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Finance

3 Top-Rated Computer Hardware Stocks to Add to Your Watchlist

Technology companies delivered stellar returns last year thanks to COVID-19-pandemic-led changes in lifestyle and the emergence of remote working and entertainment trends. Tech companies’ booming performance is evident in the iShares U.S. Technology ETF’s (IYW) 37% returns in 2020.

An increasing focus on artificial intelligence, 5G, cloud computing, and edge computing irrespective of a vaccine-driven economic recovery from the global pandemic should keep driving the performance of the technology hardware industry. This is in part because hardware is the backbone of these technologies. The global computer hardware industry is expected to grow at a CAGR of 6% between 2020 and 2025.

Consequently, we think hardware technology companies Dell Technologies, Inc. (DELL), Canon, Inc. (CAJ), NetApp, Inc. (NTAP) should keep thriving. These market leaders are developing cutting-edge hardware to support the latest developments in software. Their stocks have recorded double-digit gains over the past year, and are likely to continue doing so.

Dell Technologies, Inc. (DELL)

DELL develops, manufactures, and markets computers and related hardware. The company has worldwide operations. DELL’s stock has gained 58.1% over the past year.

DELL is currently collaborating with SK Telecom and VMWare to develop the OneBox MEC, which can provide enterprises with an integrated 5G computing platform. DELL has also recently unveiled its new portfolio of computers that are designed to be more sustainable, more collaborative, and more intelligent.

For the quarter ended October 31, 2020, the company saw a 3% growth in revenue compared to the same period last year. The company diluted EPS was up 64% during the same period.

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DELL is expected to see a revenue growth of 7.2% for the quarter ended April 2021 and 0.2% in 2021. The company’s EPS is estimated to grow 1.5% in 2021 and at a rate of 2.8% per annum over the next five years.

DELL’s strong fundamentals are reflected in its POWR Ratings. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

The stock has an overall rating of A, which equates to Strong Buy in our proprietary ratings system. It has a grade of A for Growth. In the 52-stock Technology – Hardware industry, it is ranked #3.

In total, we rate DELL on eight different levels. Beyond what we stated above we also have given DELL grades for Momentum, Stability, Sentiment, Quality, and Value. Get all the DELL ratings here.

The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

Canon, Inc. (CAJ)

CAJ is involved in developing, marketing, and manufacturing a variety of technology products, such as cameras, printers, scanners, multi-purpose devices, and lithography equipment. The company has worldwide operations. CAJ’s stock has risen 32.5% over the past six months.

The company recently launched its imagePRESS Lite C170 color multifunction printer, which is a significant addition to its  existing portfolio of products. CAJ plans to commence sales of its  FPA-3030i5a Semiconductor Lithography System in March.

For the fourth quarter, the company’s operating profit increased 45.4% compared to the same period last year. Its operating profit  increased 2.6 percentage points during the same period.

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CAJ’s revenue is estimated to increase 16.2% for the quarter ended March 31, 2021 and 15.6% in 2021. Its  EPS is expected to rise 11.3% in 2021 and 19.1% per year over the next five years.

It is no surprise that CAJ has an overall rating of A, which equates to Strong Buy in our POWR Ratings system. CAJ has a grade of B for Value, Momentum, Sentiment, and Quality. In the Technology – Hardware industry, it is ranked #5.

Click here to see the additional POWR Ratings for CAJ (Growth and Stability).

The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

NetApp, Inc. (NTAP)

NTAP markets  software, services, and systems to organizations to help store and process customer data. The company has a range of storage solutions, including all-flash arrays and hybrid flash arrays. NTAP’s stock has returned 23.4% over the past year.

NTAP recently launched a new storage-less and server-less cloud-based solution for multi-cloud management. The company has also released  new updates to its NetApp ONTAP data management software, including greater cloud integration.

For the quarter ended October 31, 2020, NTAP  saw an increase in public cloud services annualized revenue of 200% year-over-year. The company’s billings increased 10% during the same period.

NTAP’s revenue is expected to grow 3.1% for the quarter ended March 31, 2021 and 2.9% in 2021. Its EPS growth is expected to be 2.8% in 2021 and 6.2% per annum over the next five years.

NTAP has a grade of A for Quality and B for Momentum in our POWR Ratings system. In the 5-stock Technology – Storage industry, it is ranked #2.

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Beyond what we stated above we also have given NTAP grades for Stability, Growth, Value, and Sentiment. Get all the NTAP ratings here.

The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

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DELL shares were trading at $78.86 per share on Thursday afternoon, up $1.11 (+1.43%). Year-to-date, DELL has gained 7.60%, versus a 3.05% rise in the benchmark S&P 500 index during the same period.

About the Author: Aaryaman Aashind

Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks. More…

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