Riding the wave of technological expansion, fueled by the seamless integration of AI, advancing cloud computing, and perpetual innovations, investors could consider putting their eggs in the basket of stable stocks Alps Alpine Co., Ltd. (APELY), PC Connection, Inc. (CNXN), and Vtech Holdings Limited (VTKLY) for solid returns this year.

Before delving into the fundamentals of the featured stocks, let’s examine the key factors driving the tech industry’s prospects.

Generative AI's integration, propelled by exponential growth in the technology industry, is driving transformative change. Advancements in cloud computing and continuous innovation are further contributing to this shift, fostering enhanced collaboration and personalized digital interactions across diverse sectors.

This year, generative AI is anticipated to emerge as a central focus of technological interest, poised to reshape the landscape through transformative capabilities and personalized advancements. Gartner (IT) forecasts predict significant growth, projecting AI to comprise 10% of the total data landscape by 2025.

Anticipating a revolutionary impact, IT also foresees generative AI, transforming 70% of new web and mobile app design and development processes by 2026. The shift is poised to fundamentally transform the industry, potentially accelerating growth in the sector and highlighting AI's transformative influence on application development.

The momentum in software and content is also expected to persist in 2024, fueled by a robust consumer appetite for entertainment services and products enhancing daily convenience. Anticipated industry retail revenue for hardware is estimated at $348 billion, while software and services are projected to reach $163 billion.

Cloud infrastructure also stands as a key player in democratizing AI accessibility, with projections indicating businesses will surpass a $1 trillion spending milestone on cloud computing infrastructure in 2024. The growing imperative is driving increased adoption of new platforms and embracing as-a-service offerings.

Amid emerging technological trends, investors’ keen interest in the tech sector is evident from the 47.3% gains of the Technology Select Sector SPDR Fund (XLK) over the past year, outpacing the broader S&P 500 index’s 19.6% gain over the same period.

Considering this encouraging outlook, let’s look at the fundamentals of the three tech stocks.

Alps Alpine Co., Ltd. (APELY)

Based in Tokyo, Japan, APELY is a manufacturer and distributor of electronic components. The company engages in systems development, office services, and financing/leasing. Its operations span four key segments: Components; Sensor Communication; Module Systems; and Logistics.

On October 18, 2023, APELY initiated sales of AirInput™, integrating high-sensitivity capacitive sensing for touchless and touch input. The innovative product capitalizes on the rising prevalence of capacitive touch panels, enhancing intuitive input and control. This move could position the company for exponential growth and financial success.

On October 13, 2023, APELY disclosed a collaboration with DSP Concepts, Inc. to expedite the delivery of advanced sound technology. Leveraging DSP Concepts' Audio Weaver platform, APELY anticipates a 40% reduction in engineering resources dedicated to crafting audio signal processing software.

The partnership could accelerate time-to-market for forthcoming sound products and foster innovation in product features, fortifying APELY's competitive edge and elevating its market position.

For the fiscal 2023 second quarter that ended September 2023, APELY’s net sales increased 2.9% year-over-year to ￥256.50 billion ($1.78 billion). As of September 2023, the company’s cash and deposits amounted to ￥88.90 billion ($613.41 million), compared to ￥84.10 billion ($580.29 million) as of March 2023.

Additionally, its current assets stood at ￥499.40 billion ($3.45 billion), up from ￥466.50 billion ($3.22 billion) as of March 2023.

Analysts expect APELY’s revenue to increase 54% year-over-year to $6.56 billion for the fiscal year ending March 2024. The company’s EPS for the ongoing year is estimated to rise 66.6% from the prior year to $1.37. Also, the company topped the consensus revenue estimates in all four trailing quarters.

Shares of APELY have gained 7.6% over the past five days to close the last trading session at $18.34. Moreover, the stock has a 24-month beta of 0.63.

APELY’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.

APELY has an A grade for Value and a B for Stability and Momentum. It is ranked #7 out of 41 stocks within the B-rated Technology - Electronics industry.

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

PC Connection, Inc. (CNXN)

CNXN provides a range of IT products, managed services, and professional services. Additionally, it offers expertise in designing, configuring, and implementing IT solutions. The company's segments include Business Solutions; Enterprise Solutions; and Public Sector Solutions.

On December 14, 2023, CNXN unveiled the Helix Center for Applied AI and Robotics, an initiative offering customers comprehensive guidance, tools, and support. This would enhance the company's value proposition by providing customers with indispensable resources and enabling tailored implementations, thereby solidifying CNXN's leadership in the dynamic landscape of artificial intelligence and robotics.

On December 13, 2023, CNXN proclaimed the renewal of its esteemed Microsoft Azure Expert Managed Service Provider (MSP) status. The coveted recognition underscores the company's profound technical prowess and commitment to proactive and responsive customer support within Azure environments, bolstering its industry standing.

For the fiscal 2023 third quarter that ended September 30, 2023, CNXN’s income from operations marginally rose year-over-year to $32.02 million. Its adjusted EBITDA rose 9.6% from the year-ago value to $39.83 million. Additionally, the company’s adjusted net income and adjusted EPS grew 10.4% and 10.2% from the prior year’s period to $25.63 million and $0.97, respectively.

Analysts expect CNXN’s revenue to increase 3.3% year-over-year to $2.92 billion for the fiscal year ending December 2024. The company’s EPS for the current period is expected to come in at $3.41, up 6.9% from the previous year.

The stock has gained 40.6% over the past six months, closing the last trading session at $64.74. In addition, CNXN has a 24-month beta of 0.73.

CNXN’s strong outlook is apparent in its POWR Ratings. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.

CNXN has a B grade for Momentum, Stability, Sentiment, and Quality. It is ranked #3 out of 76 stocks within the Technology - Services industry.

Click here to access additional CNXN ratings for Growth and Value.

Vtech Holdings Limited (VTKLY)

Based in Tai Po, Hong Kong, VTKLY offers electronic learning toys that cater to infants, toddlers, and preschoolers through the Vtech and LeapFrog brands. The company extends its offerings to platform products, learning programs, and telecommunications products, encompassing baby monitors, handsets, and integrated access devices.

On November 21, 2023, VTKLY’s LeapFrog® Enterprises, a pioneering force in children's educational toys, unveiled eco-friendly additions, enhancing its product range. These innovations are designed to captivate children's curiosity and foster crucial educational skills, elevate playtime interactivity, and improve the company’s product portfolio.

On September 13, 2023, VTKLY introduced an enriched selection to its captivating baby line, encompassing a play tunnel, tummy time pillow, and interactive toys. The expanded collection actively fosters developmental progress, inspiring infants to explore, discover, and achieve key milestones, thus enhancing the brand's appeal and market presence.

During the six months that ended September 30, 2023, VTKLY’s operating profit rose 11.4% year-over-year to $110.30 million. Profit for the period attributable to shareholders of the company grew 14.1% from the year-ago value to $93.60 million, while EPS increased 13.8% from the prior year’s period to $0.37.

As of September 30, 2023, VTKLY’s total assets came in at $1.06 billion, up from $1.01 billion as of March 31, 2023.

The consensus revenue estimate of $2.30 billion for the fiscal year ending March 2025 reflects a 4.6% year-over-year improvement. Over the past month, shares of VTKLY have gained 13.8%, closing the last trading session at $6.05. Furthermore, the stock has a 24-month beta of 0.63.

VTKLY’s robust prospects are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.

VTKLY has an A grade for Quality and a B for Value, Momentum, and Stability. It is ranked #2 in the 35-stock B-rated Technology - Hardware industry.

Click here to access the additional VTKLY ratings (Growth and Sentiment).

What To Do Next?

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APELY shares were trading at $18.34 per share on Monday afternoon, up $1.03 (+5.95%). Year-to-date, APELY has gained 8.20%, versus a 0.29% rise in the benchmark S&P 500 index during the same period.

Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.

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