The technology industry has achieved exponential growth over the past year, backed by accelerating digital transformation and the proliferation of remote lifestyles. The continuing innovations and increasing applications of tech solutions in almost all industries should keep driving the industry’s growth. We think this bodes well particularly for fundamentally sound tech stocks Trimble (TRMB), ZIM Integrated Shipping Services (ZIM), Diodes (DIOD), and Matson (MATX). These company’s innovations could shape the world’s future. So, read on.
The technology industry continues to grow with the digital transformation of almost all businesses and the growth of remote lifestyles. According to Forrester’s U.S. Tech Market Outlook By Category For 2021 And 2022 report, the U.S. tech budget is expected to expand by 7.4% in 2021 and 6.7% in 2022.
An increasing dependency on cloud services and the growing popularity of wireless infrastructure have been boosting the industry’s growth. Investors’ interest in tech stocks is evidenced by the Technology Select Sector SPDR Fund’s (XLK) 19.2% gains over the past six months.
Hence, we think it could be wise to bet on quality technology stocks Trimble Inc. (TRMB), ZIM Integrated Shipping Services Ltd. (ZIM), Diodes Incorporated (DIOD), and Matson, Inc. (MATX). These stocks are expected to deliver substantial returns based on consistent innovations, diverse product portfolios, and strong sales growth.
Trimble Inc. (TRMB).
TRMB delivers products and services that connect the physical and digital world, such as Core technologies in positioning, modeling, connectivity, and data analytics. Its products and services enable consumers to improve productivity, quality, safety, and sustainability. The Sunnyvale, Calif.-based company also provides solutions to purpose-built products and enterprise lifecycle solutions.
Last month, TRMB launched Trimble Ventures, a venture fund with $200 million allocated for investments. With this fund, TRMB will partner with companies that focus on innovations. And through these partnerships, TRMB could expand its product offerings by accelerating its innovation capabilities.
TRMB’s total revenue for the second quarter, ended June 30, 2021, increased 28.8% year-over-year to $945.2 million. The company’s gross margin grew 29.5% from its year-ago value to $525.4 million. Its operating income rose 48.4% from the prior-year quarter to $144.8 million. Also, the company’s net income increased 119.8% year-over-year to $138.9 million.
Analysts expect TRMB’s revenue to increase 15.1% year-over-year to $3.62 billion in its fiscal year 2021. Also, the company has an impressive earnings surprising history; it beat the consensus EPS estimates in each of the trailing four quarters. In addition, its EPS is expected to increase 17% in the current year. Moreover, the stock has gained 50.5% in price over the past nine months and 91% over the past year.
TRMB’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
Also, the stock has a B grade for Sentiment, Stability, and Growth. We’ve also graded TRMB for Momentum, Value, and Quality. Click here to access all TRMB’s ratings. TRMB is ranked #8 of 45 stocks in the B-rated Technology-Electronics industry.
Note that TRMB is one of the few stocks handpicked by our Chief Growth Strategist, Jaimini Desai, currently in the POWR Growth portfolio. Learn more here.
ZIM Integrated Shipping Services Ltd. (ZIM)
Headquartered in Haifa, Israel, ZIM is a shipping company that provides smart, efficient networked, and reliable services with a unique approach. The company also provides seaborne transportation breakbulk and cargo services, inland transport services, ZIMonitor, a reefer cargo tracking service, and other carrier services.
This month, ZIM announced the exercise of its option for the long-term charter of an additional five 7,000 TEU LNG dual-fuel container vessels from Seaspan Corporation. With this option exercised, the company will secure a core fleet, which can further help it meet growing demands and reduce its carbon footprint.
For the second quarter, ended June 30, 2021, ZIM’s income from voyages and related services increased 199.6% year-over-year to $2.38 billion. The company’s gross profit grew 1,092% from its year-ago value to $1.22 billion. Its operating income rose 1,581% from the prior-year quarter to $1.16 billion. And the company’s profit for the period increased 3,408.8% year-over-year to $888.22 million.
ZIM’s revenue is expected to increase 141.8% year-over-year to $9.65 billion in its fiscal year 2021. Moreover, its EPS is expected to increase 499.2% in the current year. Over the past six months, the stock has soared 187.3% in price.
ZIM’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. Also, the stock has an A grade for Sentiment, and a B for Growth and Quality.
Diodes Incorporated (DIOD)
DIOD is a global manufacturer and supplier of high-quality application-specific standard products within the broad discrete, logic, analog, and mixed-signal semiconductor markets. The Plano, Tex., company serves the consumer electronics, computing, communications, industrial and automotive markets.
Last month, DIOD introduced the “PI3EQX12902E/PI3EQX12904E” to strengthen its ReDriver product offering. This introduction should support the company’s efforts to deliver consumer' data rates up to 8Gps.
DIOD’s net sales increased 52.6% year-over-year to $440.45 million in the second quarter, ended June 30, 2021. The company’s gross profit grew 57.5% from its year-ago value to $159.8 million. Its income from operations rose 111.7% from the prior-year quarter to $65.36 million. Also, the company’s net income increased 174.1% year-over-year to $58.63 million.
For its fiscal year 2021, analysts expect DIOD’s revenue to increase 44.6% year-over-year to $1.78 billion. It has surpassed the consensus EPS estimates in each of the four trailing quarters. The company’s EPS is estimated to increase 103.4% in the current year. The stock has gained 37.2% in price over the past nine months and 94.9% over the past year.
It’s no surprise that DIOD has an overall A rating, which equates to a Strong Buy in our POWR Rating system. Also, the stock has a B grade for Momentum, Growth, and Value.
Matson, Inc. (MATX)
Incorporated in 1882, MATX is a U.S-owned transportation services company. Its fleet of vessels includes containerships, combination containers, roll-on/roll-off ships, and custom-designed barges. The company’s subsidiary includes Matson Navigation Company, Inc., Matson Terminal Inc., and Matson Logistic Inc. MATX is headquartered in Honolulu, Hawaii.
In June, MATX announced a share repurchase program for three million shares. This should allow it to maintain its investment-grade balance sheet and acquire business and growth opportunities.
For the second quarter, ended June 30, 2021, MATX’s total operating revenue increased 66.9% year-over-year to $874.9 million. The company’s operating income grew 317.8% from its year-ago value to $213.9 million. Its net income rose 395.4% from the prior-year quarter to $162.5 million. Also, the company’s EPS increased 388.2% year-over-year to $3.71.
Analysts expect MATX’s revenue to increase 41.8% year-over-year to $3.38 billion in its fiscal year 2021. The company has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. MATX’s EPS is expected to increase by 202.5% in the current year. The stock has surged 46.6% in price over the past nine months and 124.4% over the past year.
MATX’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.
The stock has a B grade for Value, Momentum, and Quality. We’ve also graded MATX for Growth, Stability, and Sentiment. Click here to access all MATX’s ratings. In the Shipping industry, MATX is ranked #2.
TRMB shares were trading at $91.76 per share on Tuesday morning, down $0.05 (-0.05%). Year-to-date, TRMB has gained 37.43%, versus a 19.96% rise in the benchmark S&P 500 index during the same period.
About the Author: Priyanka Mandal
Priyanka is a passionate investment analyst and financial journalist. After earning a master's degree in economics, her interest in financial markets motivated her to begin her career in investment research.