Forget Western Digital, Buy These 3 Hardware Stocks Instead

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Despite Supply Chain Disruptions, PC Market Ended Last Year with double-digit growth. Global PC shipments exceeded 90 million in the last quarter of 2021 for the second year in a row. Demand for computer hardware is growing as individuals and businesses create remote computer setups amid delays in office reopening plans. Additionally, rapid advancements in hardware systems and architectures to support advanced artificial intelligence and machine learning in the age of big data are shaping the future of the hardware industry.

One of the most famous names in the computer hardware industry, Western Digital Corporation (WDC), exceeded consensus estimates in terms of highs and lows in its latest quarter. However, WDC shares fell on its weaker-than-expected outlook for the current quarter. The company also cited supply chain issues as a reason for not fully meeting high demand. The stock has fallen 19% in the past six months and 19.4% since the start of the year to close its last trading session at $52.57. In addition, several analysts have have lowered their price targets on the stock after the company released its results.

Therefore, to capitalize on the growth of the hardware industry, fundamentally sound Canon Inc. (CAJ), NetApp, Inc. (NTAP), Lenovo Group Limited (LNVGY) might be better bets instead.

Canon Inc. (CAJ)

Based in Tokyo, Japan, CAJ operates as a manufacturer and seller of office multifunction devices (MFDs), plain paper copiers, laser and inkjet printers, cameras, equipment diagnostics and lithography equipment. The Company operates through four segments: Office Business Unit; Imaging System Business Unit; medical system business unit; Industry and other business units.

Last month, CAJ launched the EOS R5 C full-frame mirrorless camera, which features features from the company’s award-winning Cinema EOS line, plus some still capabilities that made the EOS R5 camera a choice. popular and trusted among professionals and enthusiasts. Considering the popularity of its brand all over the world and its long standing fame in the market, this new launch is expected to be in high demand.

CAJ also showcased AMLOS (Activate My Line of Sight), a hybrid meeting software solution that can harness the power of Canon’s image processing technology designed to help create an immersive hybrid working experience. AMLOS, designed to work with Microsoft® Teams and Azure, aims to simplify hybrid team collaborations. With hybrid work arrangements becoming the new norm, CAJ’s new venture should be beneficial.

CAJ’s net sales increased 1% year-on-year to 955.45 billion yen ($8.32 billion) in the fiscal fourth quarter ended Dec. 31. Its gross profit was 437.85 billion yen ($3.81 billion), up 5.7% from the year-ago quarter. . CAJ’s net profit rose 11.6% year-on-year to 59.80 billion yen ($520.70 million).

Street expects the company’s revenue to grow 148% year-over-year to $32.43 billion in the fiscal year ending December 2022. The consensus estimate of the EPS of $2.11 indicates a 17.7% year-over-year increase.

Shares of CAJ have gained 5.2% over the past year and 3.4% over the past six months to close its last trading session at $23.87.

CAJ POWR Rankings reflect this promising prospect. The company has an overall rating of A, which translates to Strong Buy in our proprietary rating system. POWR ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

CAJ is rated B in value, stability and quality. Within the Technology – Material industry, it is ranked #2 out of 46 stocks.

In addition to the POWR ratings I’ve highlighted here, you can see the CAJ’s Growth, Momentum, and Sentiment ratings. here.

NetApp, Inc. (NTAP)

NTAP provides software, systems and cloud services worldwide. The company offers cloud storage services including NetApp Cloud Volumes, cloud monitoring solutions such as NetApp Cloud Manager and NetApp Virtual Desktop Service, cloud services and analytics including NetApp Cloud Insights.

In December 2021, it announced innovations in its product portfolio and recognized Amazon Web Services (AWS) for its achievements as an AWS Partner. “Together, NetApp and AWS bring the best of the cloud to our customers and partners to deliver immediate business value, whether in the form of cost efficiency, compliance, data protection, or performance,” said Anthony Lye, VP -Executive Chairman and Managing Director. public cloud services at NetApp.

The company also announced that NetApp ONTAP, the world’s first storage operating system, has become the first enterprise storage platform to receive CSfC (Commercial Solutions for Classified) validation from the National Security Agency (NSA). ) from the United States for security and encryption.

In November 2021, NTAP announced its acquisition of CloudCheckr, a leading cloud optimization platform that provides cloud visibility and insights to reduce costs, maintain security and compliance, and optimize cloud resources. This acquisition should strengthen NTAP’s operational capabilities.

NTAP’s net revenue increased 10.6% year over year to $1.57 billion in the second fiscal quarter ended Oct. 29. Its gross profit rose 13.5% from the previous year’s value to $1.06 billion. Net income was $224 million, indicating a 63.5% year-over-year improvement. His PES rose 60.7% from its value a year ago at $0.98.

The consensus revenue estimate of $1.61 billion for the fiscal third quarter ended January 2022 indicates a 9.8% year-over-year increase, while the consensus EPS estimate of 1. $29 indicates a 17% year-over-year increase. Additionally, NTAP has exceeded consensus EPS estimates in each of the past four quarters.

The stock has gained 31.7% over the past year and 9.3% over the past six months to close its last trading session at $87.01.

It’s no surprise that NTAP has an overall rating of B, which translates to Buy in our proprietary rating system. NTAP is rated A in quality. It is ranked #13 in the Technology – Hardware category. industry.

Click here to see NTAP’s ratings for Growth, Value, Momentum, Stability and Sentiment.

Lenovo Group Limited (LNVGY)

Based in Quarry Bay, Hong Kong, LNVGY develops, manufactures and markets technology products and services. The Company operates through Intelligent Devices Group and Data Center Group segments.

On January 26, LNVGY unveiled Lenovo TruScale™ High-Performance Computing as a Service (HPCaaS), bringing the power of supercomputing to organizations of all sizes through a cloud-like experience. This new offering expands LNVGY’s TruScale All-as-a-Service portfolio and aims to provide HPC customers with access to greater supercomputing resources.

In December, LNVGY introduced the ThinkEdge SE450 server, an artificial intelligence platform with advanced intelligence capability that delivers faster insights and accelerates real-time decision making. This AI-ready solution is expected to enhance LNVGY’s ThinkEdge portfolio.

LNVGY’s revenue increased 23.1% year-on-year to $17.87 billion for the second fiscal quarter ended Sept. 30. Its gross profit rose 33.4% from the previous year’s value to $3.01 billion. Profit for the period was $557 million, indicating a 59.1% year-on-year improvement. Its EPS rose 59.7% from its value a year ago at $3.96.

Analysts expect the company’s revenue to grow 7.5% year-over-year to $18.53 billion for the fiscal third quarter ending December 2021.

Over the past six months, the stock has gained 17.2% to close its last trading session at $21.83.

LNVGY’s POWR ratings reflect its strong fundamentals. The company has an overall rating of B, which translates to Buy in our proprietary rating system. LNVGY has a value rating of A and a stability rating of B. It is ranked #6 in the same industry.

To view additional LNVGY ratings for Growth, Momentum, Sentiment and Quality, Click here.


CAJ shares were unchanged in after-hours trading on Wednesday. Year-to-date, the CAJ is down -1.43%, compared to a -3.71% rise in the benchmark S&P 500 over the same period.

About the Author: Subhasree Kar

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a master’s degree in economics, she gained knowledge in equity research and portfolio management at Finlatics. Following…

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