Many of the gains in the stock market over the past year can be attributed to the exceptional growth in the technology sector. Major tech companies benefited from the increased dependence of individuals and businesses on their offerings to stay operational during the pandemic.
This trend is expected to continue in 2021. New strains of the coronavirus are spreading throughout the world and vaccine distribution has been slower than expected, especially in the US.
With that in mind, I believe that Garmin Ltd. (GRMN) and NETGEAR, Inc. (NTGR) are two tech stocks that investors should consider buying in 2021. Here’s why:
Garmin Ltd. (GRMN)
GRMN develops and commercializes a range of navigation, communication, and information devices worldwide. It operates through five segments: Auto, Aviation, Marine, Outdoor, and Fitness. The company offers global positioning system (GPS) navigation and wireless devices and applications.
On January 5th, GRMN announced the acquisition of GEOS Worldwide Limited and its subsidiaries, which includes the International Emergency Response Coordination Center (IERCC) to strengthen its emergency monitoring and incident response services. The addition of the IERCC to the Garmin family will enable the company to enhance the safety of its active lifestyle customers.
Garmin International, Inc., a unit of GRMN, unveiled a small and fashionable smartwatch, Lily, a couple of days ago. This smartwatch featuring a beautiful patterned lens is a boost to the company’s commitment to revolutionize the wellness industry.
GRMN’s revenue has increased 18.7% year-over-year to $1.11 billion in the third quarter that ended September 30, 2020. Gross profit grew 17.7% from the year-ago value to $667.98 million. Operating income has risen 21.3% from the prior-year quarter to $317.10 million, while EPS improved 36.6% year-over-year to $1.64.
The consensus EPS estimate of $1.39 for the about-to-be reported quarter ended December 31, 2020, indicates a 7.8% improvement year-over-year. GRMN has an impressive earnings surprise history, as it beat the Street EPS estimates in each of the trailing four quarters. The consensus revenue estimate of $1.18 billion for the fourth quarter indicates a 7.3% growth year-over-year. The stock has gained 21.1% over the past year.
GRMN’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. GRMN has a grade of B for Stability, Quality and Sentiment. It is currently ranked #15 of 53 stocks in the Technology – Hardware Industry.
In total, the POWR Ratings rate GRMN on 8 different levels. Beyond what we stated above, we also have given GRMN grades for Momentum, Growth and Value. Get all of GRMN’s ratings here.
NETGEAR, Inc. (NTGR)
NTGR is a provider of networking solutions. The company offers Internet-connected products for networking, broadband access, and network connectivity. NTGR has already benefited from the work from home trend as it saw strong demand for connected home products.
Even as people get back into the office, the company is poised to continue growing due to its latest technological innovations. On January 11th, NTGR launched two new mobile products: the Nighthawk 4G LTE WiFi 6 Router and the NETGEAR 4G LTE Modem to provide connectivity for households and businesses regardless of their location.
Due to the increasing demand for cloud-based applications for businesses, the company is introducing next generation commercial products. During the same day, NTGR launched the latest version of its Remote Cloud management solution, NETGEAR Insight, to provide businesses with increased simplicity, capabilities and user experience.
NTGR’s revenue has increased 42.2% year-over-year to $378.11 million in the fiscal third quarter that ended September 27, 2020. Its non-GAAP operating income has risen 97.3% from the prior-year quarter to $41.39 million, while non-GAAP EPS improved 73.8% year-over-year to $1.13.
Analysts expect NTGR’s revenues to grow 36.9% year-over-year in the about-to-be reported quarter ended December 31, 2020 to $346.28 million. The consensus EPS estimate of $0.84 for the fourth quarter indicates a 147.1% improvement year-over-year. The stock has an impressive earnings surprise history, as it beat the Street EPS estimates in each of the trailing four quarters. The stock has gained 66% over the past year.
It’s no surprise that NTGR has an overall rating of B, which equates to Buy in our POWR Ratings system. NTGR has a grade of A for Growth and Value. It is currently ranked #9 of 57 stocks in the Technology – Communication/Networking Industry.
Click here to see the additional POWR Ratings for NTGR (Sentiment, Stability, Quality and Momentum).
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GRMN shares were unchanged in after-hours trading Tuesday. Year-to-date, GRMN has declined -0.66%, versus a 2.05% rise in the benchmark S&P 500 index during the same period.
About the Author: Rishab Dugar
Rishab is a financial journalist and investment analyst. His investment approach is to focus on quality stocks, trading at low prices, with business models that he readily understands. More…
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