Although the benchmark stock indexes rallied following the Federal Reserve’s interest rate increase by half a percentage point on Wednesday, worries over the potential for further monetary policy tightening and intensifying supply chain disruptions to push the economy into recession weighed heavily on market sentiment yesterday. The major benchmark indexes saw their worst losing day this year. The Wall Street fear gauge CBOE Volatility index has increased more than 100% year-to-date.
Since technology has been one of the worst-hit sectors, many high-quality tech stocks have now entered oversold territory. However, a growing reliance on tech products and solutions and increasing corporate and government investments to encourage the development of next-generation or efficient products should keep driving the industry’s growth.
Therefore, we think beaten-down tech stocks Micron Technology, Inc. (MU), Infineon Technologies AG (IFNNY), Jabil Inc. (JBL), F5 Networks, Inc. (FFIV), and Cirrus Logic, Inc. (CRUS), which have the potential to rebound soon, could be solid bets now.
Micron Technology, Inc. (MU)
MU designs, manufactures, and sells memory and storage products worldwide. The Boise, Idaho-based company operates through computer and networking, mobile, storage, and embedded business units. It sells dynamic random access memory chips (DRAMs), static random access memory chips (SRAMs), flash memory, semiconductor components, and memory modules to various end markets.
On March 22, 2022, regulated electrical power utility Idaho Power partnered with MU to facilitate the construction of a new 40-megawatt (MW) solar project. Idaho Power has asked the Idaho Public Utilities Commission (IPUC) to approve a power purchase agreement with oil & gas exploration and production company Black Mesa Energy, LLC, to develop a dedicated solar facility for MU’s renewable energy use. This project supports MU’s goal to source 100% renewable energy for its U.S. operations by the end of 2025.
For its fiscal year 2022 second quarter, ended March 3, 2022, MU’s revenue increased 24.9% year-over-year to $7.79 billion. The company’s non-GAAP gross profit came in at $3.62 billion, up 81.3% from its year-ago period. Its non-GAAP operating income came in at $2.75 billion, indicating a 118.8% rise from the prior-year period. MU’s non-GAAP net income has increased 116.7% year-over-year to $2.44 billion. Its non-GAAP EPS came in at $2.14, representing a 118.4% year-over-year improvement. As of March 3, 2022, the company had $9.12 billion in cash and equivalents.
Analysts expect MU’s EPS to grow 58.1% year-over-year to $9.58 for its fiscal year 2022, ending Aug.31, 2022. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The $33.70 billion consensus revenue estimate for the same fiscal year represents a 21.6% rise from the prior-year period. The company’s EPS is expected to grow at a 29.7% rate per annum over the next five years.
MU’s trailing-12-month gross profit margin, EBITDA margin, and ROE are 46%, 54.8%, and 20.4%, respectively. The stock has declined 4.5% in price over the past month. It closed yesterday’s trading session at $71.29, down 27.6% from its 52-week high of $98.45.
MU’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has an A grade for Value and a B grade for Growth and Quality. Click here to see the additional ratings for MU’s Stability, Sentiment, and Momentum. MU is ranked #6 of 96 stocks in the B-rated Semiconductor & Wireless Chip industry.
Click here to checkout our Semiconductor Industry Report for 2022
Infineon Technologies AG (IFNNY)
Headquartered in Munich, Germany, IFNNY designs, manufactures, and markets semiconductors and related system solutions worldwide. The company offers power semiconductors, microcontrollers, security controllers, radio frequency products, and sensors. It markets its products to the automotive, industrial, communications, and consumer and security electronics sectors.
On April 12, 2022, IFNNY’s PT Infineon Technologies Batam in Indonesia announced that it had purchased real estate from PT Unisem, a member of global semiconductor assembly and test services provider Unisem Group, to expand its existing backend operations. This should help IFNNY increase its focus on the assembly and test of automotive products and strengthen its global presence.
IFNNY’s revenue for its fiscal year 2022 first quarter, ended Dec. 31, 2021, increased 35.5% year-over-year to €3.16 billion ($3.34 billion). The company’s gross profit came in at €1.31 billion ($1.39 billion), up 33.2% from the prior-year period. Its operating profit increased 85.8% year-over-year to €617 million ($651.50 million). While its adjusted net earnings increased 47% year-over-year to €532 million ($561.75 million), its adjusted EPS grew 46.4% to €0.41. The company had €2 billion ($2.11 billion) in cash and cash equivalents as of Dec. 31, 2021.
Analysts expect the company’s EPS to hit $1.87 for its fiscal 2022, ending Sept. 30, 2022, representing a 30.8% rise from the prior-year period. The $14.17 billion consensus revenue estimate for the same fiscal year indicates a 7.2% year-over-year improvement. Analysts expect IFNNY’s EPS to improve at a 20.9% rate per annum over the next five years.
IFNNY’s trailing-12-month gross profit margin, EBITDA margin, and ROE are 39.7%, 29.9%, and 12.4%, respectively. The stock has declined 9.8% in price over the past month. It ended yesterday’s trading session at $28.78, down 42.4% from its 52-week high of $49.99.
IFNNY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
It has a B grade for Growth, Value, and Stability. Click here to see the additional ratings for IFNNY (Quality, Sentiment, and Momentum). IFNNY is ranked #12 of 96 stocks in the Semiconductor & Wireless Chip industry.
Click here to checkout our Semiconductor Industry Report for 2022
Jabil Inc. (JBL)
JBL provides electronic design and manufacturing services and solutions worldwide. The St. Petersburg, Fla., company provides systems assembly, regulatory compliance, reliability tests, direct-order fulfillment, and configure-to-order services. It serves 5G, wireless and cloud, digital print and retail, industrial and semi-cap, networking and storage, automotive and transportation, connected devices, healthcare and packaging, and mobility industries.
On April 12, 2022, JBL announced the formation of the Jabil Payment Solutions business unit to speed the development and delivery of leading-edge payment and point-of-sale (POS) platforms. Accelerated by the recent acquisition of YouTransactor SAS, a leading technology provider for mobile payment terminals, Jabil Payment Solutions will be able to meet the unprecedented demand for cashless, contactless transactions and in-store, custom solutions for small and midsize businesses.
For its fiscal year 2022 second quarter, ended February 28, 2022, JBL’s net revenue increased 10.6% year-over-year to $7.55 billion. The company’s gross profit came in at $609 million, up 7% from its year-ago period. Its non-GAAP operating income was $344 million for the quarter, indicating a 20.7% year-over-year improvement. JBL’s non-GAAP net income came in at $246 million, representing a 26.8% rise from the prior-year period. And its non-GAAP EPS increased 32.3% year-over-year to $1.68. The company had $1.09 billion in cash and equivalents as of Feb. 28, 2022.
Analysts expect the company’s EPS to improve 29.4% year-over-year to $7.26 in its fiscal 2022, ending August 31, 2022. It surpassed the Street’s EPS estimates in each of the trailing four quarters. The $32.70 billion consensus revenue estimate for the same fiscal year represents an 11.7% rise from the prior-year period. The company’s EPS is expected to grow at a 12% rate per annum over the next five years.
JBL’s trailing-12-month gross profit margin, EBITDA margin, and ROE are 7.9%, 6.9%, and 36.4%, respectively. The stock closed yesterday’s trading session at $58.41, down 19% from its 52-week high of $72.11.
JBL’s POWR Ratings reflect its solid prospects. It has an overall A rating, which equates to Strong Buy in our proprietary rating system.
The stock has an A grade for Sentiment and a B grade for Growth, Value, and Quality. In addition to the POWR Ratings grades we have just highlighted, one can see the ratings for JBL’s Momentum and Stability here. JBL is ranked #6 of 81 stocks in the Technology - Services industry.
F5 Networks, Inc. (FFIV)
FFIV in Seattle, Wash., provides multi-cloud application services for the security, performance, and availability of network applications, servers, and storage systems. The company also offers a range of professional services, including consulting, installation, maintenance, and other technical support services. It sells its products to large enterprise businesses, public sector institutions, governments, and service providers through distributors, value-added resellers, managed service providers, and systems integrators.
On April 5, 2022, Japanese e-commerce retailer Rakuten Group, Inc.’s (RKUNY) mobile telecom company Rakuten Symphony announced that it will make available FFIV’s new BIG-IP Next Cloud-Native Network Functions (CNFs) in its Rakuten Symphony Symworld marketplace. This collaboration aims to accelerate and simplify the process for telecom operators through cloud-native functions and a delivery model that reduces application deployment from months and years to minutes and hours. This gives FFIV quicker access to the market and offers telecom operators a vastly improved network update cadence, critical for ensuring security.
FFIV’s income from operations for its fiscal 2022 first quarter, ended March 31, 2022, increased 39.5% year-over-year to $74.65 million. The company’s net income came in at $56.24 million, up 30.1% from the year-ago period. Its EPS came in at $0.92, representing a 31.4% rise from the prior-year period. The company had $586.54 million in cash and cash equivalents as of March 31, 2022.
Analysts expect the stock’s revenue to improve 3.1% year-over-year to $2.68 billion for its fiscal 2022, ending Sept. 30, 2022. The company surpassed the Street’s EPS estimates in each of the trailing four quarters. FFIV’s EPS is expected to grow at an 8.7% rate per annum over the next five years.
FFIV’s trailing-12-month gross profit margin, EBITDA margin, and ROE are 80.7%, 20.3%, and 15.9%, respectively. The stock has declined 20.1% over the past month. It ended yesterday’s trading session at $170.63, down 31.5% from its 52-week high of $249.
FFIV’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, which equates to Buy in our proprietary rating system.
The stock has an A grade for Quality and a B grade for Value. Click here to see the additional ratings for FFIV (Growth, Sentiment, Stability, and Momentum). The stock is ranked #7 of 59 stocks in the Software - Business industry.
Click here to check out our Software Industry Report for 2022
Cirrus Logic, Inc. (CRUS)
CRUS provides integrated circuits (ICs) for audio and voice signal processing applications. The Austin, Tex., company offers portable products in smartphones, tablets, digital headsets, and wearables. Its non-portable audio and other products include analog and mixed-signal components that target the consumer market, including smart home applications and the automotive, energy, and industrial markets.
On July 8, 2021, CRUS agreed to acquire Lion Semiconductor, an electronic parts supplier, for $335 million in cash. The acquisition affords CRUS access to Lion’s proprietary fast-charging products and robust intellectual property portfolio and accelerates its growth in the high-performance mixed-signal business.
CRUS’ net sales for its fiscal 2022 fourth quarter, ended March 26, 2022, increased 66.9% year-over-year to $489.97 million. The company’s non-GAAP gross profit came in at $258.99 million, representing a 74.6% rise from the prior-year period. Its non-GAAP operating income was $135.94 million, up 220.6% from the year-ago period. While its non-GAAP net income increased 196.3% year-over-year to $117.71 million, its non-GAAP EPS increased 204.6% to $2.01. The company had $369.81 million in cash and cash equivalents as of March 26, 2022.
Analysts expect the company’s revenue to reach $1.82 billion for its fiscal year 2023, ending March 31, 2022, representing a 2.2% rise from the prior-year period. It surpassed the Street’s EPS estimates in each of the trailing four quarters, which is impressive. CRUS’ EPS is expected to grow at a 10.7% rate per annum over the next five years.
CRUS’ trailing-12-month gross profit margin, EBITDA margin, and ROE are 52%, 24.2%, and 21.8%, respectively. The stock has declined 12.8% in price year-to-date. It ended yesterday’s trading session at $80.26, down 16.3% from its 52-week high of $95.84.
CRUS’ strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which equates to Buy in our proprietary rating system.
The stock has a B grade for Value and Sentiment. Click here to see the additional ratings for CRUS (Momentum, Quality, Stability, and Growth). CRUS is ranked #31 in the Semiconductor & Wireless Chip industry.
Click here to checkout our Semiconductor Industry Report for 2022
MU shares were trading at $70.37 per share on Friday afternoon, down $0.92 (-1.29%). Year-to-date, MU has declined -24.35%, versus a -13.39% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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