Despite last year’s rough correction in the tech space due to the Fed’s aggressive rate hikes, it made a solid comeback fueled by staggering demand for Artificial Intelligence (AI) across various sectors and slowing inflation figures. The sector’s strong performance is evident from the tech-heavy Nasdaq Composite index’s 42.1% year-to-date gains.
Below, I have explored three top-rated tech stocks, Gilat Satellite Networks Ltd. (GILT), Ceragon Networks Ltd. (CRNT), and PCTEL, Inc. (PCTI), that could be solid investments for the coming week.
In recent news, the global economy’s progress has been undeniable amid the persistent macroeconomic challenges. The cumulative effect of interest-rate hikes by the Federal Reserve was exhibited in June’s Consumer Price Index (CPI) data that rose to the lowest levels in more than two years to 3%.
Also, the Personal Consumption Expenditures price index (PCE) measured 3% year-over-year in June, easing from a 3.8% rise in May. Although inflation has not yet reached the Fed’s desired 2% level, the continued slowdown has become good news for technology stocks.
Rapid digitization across businesses to ramp up operations and the growing usage of cutting-edge technologies bolstered the demand for companies in this space. According to Gartner, spending on IT and communications services this year is forecasted to increase 8.8% and 2.7% year-over-year to $1.42 trillion and $1.46 trillion, respectively.
Moreover, advanced technological trends, such as AI and its applications to produce chips, growth in broadband satellites, and rising streaming prominence, are expected to shape the networking and communication industry’s future.
Revenue in the global communication services market is expected to show a CAGR of about 2%, resulting in a market volume of $1.58 trillion by 2028.
In addition, the accelerated deployment of 5G technology has sparked a seismic shift in the global digital landscape driving advancements in various technologies, including artificial intelligence to autonomous vehicles. Further, the global 5G services market is estimated to reach $1.67 trillion by 2030, growing at a CAGR of 52%.
Therefore, investors could look to own quality tech stocks GILT, CRNT, and PCTI this upcoming week, which look well-positioned to capitalize on the communication industry’s growth prospects.
Gilat Satellite Networks Ltd. (GILT)
Headquartered in Petah Tikva, Israel, GILT is a leading global provider of satellite-based broadband communications through three segments: Satellite Networks; Integrated Solutions; and Network Infrastructure and Services. It designs and manufactures ground-based satellite communications equipment; and provides solutions and end-to-end services.
On August 1, Satcom Direct joined forces with GILT to create new ultra-low profile Electronically Steered Antennas (ESA) for In-Flight Connectivity (IFC) in business, government, and defense aviation. The antennas, available from 2025, are designed to be compatible with the OneWeb Low Earth Orbit (LEO) constellation, enhancing the Plane Simple® Antenna Series portfolio.
Moreover, this strategic agreement allows GILT to expand its proven technology know-how in the commercial aviation space.
On July 20, GILT declared that it had been selected by a Tier 1 global telecommunications operator to provide satellite connectivity for a major utility company in Western Europe.
By leveraging GILT’s SkyEdge II-c platform, the telecommunications operator provides mission-critical, all-weather IoT telemetry to hundreds of remote sites on the national utility network. This reflects the strong demand for the company’s solutions and the expansion of its offerings at a global scale.
GILT’s revenues increased 14.7% year-over-year to $58.96 million for the fiscal first quarter that ended on March 31, 2023. Its gross profit grew 50.6% from the year-ago value to $24.68 million, while its non-GAAP operating income amounted to $5.28 million, compared with a non-GAAP operating loss of $266 thousand in the prior-year quarter.
Non-GAAP net income and EPS stood at $3.85 million and $0.07, versus an adjusted net loss and loss per share of $1.78 million and $0.03, respectively, in the same period last year. Also, the company’s adjusted EBITDA came in at $8.39 million, representing a 231.8% improvement year-over-year.
Analysts expect GILT’s EPS for the fiscal year 2023 to increase 380% year-over-year to $0.28 and by 10% per annum over the next five years. Its revenue estimate of $269.77 million for the current year indicates a rise of 12.5% from the prior-year period.
Over the past three months, the stock has gained 21.5% to close the last trading session at $6.27.
GILT’s solid prospects are reflected in its POWR Ratings. The stock has an overall rating of B, translating to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has an A grade for Sentiment and a B for Growth. Out of the 52 stocks in the Technology - Communication/Networking industry, it is ranked #3. To see the other ratings of GILT for Value, Momentum, Stability, and Quality, click here.
Ceragon Networks Limited (CRNT)
CRNT, based in Rosh HaAyin, Israel, is a global innovator in 5G wireless transport solutions for cellular operators and other wireless service providers. Its offerings include network management systems, network and radio planning, site survey, solutions development, installation, network auditing and optimization, maintenance, training, and other services.
On May 16, the company signed a multi-year contract worth up to $4.2 million with the City of Cincinnati to upgrade its public safety network. The project includes a multi-technology, multi-service solution that provides a robust, modernized backhaul and routing solution and a long-term maintenance and support plan.
This win is another testament to CRNT’s end-to-end network design and implementation capabilities, and it aligns perfectly with the company’s long-term growth strategy.
During the fiscal second quarter (ended June 30, 2023), CRNT’s revenue increased 21.9% year-over-year to $86.15 million, while its gross profit grew 41.8% from the year-ago value to $30.36 million in the same period. Non-GAAP net income came in at $4.40 million and $0.02 per share, compared to a non-GAAP net loss of $2.47 million and $0.02 per share, respectively, in the prior-year quarter.
In addition, its cash and cash equivalent at the end of the period stood at $24.53 million, representing a 3.9% increase year-over-year.
Street expects CRNT’s revenue for the quarter ending September 2023 to increase 7.7% year-over-year to $84.53 million. Likewise, its EPS estimate of $0.03 for the current quarter indicates a 400% improvement year-over-year.
CRNT’s shares have gained 21.1% over the past nine months to close the last trading session at $2.12.
It’s no surprise that CRNT has an overall rating of B, which equates to Buy in our proprietary rating system. It has an A grade for Growth, Value, and Sentiment. Within the same industry, it is ranked #2.
In addition to the POWR Ratings we’ve stated above, we also have CRNT’s ratings for Momentum, Stability, and Quality. Get all CRNT ratings here.
PCTEL, Inc. (PCTI)
PCTI is a global provider of wireless technology solutions, including purpose-built Industrial IoT devices, antenna systems, and test and measurement products. It designs and manufactures precision antennas and industrial IoT devices that are deployed in small cells, enterprise Wi-Fi access points, fleet management, transit systems, and equipment and devices for the industrial IoT.
On August 3, PCTI introduced a new 5G FR1 Omnidirectional antenna for robust Industrial IoT applications. Its design ensures mechanical strength, flexible installation, wide bandwidth, and comprehensive coverage across the whole 5G FR1 frequency range while providing continuous connectivity even in the harshest environments.
As the demand for reliable, secure wireless connectivity and extensive coverage increases, such effective technologies could witness strong demand.
On May 23, PCTI announced the addition of new 4G LTE and 5G NR network monitoring capabilities to the SeeHawk™ Monitor system, enabling users to detect and respond to changes in network conditions rapidly.
The newly added capabilities support mission-critical coverage, international spectrum coordination, and rogue base station detection, making it highly effective in garnering strong user demand.
In the first quarter that ended on March 31, 2023, PCTI’s revenues increased marginally year-over-year to $22.97 million, while its gross profit grew 23.6% from the year-ago value to $11.53 million.
The company’s non-GAAP operating income improved 602.2% from the prior-year quarter to $2.24 million, while its adjusted net income came in at $2.14 million, representing a 603.9% year-over-year improvement. Also, its non-GAAP earnings per share stood at $0.12, up significantly year-over-year.
The consensus revenue estimate of $102.10 million for the fiscal year 2024 represents an 11.9% increase year-over-year. The consensus EPS estimate of $0.47 for the next year indicates a 38.2% improvement year-over-year. The company has an impressive earnings surprise history, surpassing the consensus EPS estimates in three of the trailing four quarters.
The stock has gained 8.3% year-to-date to close the last trading session at $4.71.
PCTI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
It also has an A grade for Value and Sentiment and a B for Stability and Quality. Among the 52 stocks in the same industry, it is ranked first. Click here to see the other ratings of PCTI for Growth and Momentum.
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GILT shares were trading at $6.21 per share on Monday afternoon, down $0.06 (-0.96%). Year-to-date, GILT has gained 7.07%, versus a 18.55% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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