As we inch closer to a likely market turnaround, investors set their sights on tech stocks. Cyclicality is a potent market force with a penchant for taking tech stocks to the moon after a painful downturn like last year.
Though economic recessions may dampen outlooks for these stocks temporarily, the long-term position for these stocks remains as bright as ever.
Amidst a cacophony of headlines debating over an impending recession, forward-thinking investors are looking toward breakthrough technology stocks.
These powerhouse companies underpin some of the most talked-about innovations over the past several years, positioning them for sustained success. Despite a challenging 2022 marred by steep losses, those willing to wager on these deflated tech gems today could potentially reap substantial rewards in the future.
| ROK | Rockwell Automation | $277.30 |
| FN | Fabrinet | $98.25 |
| ON | ON Semiconductor | $77.92 |
Rockwell Automation (ROK)
Rockwell Automation (NYSE:ROK) is gearing up for an impressive comeback from a relatively weak stock market showing last year.
However, its results were remarkable from a fundamentals standpoint, especially in the past couple of quarters. Also, it offers a sweet annual dividend of $4.72, with payouts growing in the past 13 consecutive years.
In its first quarter of fiscal 2023, its earnings per share of $2.46 handily beat analyst estimates of $1.87. Its revenues surged by 6.5% to $1.98 billion, outpacing estimates of $1.92 billion. This extraordinary turnaround is a testament to the resilience of the industrial automation behemoth but a harbinger of the resurgence of American manufacturing.
With companies in the U.S. looking to ease supply chain constraints, they’re bringing factory production back home, positioning Rockwell for incredible long-term growth. According to Grand View Research, the market for industrial automation could grow at a 10.5% CAGR, reaching a whopping $377.25 billion by 2030.
Fabrinet (FN)
Fabrinet (NYSE:FN) is an innovative tech company specializing in optical packaging and electronic manufacturing services.
It generates roughly 80% of its revenue from optical communications firms (predominantly telecoms) and is at the epicenter of a burgeoning market. Its strength lies in its robust network of relationships with original equipment manufacturers.
Its business remains rock-solid, with its year-over-year revenue and EBITDA growth at a staggering 18% and 31%, comfortably ahead of its 5-year averages. The above-average growth rates in recent quarters are driven by the growing demand for its LiDAR (Light Detection and Ranging) lasers for cars.
Demand from automotive manufacturers has been recovering post-pandemic, evidenced by the 41% YOY growth in its “Lasers, sensors, and other” segment in its most recent quarter.
One of the knocks on, Fabrinet has been its lofty valuation, but analysts at Tipranks estimate that it offers a 44% upside from current levels.
ON Semiconductor (ON)
ON Semiconductor (NASDAQ:ON) is one of the most promising tech titans, riding the electrifying wave of automobile innovation.
Through its robust intelligent sensing and power solutions, it has positioned itself at the epicenter of the booming electric vehicle market.
Its best-in-class image sensors are gaining momentum in the realm of Advanced Driver-Assistance Systems. ADAS is a mission-critical application that is likely to grow at a spectacular pace, fueled by consumer and regulatory appetite for safety features.
The company has stakes in major transformations in areas such as vehicle electrification, safety, industrial automation, 5G, and cloud infrastructure. Growth across both lines in the past year has been tremendous, with margins boosted by the robust semiconductor pricing environment.
It’s backed by a rock-solid balance sheet, boasting almost $3 billion in cash equivalents. Also, despite its stellar growth numbers over the past year, its stock is trading roughly four times trailing twelve-month sales, a 40% discount to its sector average.
On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.