The technology industry’s outlook appears rosy with the ever-growing demand for innovative tech solutions backed by rapid digitalization among enterprises across diverse sectors. Hence, it could be wise to invest in quality tech stocks Ceragon Networks (CRNT), Iteris (ITI), and RADCOM (RDCM) now. These stocks are rated B (Buy) in our proprietary rating system. Read on….
As the dependency on technology grows, so do its operations and horizons across multiple end-use sectors. That has considerably surged the demand for advanced tech products and services amid rapid digitalization globally. Also, continued advancements in AI, cloud computing, IoT, industrial robots, and more would drive the tech industry’s growth.
Given the industry’s bright growth prospects, investors could consider investing in fundamentally sound tech stocks Ceragon Networks Ltd. (CRNT), Iteris, Inc. (ITI), and RADCOM Ltd. (RDCM) for substantial returns. These stocks are B (Buy) rated in our proprietary POWR Ratings system.
In 2023, macroeconomic headwinds, including stubborn inflation and a period of economic uncertainty, did not slow digital transformation worldwide. Further, demand for innovative tech solutions will surge significantly this year and beyond. The primary spending areas are communications services, software, devices, data center systems, and IT services.
The tech industry’s expansion is primarily fueled by ongoing trends, including growing generative AI usage and adoption of machine learning, surging demand for data analytics & big data solutions, enhanced focus on IoT & connected devices, and increased need to comply with data privacy regulations.
According to the latest forecast by Gartner, global IT spending is projected to total $5 trillion this year, up 6.8% from 2023. Moreover, worldwide spending on IT services is expected to grow 8.7% year-over-year to $1.50 billion.
“2024 will be the year when organizations actually invest in planning for how to use GenAI, however IT spending will be driven by more traditional forces, such as profitability, labor, and dragged down by a continued wave of change fatigue,” said John-David Lovelock, Distinguished VP Analyst at Gartner.
As per Statistics, the IT services market revenue is expected to reach $1.36 trillion in 2024. In global comparison, most revenue will be generated in the U.S., approximately $495.30 billion. The revenue is further projected to grow at a CAGR of 6.7% during the forecast period (2024-2028), resulting in a market volume of $1.78 trillion by 2028.
Given the industry’s robust outlook, investing in fundamentally strong tech stocks CRNT, ITI, and RDCM could be wise now.
Let’s discuss the fundamentals of these stocks in detail:
Ceragon Networks Ltd. (CRNT)
Based in Rosh HaAyin, Israel, CRNT offers wireless transport solutions for cellular operators and other wireless service providers. Its solutions use microwave and millimeter-wave radio technologies to transfer telecommunication traffic between base stations, service provider’s networks, wireless 5G and 4G, 3G, and other cellular base stations.
On January 11, 2024, CRNT signed an agreement with a global integrator in support of a network modernization project for a Tier 1 Operator in India. As per the agreement, Ceragon will support a massive modernization project focused on upgrading existing network capabilities, expanding capacity, improving country-wide connectivity, and delivering services.
With this new customer, CRNT is set to deploy its new, innovative, ultra-compact, energy-efficient radio in tens of thousands of new sites, including managed services.
On December 5, 2023, CRNT announced the completion of the acquisition of Siklu, a provider of multi-gigabit “wireless fiber” connectivity in urban, suburban, and rural areas. This acquisition creates a more comprehensive, end-to-end offering ideally targeted to small service providers and private networks around the world.
This strategic acquisition of Siklu is anticipated to increase Ceragon’s market presence, mainly in North America, with private networks and small service providers.
In the third quarter that ended September 30, 2023, CRNT’s revenue increased 10.9% year-over-year to $87.26 million. Its non-GAAP gross profit grew 8.8% year-over-year to $30.42 million. The company’s non-GAAP operating income was $8 million, indicating a growth of 25% from the previous year’s quarter.
In addition, its non-GAAP net income came in at $4.96 million, or $0.06 per share, up 20.4% and 20% from the prior year’s quarter, respectively. The company’s cash and cash equivalents as of September 30, 2023, were $33.97 million, compared to $22.95 million as of December 31, 2022.
Street expects CRNT’s revenue to increase 11.5% year-over-year to $380.78 million for the fiscal year ending December 2024. The company’s EPS for the current year is expected to grow 76.5% year-over-year to $0.30. Moreover, CRNT topped the consensus EPS and revenue estimates in three of the trailing four quarters.
CRNT’s stock gained 34.1% over the past month and 28% over the past year to close the last trading session at $2.70.
CRNT’s bright outlook is reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a 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 a B grade for Growth, Value, and Sentiment. CRNT is ranked #2 out of 45 stocks in the Technology – Communication/Networking industry.
Click here to access additional CRNT ratings for Quality, Stability, and Momentum.
Iteris, Inc. (ITI)
ITI offers intelligent transportation systems technology solutions in North America, Europe, South America, and Asia. Its products include ClearGuide, ClearRoute, Commercial Vehicle Operations, BlueArgus, TrafficCarma, Vantage Apex, Vantage Fusion, and others. It also sells original equipment manufacturer products and provides travel demand forecasting.
On December 13, ITI announced the launch of Vantage CV™, an integrated detection and connected vehicle (CV) system for safer intersections. The new offering, Vantage CV™, is a complete connected vehicle system that enhances safety and offers seamless integration with Iteris vehicle and pedestrian detection devices.
On November 14, ITI received a $13.30 million contract from the Metropolitan Transportation Commission (MTC) to continue operational support in the San Francisco Bay Area. ITI will provide managed services that support traveler information and toll lane operations across the San Francisco Bay Area.
ITI has been engaged in providing key services to the MTC since 2020, and the new contract will extend this valuable partnership till June 2027.
For the fiscal 2024 second quarter ended September 30, 2023, ITI’s revenues increased 11% year-over-year to $43.56 million. Its gross profit grew 148.3% from the year-ago value to $16.26 million. The company’s net income was $551 thousand, or $0.01 per share, against a net loss of $7.39 million, or $0.17 per share a year earlier, respectively.
Furthermore, the company’s adjusted EBITDA came in at $2.92 million, compared to an adjusted EBITDA loss of $5.16 million in the prior year’s quarter.
Analysts expect ITI’s revenue and EPS for the fourth quarter (ending March 2024) to increase 4% and 211.1% year-over-year to $44.13 million and $0.09, respectively. For the fiscal year 2024, its revenue is expected to grow 10.9% year-over-year to $191.46 million. Further, the company has surpassed the consensus revenue estimates in each of the trailing four quarters.
ITI’s shares have surged 22% over the past six months and 32.3% over the past year to close the last trading session at $4.71.
ITI’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has a B grade for Value and Growth. Within the A-rated Technology – Hardware industry, ITI is ranked #10 of 36 stocks.
In addition to the POWR Ratings I’ve just highlighted, you can see ITI’s ratings for Quality, Stability, Sentiment, and Momentum here.
RADCOM Ltd. (RDCM)
Headquartered in Tel Aviv, Israel, RDCM provides 5G-ready cloud-native network intelligence and service assurance solutions for telecom operators or communication service providers (CSPs). It offers RADCOM ACE, RADCOM Network Visibility, and RADCOM Network Insights. It also provides solutions for mobile and fixed networks.
On January 16, RDCM announced NetTalk – Generative AI (GenAI) applications that are part of its RADCOM ACE portfolio, offering operators to adopt the power of Generative AI and trusted data to manage their network operations in a faster and cost-effective manner.
These innovative applications of RDCM will contribute to an improved customer experience by enhancing engineering team productivity, optimizing 5G network quality, and lowering costs.
For the third quarter that ended September 30, RDCM’s revenue grew 9.8% year-over-year to $13.19 million. Its non-GAAP gross profit increased 12.9% from the year-ago value to $9.94 million. The company’s non-GAAP operating income was $1.37 million, up 152.3% from the prior year’s quarter.
Also, the company’s non-GAAP net income and non-GAAP EPS came in at $2.40 million and $0.15 per share, up 149.5% and 150% year-over-year, respectively. As of September 30, 2023, RDCM had cash, cash equivalents, and short-term bank deposits of $78.60 million and no debt.
Analysts expect RDCM’s revenue for the fourth quarter (ended December 2023) to increase 10.3% year-over-year to $13.55 million, respectively. For the fiscal year 2024, the company’s revenue is expected to grow 10.5% year-over-year to $56.50 million. Also, the company topped the consensus revenue estimates in each of the trailing four quarters, which is impressive.
Shares of RDCM have declined 2.5% over the past month to close the last trading session at $7.79.
RDCM’s POWR Ratings reflect its promising prospects. The stock has an overall rating of B, which translates to Buy in our proprietary rating system.
The stock has an A grade for Sentiment and a B for Quality, Growth, and Stability. RDCM is ranked #6 out of 81 stocks in the Technology – Services industry.
To access additional RDCM ratings for Value and Momentum, click here.
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CRNT shares rose $0.02 (+0.74%) in premarket trading Thursday. Year-to-date, CRNT has gained 25.00%, versus a -0.64% rise in the benchmark S&P 500 index during the same period.
Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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