3 Tech Stocks to Buy and Hold for the Long-Term
Because the demand for advanced technology solutions is expected to continue rising with digital transformation in almost every industry, we think it...
Because the demand for advanced technology solutions is expected to continue rising with digital transformation in almost every industry, we think it could be wise to buy and hold fundamentally strong tech stocks AudioCodes (AUDC), Kimball Electronics (KE), and Issuer Direct (ISDR). Let’s discuss.
It’s no surprise that the demand for advanced technology-based products and services has increased exponentially amid the COVID-19 pandemic. As COVID-19 cases continue to rise and several industries undergo a digital transformation, the technology industry could continue growing for the foreseeable future. Investors’ interest in tech stocks is evidenced by the technology Select Sector SPDR Fund’s (XLK) 16% gains over the past three months.
Last week, the tech-heavy Nasdaq hit a record high as the Federal Reserve’s comments eased fears of a sudden tapering of monetary stimulus and boosted optimism around the economic recovery. Furthermore, with technology playing a pivotal role in enabling remote work and digitalization, the industry is expected to grow. According to a Gartner, Inc. (IT) report, governments globally are expected to spend $557.3 billion in 2022 on information technology, representing a 6.5% year-over-year rise.
Therefore, it could be wise to bet on quality tech stocks AudioCodes Ltd. (AUDC), Kimball Electronics, Inc. (KE), and Issuer Direct Corporation (ISDR). They are expected to perform well for the foreseeable future due to their promising product portfolios and continuing innovations.
AudioCodes Ltd. (AUDC)
Headquartered in Lod, Israel, AUDC is a leading provider of advanced communications software, products, and productivity solutions for the digital workplace. The company’s broad portfolio of products and services includes Media Gateways, IP Phones, Media Servers, Value Added Applications, and Professional Services.
In the second quarter, AUDC bought back 236,544 of its shares under its share repurchase program for $7.1 million. In addition, the company paid a $0.17 quarterly dividend per share on August 26. It has increased its dividends for the past three years, which represents its financial strength.
AUDC’s total revenue increased 13.2% year-over-year to $60.58 million for its fiscal second quarter ended June 30, 2021. The company’s operating income came in at $10.13 million, representing a 14.6% year-over-year rise. Its non-GAAP net income increased 20.8% year-over-year to $12.67 million. And its non-GAAP EPS was $0.37, up 15.6% year-over-year.
In terms of trailing-12-month gross profit margin, AUDC's 69.11% is 40.9% higher than the 49.04% industry average. In addition, the stock's trailing-12-month ROCE and ROTA of 16.67% and 9.45%, respectively, are higher than the 8.25% and 3.57% industry averages.
For its fiscal 2022, analysts expect AUDC’s revenue to be $275.94 million, representing an 11.9% year-over-year rise. The company’s EPS is expected to increase 7.9% year-over-year to $1.64 in its fiscal 2022. In addition, it surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past six months, the stock has gained 18.6% in price to close yesterday’s trading session at $32.79.
AUDC’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Also, the stock has an A grade for Quality, and a B grade for Stability and Sentiment. Within the B-rated Technology-Communication/Networking industry, it is ranked #3 of 55 stocks. Click here to see the additional POWR Ratings for Growth, Value, and Momentum for AUDC.
Kimball Electronics, Inc. (KE)
KE is an electronics manufacturing company that serves customers in the automotive, medical, industrial, and public safety end markets. The Jasper, Ind.-based concern operates across the United States, China, Mexico, Poland, Romania, Thailand, and Vietnam. In addition, its manufacturing services include mainly software design capabilities and production and the testing of printed circuit board assemblies (PCBAs).
On August 20, 2021, KE launched Kimball Medical Solutions, which is expected to provide its medical customers a full-service approach across all its capabilities. The company’s Chairman and CEO, Don Charron, said, “Our unified approach to providing innovative solutions and specialized services for the medical market from all of our areas of expertise and capabilities will enable our medical customers to increase their speed to market. We want Kimball Medical Solutions to be a single-source for our customers’ medical manufacturing needs.”
KE’s total revenues increased 15% year-over-year to $329.13 million in its fiscal fourth quarter, ended June 30, 2021. Its non-GAAP operating income came in at $17.97 million, representing a 66.2% year-over-year rise. Its non-GAAP net income increased 72.1% year-over-year to $14.71 million, while its non-GAAP EPS was $0.58, representing a 70.6% year-over-year rise.
In terms of trailing-12-month ROTC, KE's 8.29% is 74.5% higher than the 4.75% industry average. In addition, the stock's trailing-12-month ROCE and ROTA of 13.81% and 6.98%, respectively, are also higher than the 8.25% and 3.57% industry averages.
Analysts expect KE’s revenue to grow 11.9% year-over-year to $1.45 billion in its fiscal year 2022. In addition, the company’s EPS is expected to increase 89.1% year-over-year to $2.08 in the current year. Also, it surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past nine months, the stock has gained 52.8% in price to close yesterday’s trading session at $24.40.
KE’s strong fundamentals are reflected in its POWR ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system.
In addition, it has a B grade for Value, Stability, Sentiment, and Quality. It is ranked #5 of 45 stocks in the B-rated Technology-Electronics industry. Click here to see the additional POWR Ratings for KE (Growth and Momentum).
Issuer Direct Corporation (ISDR)
ISDR in Raleigh N.C., provides shareholder communications and compliance platforms, technologies, and services mainly to the public and private companies, law firms, brokerage firms, and investment banks. Its lead platform—Platform id—helps its customers manage events and distribute their messages to constituents, investors, markets, and regulatory systems.
Last month, ISDR upgraded its ACCESSWIRE platform with its all-new subscription add-on Newsroom Suite. The company’s founder and CEO, Brian Balbirnie, said, “This suite of products is going to help our customers expand their storytelling process into a brand-building phase on our platform.”
For its fiscal second quarter, ended June 30, 2021, ISDR’s net revenue increased 17.1% year-over-year to $5.72 million. Its non-GAAP net income was $1.19 million, up 21.7% year-over-year. Also, its non-GAAP EPS increased 19.2% from the same period last year to $0.31. Its EBITDA was $1.64 million, up 21.2% year-over-year.
In terms of its trailing-12-month gross profit margin, ISDR's 72.09% is 47% higher than the 49.04% industry average. In addition, the stock's 9.82% and 7.41% respective trailing-12-month ROCE and ROTA are higher than the 8.25% and 3.57% industry averages.
ISDR’s revenue is expected to be $24.66 million in its fiscal year 2022, representing a 14.5% year-over-year rise. In addition, the company’s EPS is expected to increase 23.7% year-over-year to $0.99 in the current year. Also, it surpassed Street EPS estimates in three of the trailing four quarters. Over the past nine months, the stock has gained 44.5% in price to close yesterday’s trading session at $27.86.
It’s no surprise that ISDR has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has an A grade for Sentiment, and a B grade for Stability, Value, and Quality.
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AUDC shares were unchanged in premarket trading Thursday. Year-to-date, AUDC has gained 20.30%, versus a 21.39% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.