The tech industry is inevitable for worldwide growth and development, thanks to the wide adoption of cutting-edge technologies like AI, integration of digital technologies and cloud computing.
Given the industry's rosy prospects, it could be wise to invest in fundamentally strong tech stocks NetScout Systems, Inc. (NTCT), AudioCodes Ltd. (AUDC), and AstroNova, Inc. (ALOT) which are currently trading under $20 and look poised for huge upside.
The tech industry is ever growing, with widespread prevalence and application of software development, cybersecurity, changing system, and enhanced modes of communication. With this rapid surge, Gartner expects the worldwide IT spending to grow 8% in the year to $5.06 trillion with rising spending on data center systems and planning for Generative AI.
The information technology market is expected to grow at a CAGR of 8.3% reaching $12.42 trillion by 2028 driven by globalized IT services, digital transformation, cybersecurity innovations, smart city development, and evolving e-commerce.
Also, rising demand for high-quality hardware to support robotics, cloud computing, edge computing, and smarter systems are boosting the IT hardware market, which is expected to reach $191.03 billion by 2029, growing at a CAGR of 7.9%.
Further, the overall tech market hinges on the development and evolution of Artificial Intelligence (AI). The AI market growth is expected to continue with the market likely to surpass $826 billion by 2030.
Besides, with aspiration to drive growth with advanced technologies, optimize company operations, and wider use of cloud technologies, the IT services market is poised to reach $630.76 billion by 2029, expanding at a CAGR of 6.5%.
Given these encouraging trends, let's delve deeper into the fundamentals of top tech stocks NTCT, AUDC, and ALOT.
NetScout Systems, Inc. (NTCT)
NTCT provides service assurance and cybersecurity solutions to protect digital business services against disruptions internationally. The company offers nGeniusONE management software to predict, preempt, and resolve network and service delivery problems.
In terms of forward non-GAAP P/E, NTCT is trading at 8.44x, 63.7% lower than the industry average of 23.26x. Also, the stock’s forward EV/Sales multiple of 1.26 is 57% lower than the industry average of 2.92. Also, its forward Price/Cash Flow of 14.37x is 39% lower than the industry average of 23.55x.
On June 26, NTCT expanded its Arbor Cloud DDoS attack mitigation network to 16 scrubbing centers worldwide via recent addition of a new Toronto facility. The network offers ISPs and enterprise customers more than 15 Tbps of dedicated attack capacity.
On June 20, NTCT extended its long-term partnership with Vodafone to enhance the performance of Vodafone’s networks for customers. Under the multi-year agreement, Vodafone will leverage NETSCOUT InfinistreamNG to provide real-time, end-to-end visibility monitoring solutions across Vodafone’s physical and virtual network environment, including 5G Standalone.
For the fourth quarter that ended March 31, 2024, NTCT posted total revenue of $203.44 million. Its non-GAAP gross profit stood at $157.05 million. The company’s non-GAAP net income came in at $39.82 million and $0.55 per share, up 46.5% and 44.7% from the prior year’s quarter, respectively.
In addition, the company’s total current assets were $672.49 million as of March 31, 2024, compared to $617.36 million as of March 31, 2023.
Street expects NTCT's revenue and EPS for the third quarter (ending December 2024) to increase 5.2% and 5.5% year-over-year to $229.50 million and $0.77, respectively. Furthermore, the company surpassed the consensus EPS estimates in each of the trailing four quarters, which is impressive.
Shares of NTCT have plunged 12% over the past month to close the last trading session at $18.10. Wall Street analysts expect the stock to hit $24 in the near term, indicating a potential upside of 32.6%.
NTCT's robust growth prospects are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has an A grade for Growth. It also has a B grade for Value and Quality. Within the Technology - Services industry, NTCT is ranked #6 out of 79 stocks.
Click here to access additional ratings of NTCT for Stability, Sentiment, and Momentum.
AudioCodes Ltd. (AUDC)
Headquartered in Lod, Israel, AUDC offers advanced communications software, products, and productivity solutions for the digital workplace globally. The company offers solutions, products, and services for unified communications, contact centers, hosted business services, Voice.AI, and service provider businesses.
In terms of forward non-GAAP P/E, AUDC is trading at 11.34x, 51.2% lower than the industry average of 23.26x. Further, the stock’s forward EV/Sales multiple of 1.00 is 65.8% lower than the industry average of 2.92. Likewise, its forward Price/Sales of 1.27x is 55.9% lower than the industry average of 2.87x.
On March 25, AUDC entered into a strategic partnership with Tata Tele Business Services, a leading provider of unified communications solutions to offer Smartflo UCaaS on Microsoft Teams. Under the collaboration, TTBS will use AudioCodes Live Platform for Microsoft Teams to offer Smartflo UCaaS, a voice solution integrated with Microsoft Teams.
The strategic collaboration will allow integrated voice calling via Microsoft Operator Connect and Direct Routing. It also enhances AUDC’s presence in India’s enterprise market by providing Microsoft Teams users with seamless communication solutions and advanced contact center services through the AudioCodes Live Platform.
On March 13, AUDC announced that Voca Conversational Interaction Center (Voca CIC) is now an omnichannel contact center for Microsoft Teams supporting email and webchat in a one-screen Microsoft Teams contact center built in Azure. Adding omnichannel to Voca CIC further empowers AudioCodes Live, offering a complete calling and contact center for Microsoft Teams.
AUDC’s total revenues increased 1.5% year-over-year to $60.08 million during the first quarter that ended March 31, 2024. Its gross profit grew 5.8% from the year-ago value to $38.67 million. The company’s non-GAAP net income came in at $5.22 million and $0.17 per share, up 94.7% and 112.5% over the prior year’s quarter, respectively.
Analysts expect AUDC's revenue and EPS for the second quarter (ending June 2024) to increase marginally and 19.8% year-over-year to $60.56 million and $0.19, respectively. Also, the company has topped the consensus EPS estimates in three of the trailing four quarters.
AUDC's shares have gained 2.9% over the past month and 12% over the past year to close the last trading session at $10.28. Wall Street analysts expect the stock to hit $12 in the near term, indicating a potential upside of 16.7%.
AUDC's sound fundamentals are reflected in its POWR Ratings. It has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
The stock has a B grade for Quality, Growth, Value, and Stability. Within the Technology – Communication/Networking industry, AUDC has topped among the 44 stocks.
In addition to the POWR Ratings we've stated above, we also have AUDC ratings for Momentum and Sentiment. Get all AUDC ratings here.
AstroNova, Inc. (ALOT)
ALOT designs, develops, manufactures, and distributes specialty printers, and data acquisition and analysis systems internationally. The company operates through Product Identification (PI) and Test & Measurement (T&M) segments.
In terms of trailing-12-month EV/Sales, ALOT is trading at 0.84x, 73.3% lower than the industry average of 3.15x. Likewise, the stock’s trailing-12-month EV/EBITDA multiple of 7.95 is 57.2% lower than the industry average of 18.58. Also, its trailing-12-month Price/Sales of 0.75x is 74.9% lower than the industry average of 2.98x.
On June 5, ALOT and recently acquired MTEX NS subsidiary unveiled groundbreaking new innovative and sustainable printing technologies. The products launched includes AQUAFLEX from MTEX NS, TrojanLabel T2-PRO system, ATOM 3 by MTEX NS, FLEXPACK series by MTEX NS, and MULTI 800 by MTEX NS.
The latest solutions expanded ALOT’s portfolio and underscores the companies’ dedication towards driving innovation and delivering value to the customers across diverse market segments.
During the first quarter, which ended April 27, 2024, ALOT reported revenue of $32.96 million and its gross profit was $11.97 million for the quarter. The company's net income of $1.18 million and $0.15 per common share reflects growth of 39.3% and 36.4% from the prior year's quarter.
Furthermore, the company’s cash and cash equivalents and total assets stood at $3.99 million and $126.60 million as of April 27, 2024.
ALOT's stock has soared 17.8% over the past nine months to close the last trading session at $14.60.
ALOT's POWR Ratings reflect its robust outlook. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
ALOT has an A grade for Value and a B grade for Stability, Sentiment, and Quality. It is ranked #3 among the 38 stocks in the B-rated Technology - Hardware industry.
Click here to access additional ALOT ratings for Growth and Momentum.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
NTCT shares were trading at $18.49 per share on Thursday afternoon, up $0.39 (+2.15%). Year-to-date, NTCT has declined -15.76%, versus a 15.68% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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