocks that you may be interested in, here are a few that look good right now:
InterDigital, Inc.
Wilmington, DE-based InterDigital is a technology company that focuses on designing and developing wireless communication technologies, specifically, digital cellular and wireless products and networks, including 2G, 3G, 4G and 5G that are incorporated into consumer electronic products like smartphones, tablets, televisions and gaming consoles. Its AI R&D has expanded its offerings to video coding and transmission technologies.
The company has grown its earnings 15.6% in the last five years and is on track to grow another 13.9% in the next five.
In the last quarter, the company beat estimates by 579.0%, after which its 2023 and 2024 estimates jumped 248.3% and 81.3%, respectively. Although current estimates call for a decline in 2024, these are still early days to be getting firm on that number.
InterDigital shares trade at a 15.95X multiple to its earnings potential in the current year. The shares are currently trading at a slight discount to industry and a 17.7% discount to the S&P 500. Given its track record and growth potential, as well as the cheap valuation, the shares are definitely worth buying.
Infineon Technologies AG
Neubiberg, Germany-based Infineon Technologies AG is a semiconductor company that designs, develops and markets a broad range of semiconductors and system solutions including microcontrollers, sensors, power semiconductors, modules, driver ICs and connectivity solutions. Its products are used in various applications, such as automotive electronics, industrial drives, home appliances, power supplies, robotics, mobile devices, IoT and security systems.
Infineon’s earnings have grown 18.3% in the last five years. Analysts are currently looking for 16.4% growth over the long term.
In the last 60 days, estimates for the current year ending September are up 4.6% while those for the next year are up 5.6%. Earnings came in just ahead of estimates in the last quarter and given the history, there should be a similar report in the current quarter.
The valuation is also supportive. At 13.80X P/E, the shares trade at a 41.1% discount to the industry and a 28.8% discount to the S&P 500, indicating that the share are significantly undervalued.
NetEase, Inc.
Hangzhou, China-based NetEase has a number of online businesses, including online games, music streaming, intelligent learning services and other internet content services.
NetEase recorded 23.3% earnings growth in the last five years and analysts are looking for an average earnings growth of 13.2% in the next 3-5 years.
The company beat analyst estimates by 29.0% in the last quarter, so analysts have raised their estimates 6.2% for 2023 and 11.7% for 2024.
NTES shares are trading at a 35.1% discount to its industry and a 9.0% discount to the S&P 500. Therefore, the valuation is another indication that this is a good time to buy the shares.
Perion Network Ltd.
Holon, Israel-based Perion Network is a digital advertising solutions provider serving brands, agencies and publishers worldwide. The company offers various platforms and tools, including content monetization, search monetization, and cross-channel digital advertising software. Additionally, the company offers AI-based platforms for campaign optimization and an Intelligent HUB connecting the supply and demand sides of the marketplace.
Perion’s average 5-year earnings growth rate is 35.6% and analysts have made a conservative estimate of 25.0% earnings growth for the company in the long term.
In the last quarter, the company beat estimates by 15.4%. In the last 60 days, its estimates have increased by 5.6% for 2023 and by 5.5% for 2024.
PERI shares trade at a 53.6% discount to the industry to which it belongs and a 41.8% discount to the S&P 500. Therefore, the shares are worth considering.
Vertiv Holdings Co.
Westerville, OH-based Vertiv Holdings specializes in designing, manufacturing and servicing critical digital infrastructure technologies and life cycle services. Its offerings cater to data centers, communication networks, and commercial and industrial environments. Its products are used in social media, finance, healthcare, transportation, retail, education and government sectors.
Vertive has grown its earnings 63.3% in the last five years. In the next five years, it is expected to grow 40.8%.
The last quarter’s earnings surprise was a whopping 41.2%. Estimate revisions have however been relatively muted. For 2023, estimates are up a mere 4 cents (3.3%). For 2024, they’re up 10 cents (7.5%).
The shares are trading at a 42.6% discount to the industry and a 10% discount to the industry. Therefore, valuation is attractive.
Why Haven’t You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.