With investors fretting over whether rising inflation will entrench itself or blow over as per the Federal Reserve’s expectations, tech stocks have been taking a big hit. Although a weaker-than-expected April jobs report, which eased concerns about the potential for a central bank policy change, helped tech stocks rally briefly, the sector remains extremely volatile.
But while certain higher-priced technology stocks have experienced the most losses, some are still advancing on investors’ optimism over the industry’s bright long-term prospects.
Continued digitization and rising demand for advanced technologies from almost all industries should keep driving growth in the tech space. Amid current market volatility, we think it is wise to invest in fundamentally-sound technology stocks Motorola Solutions, Inc. (MSI) and NortonLifeLock Inc. (NLOK), which have recently hit their 52-week highs.
Motorola Solutions, Inc. (MSI)
Formerly known as Motorola, Inc., Motorola Solutions is a global leader in mission-critical communications and analytics. The company operates in two segments, Products and Systems Integration, and Services and Software, and offers products including devices, accessories, video security equipment and infrastructure, mobile video cameras and accessories.
MSI’ total sales increased 6.6% year-over-year to $1.77 billion in the first quarter, ended April 3, 2021. Its gross margin grew 9.3% from its year-ago value to $860 million, while its operating earnings increased 15.1% year-over-year to $298 million over this period. Its net earnings increased 23.7% year-over-year to $245 million. The company reported EPS of $1.41 for this period, compared to $1.12 in the prior-year quarter.
A $1.94 billion consensus revenue estimate for the current quarter, ending June 2021 represents a 19.7% improvement year-over-year. The $1.92 consensus EPS estimate for the current quarter represents a 38.1% increase from the same period last year. The stock has gained 51.2% over the past year. The stock hit its 52- week high of $204.89 in today’s trading session.
MSI’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
MSI is also rated a B in Sentiment, Quality and Growth. Within the B-rated Technology - Communication/Networking industry, it is ranked #4 of 55 stocks. To see additional POWR Ratings for Momentum, Stability and Value for MSI, Click here.
NortonLifeLock Inc. (NLOK)
NLOK is a global leader in consumer cybersecurity. The company offers Norton 360, an integrated platform that provides extensive cyber safety coverage along with a subscription service. It also provides Norton Secure VPN solution that enhances security and online privacy, Privacy Monitor Assistant--an on-demand white glove service, Home Title Protect product that detects fraud and notifies members, and Avira Security, a consumer-focused portfolio of cybersecurity and privacy solutions.
This month, 3BL Media has rewarded NLOK an annual 100 Best Corporate Citizens ranking, recognizing outstanding environmental, social and governance (ESG) transparency and performance among the 1,000 largest U.S. public companies. The recognition reaffirms NLOK’s ongoing commitment to corporate responsibility as a core value and will help in the continued growth of the business.
In its fiscal fourth quarter, ended April 2, 2021, NLOK’s net revenue increased 9.4% year-over-year to $672 million. Its gross profit increased 10.8% from the year-ago value to $573 million, while its operating income grew 504.5% year-over-year to $266 million. The company’s income from continuing operations came in at $208 million, representing a 39.6% increase year-over-year.
Analysts expect NLOK’s revenue for the current quarter, ending June 2022 to be $684.68 million, representing 14.2% year-over-year growth. The company’s EPS is likely to increase 32.3% year-over-year to $0.41 in the current quarter. NLOK has gained 35.9% over the past year. The stock hit its 52-week high of $27.75 in today’s trading session.
It is no surprise that NLOK has an overall B grade, which equates to Buy in our proprietary ratings system. It has an A grade for Quality, and a B grade for Sentiment and Growth. In the Software - Security industry, it is ranked #1 of 24 stocks.
In total, we rate NLOK on eight different levels. Beyond what we’ve stated above, we have also given NLOK grades for Momentum, Stability and Value. Get all the NLOK ratings here.
Click here to check out our Software Industry Report for 2021
MSI shares were unchanged in after-hours trading Tuesday. Year-to-date, MSI has gained 20.35%, versus a 12.23% rise in the benchmark S&P 500 index during the same period.
About the Author: Samiksha Agarwal
Samiksha Agarwal has always had a keen interest in financial markets. This has led her to a career as a financial journalist. Through her extensive knowledge of fundamental analysis, her goal is to help investors identify untapped investment opportunities in the stock market.
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