COVID-19 has significantly accelerated the demand for digital platforms as people are working and learning from home to stay functional. The convergence of technological development and changing customer behavior, while adjusting to the “new normal” has been a huge boon for the tech industry.
With the threat of a second wave of coronavirus hitting the United States after raging through European and Asian countries, a second round of lockdown is likely to be reinstated soon to curb the spread. With a drop in temperature making people more susceptible to the disease, people are expected to stay at home willingly or by federal decree in the near future.
With people depending more on a virtual way of living, and businesses making permanent changes to operations to stay functional, tech stocks such as Amphenol Corporation (APH), Synopsys, Inc. (SNPS), and Cadence Design Systems, Inc. (CDNS) should witness solid growth in the near future.
Amphenol Corporation (APH)
APH is a producer and designer of electronic and fiber optic connectors operating in two segments - Interconnect Products and Assemblies, and Cable Products and Solutions. The company sells its products to military-aerospace, information technology, medical, automotive, wireless mobile devices, and infrastructure industries internationally.
Earlier this year, APH raised approximately $500 million through a senior note offering. The company plans to utilize a part of its net proceeds to redeem outstanding senior notes due in 2026. This should help the company significantly reduce its interest burden because the interest borne by the older senior notes were higher than the newly issued unsecured senior notes.
On June 3rd, APH presented its Sustainability Report of 2019 drawing attention to its success in the fields of supply chain, resource efficiency, product impact, governance and employee engagement.
APH’s net sales increased 10.5% year-over-year to $2.32 billion in the third quarter that ended September 2020. Net income grew 23.7% from the prior-year quarter to $346.60 million. Gross profit rose 11% from the year-ago value to $734.90 million, while EPS rose 22.1% from the prior-year quarter to $1.16.
The consensus EPS estimate of $1.01 for the fourth quarter ending December 2020 indicates a 3.1% improvement year-over-year. Moreover, APH beat the street EPS estimates in three out of trailing four quarters, which is impressive. The consensus revenue estimate of $2.22 billion for the ongoing quarter indicates 3.1% growth from the same period last year. APH has gained 9.2% year-to-date.
How does APH stack up for the POWR Ratings?
A for Trade Grade
A for Buy & Hold Grade
A for Peer Grade
B for Industrial Rank
A for Overall POWR Rating.
The stock is also ranked #1 out of the 38 stocks in the Technology-Electronics industry.
Synopsys, Inc. (SNPS)
Synopsys is an electronic design automation company focusing on silicon designing and testing and software security. The company produces hardware description language and transistor-level circuit simulators. It also provides IP solutions and subsystems for audio, sensor, and data fusion functionality.
SNPS partnered with IBM Research's AI Hardware Center to build methodologies of next generation AI chips.
On October 22nd, SNPS announced that its 3D Compiler Solutions facilitated Samsung’s implementation of advanced high-bandwidth memories in a single package. This recent collaboration has given a boost to Samsung’s design productivity while reducing its turnaround time from months to hours.
On October 14th, SNPS announced its strategic alliance with SiMa.ai so that its machine learning inference can be delivered at scale to the embedded edge. The company has provided SiMa.ai some of its major products such as, Fusion Design Platform, Designware IP and Verification Continuum Platform
In SNPS’s fiscal third quarter that ended July 2020, revenue increased 13% year-over-year to $964.13 million. GAAP net income rose 153.1 % from the year-ago value to $252.91 million, while EPS grew 149.3% from the same period last year to $1.67.
The consensus EPS estimate of $1.57 for the fiscal fourth quarter that ended October 2020 indicates a 36.5% improvement year-over-year. Moreover, SNPS beat the street EPS estimates in each of the trailing four quarters, which is impressive. The consensus revenue estimate of $1.03 billion for the about to be reported quarter indicates 20.5% growth from the same period last year.
SNPS has gained 68.9% year-to-date. It’s no surprise that SNPS is rated “Buy” in our POWR Ratings system. It has an “A” for Trade Grade and Peer Grade, and a “B” for Buy & Hold Grade and Industry Rank. Among the 30 stocks in the Technology-Hardware industry, it is ranked #4.
Cadence Design Systems, Inc. (CDNS)
CDNS is an electronic design automation software and engineering services company providing functional verification, hardware prototyping, and emulation services internationally. They key products of the company include silicon structures for integrated circuit designs, software, hardware, and intellectual property products.
CDNS recently announced its collaboration with Samsung to produce an integrated flow for the purpose of designing next generation mobile, automotive, AI and other developing applications. This partnership allows the users to improve their productivity, while fulfilling market challenges.
On September 24th, CDNS announced that it has joined hands with GlobalFoundries (GF) to provide their mutual customers with high-performance SerDes, as well as memory interfaces, which could support the creation of high-performance aerospace, computing and defense applications, cloud/data center servers and AI accelerators.
CDNS’s revenue increased 15% year-over-year to $666.61 million in the third quarter that ended September 2020. Net income rose 59.2% from the year-ago value to $161.63 million. EPS increased 59.5% from the prior-year quarter to $0.59. The company reported a gross operating margin of 25% for this period, up 400 basis points from the same period last year.
The consensus EPS estimate of $0.74 for the fourth quarter ending December 2020 indicates a 37% improvement year-over-year. CDNS has an impressive earnings surprise history as well, as it beat the street EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $732.01 million for the current quarter indicates a 22.1% increase year-over-year.
CDNS has gained 74.2% year-to-date. CDNS’s strong fundamentals are reflected in its POWR Ratings. It has a “Buy” rating with an “A” in Trade Grade and Peer Grade, and a “B” in Buy and Hold Grade and Industry Rank. It is ranked #5 out of 30 stocks in the Technology-Hardware industry.
Want More Great Investing Ideas?
Why is the Stock Market Tanking Now?
7 Best ETFs for the NEXT Bull Market
5 WINNING Stocks Chart Patterns
APH shares were trading at $116.88 per share on Wednesday afternoon, up $0.38 (+0.33%). Year-to-date, APH has gained 8.88%, versus a 9.17% rise in the benchmark S&P 500 index during the same period.
About the Author: Imon Ghosh
Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization.
The post 3 "Strong Buy" Tech Stocks to Buy in November appeared first on StockNews.com