Major equity indices continue to experience extreme volatility due to aggressive interest rate hikes planned by the Fed to control decades-high inflation and rising geopolitical tensions between Ukraine and Russia. Tech stocks have seen a massive sell-off year-to-date, with the Nasdaq Composite down 11.9% year-to-date.
The tech industry has helped businesses stay functional since the onset of the COVID-19 pandemic. The growing adoption of cloud, service-based computing, and hybrid business structures by enterprises is driving solid growth for most technology companies. The technology industry is expected to witness further growth due to the rapid adoption of newer and advanced technologies and solutions. According to Gartner, global IT spending, which includes data center systems, enterprise software, devices, IT services and communication services, will reach $4.5 trillion in 2022, representing an increase of 5.1% from 2021.
That’s why today we’re highlighting 3 stocks from our Top 10 Technology screen, which is just one of the top 10 performing screens in our POWR Screens Service 10 (more on this below). Internet Initiative Japan Inc. (IIJIY), Extreme Networks, Inc. (OUTSIDE) and Wayside Technology Group, Inc. (WSTG) are well positioned to take advantage of industry tailwinds.
Internet Initiative Japan Inc. (IIJIY)
Headquartered in Tokyo, Japan, IIJIY provides Internet connectivity, WAN, outsourcing, system integration and network-related equipment sales services in Japan. The Company operates through the Network Services and Systems Integration business and the ATM Operation business.
IIJIY’s nine-month revenue ended December 31, 2021 increased 6.1% year-on-year to 165.60 billion yen ($1.43 billion). Of the society operating result rose 60.9% year-on-year to 16.29 billion yen ($0.14 billion). Additionally, its net profit rose 96.1% year-on-year to 11.52 billion yen ($0.09 billion). Its EPS was ¥127, representing a 95.8% year-on-year increase.
Analysts expect IIJIY’s fiscal 2022 revenue to grow 17.2% year-on-year to $1.98 billion. Over the past year, the stock has gained 39.7% to close the last trading session at $30.61.
The IIJIY’s strong fundamentals are reflected in its POWR Rankings. It has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has an A rating for stability and a B rating for value and quality. It is ranked No. 6 out of 49 stocks in the A rating Telecom – Abroad industry. Click here to see IIJIY’s other ratings for growth, momentum and sentiment.
Extreme Networks, Inc. (OUTSIDE)
EXTR provides end-to-end cloud-based network solutions, services and support. The company provides solutions from the edge of the Internet of Things (IoT) to the cloud. Its products include ExtremeWireless, ExtremeSwitching, ExtremeControl, ExtremeCloud IQ, ExtremeAnalytics, ExtremeLocation, Extreme AirDefense, ExtremeGuest and ExtremeCloud A3.
On September 15, 2021, EXTR announced its acquisition of Ipanema, the cloud-native enterprise SD-WAN division of Infovista. The acquisition will strengthen EXTR’s ExtremeCloud portfolio by adding flexibility, capabilities and security when connecting locations, applications and devices. Adding Ipanema’s capabilities to ExtremeCloud’s portfolio will deliver new cloud-managed SD-WAN and security software solutions to power the infinite enterprise.
For the fiscal second quarter ended December 31, 2021, EXTR’s revenue increased 16% year-over-year to $280.90 million. The company’s non-GAAP net income rose 78% year over year to $28.40 million. Additionally, its non-GAAP EPS was $0.21, representing a 62% year-over-year increase.
For fiscal 2022, EXTR’s EPS and revenue are expected to grow 43.9% and 12.1% year-over-year to $0.82 billion and $1.13 billion, respectively. It has exceeded Street EPS estimates in each of the past four quarters. Over the past year, the stock has gained 24.8% to close the last trading session at $12.10.
EXTR’s POWR ratings reflect a strong outlook. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. It has an A rating for growth and a B rating for value and quality. Within the Technology – Communication/Networking the industry, it is ranked first. To see other EXTR ratings for Momentum, Stability and Sentiment, Click here.
Wayside Technology Group, Inc. (WSTG)
WSTG operates as a value-added information technology solutions and distribution company. It operates through the Distribution and Solutions segments. It also offers virtualization/cloud computing, security, networking, storage and infrastructure management, application lifecycle management, and other technically sophisticated IT areas and hardware.
On January 11, 2022, WSTG announced that its wholly owned subsidiary Climb Channel Solutions had partnered with IRONSCALES, a global leader in AI-powered messaging security solutions. Climb Channel Solutions CEO Dale Foster said, “We have partnered with IRONSCALES to offer our customers a holistic, industry-leading email security platform that will strengthen their cybersecurity offerings and protect them against all forms of phishing. before, during and after the incidents.
WSTG’s net sales increased 13% year-over-year to $68.91 million for the third quarter ended September 30, 2021. The company’s adjusted gross billings increased 32.6% year-over-year to $226.93 million. Additionally, its adjusted EBITDA increased 128.4% year-over-year to $4.23 million.
Analysts expect WSTG’s EPS to grow 22% over the next five years. Over the past year, the stock has gained 53% to close the last trading session at $30.60.
WSTG’s strong fundamentals are reflected in its POWR ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. It has an A rating for growth and a B rating for value, sentiment and quality. It is ranked first out of 48 stocks in the Technology – Electronics industry. Click here to see other WSTG ratings for Momentum and Stability.
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IIJIY shares were trading at $30.01 per share on Monday afternoon, down $0.60 (-1.96%). Year-to-date, IIJIY is down -27.20%, compared to a -7.77% rise in the benchmark S&P 500 over the same period.
About the Author: Dipanjan Banchur
Ever since he was in elementary school, Dipanjan had been interested in the stock market. This allowed him to obtain a master’s degree in finance and accounting. Currently, as an investment analyst and financial journalist, Dipanjan is particularly interested in reading and analyzing emerging trends in financial markets. Following…