The resurgence of COVID-19 infections due to the Delta variant’s spread has renewed investor interest in tech stocks. Furthermore,  the ongoing digital transformation of virtually every industry has highlighted the importance of technology over the past few months. Consequently,  the tech-heavy Nasdaq composite has gained 10.9% over the past three months, outperforming the broader S&P 500 index’s 5.8% returns.

The big infrastructure bill recently passed in the U.S. Senate has switched  investors’ focus to cyclical stocks. Nevertheless, concerns regarding the resurgence of COVID-19 cases are expected to boost investments in tech stocks in the near term.

Given this backdrop, we think surging tech stocks SPS Commerce, Inc. (SPSC), Nova Ltd. (NVMI), Methode Electronics, Inc. (MEI), and OSI Systems, Inc. (OSIS) could hit fresh price highs soon.

SPS Commerce, Inc. (SPSC)

SPSC in Minneapolis, Minn., provides cloud-based supply chain management solutions globally. Its customer base includes retailers, suppliers, grocers, distributors, and logistics firms. In addition, the company offers fulfillment solutions, analytics solutions, and peripheral solutions through its cloud platform SPS Commerce.

SPSC’s revenues increased 25% year-over-year to $94.50 million in its fiscal second quarter, ended June 30. Its recurring revenue increased 22% from the same period last year. Its income from operations came in at $13.53 million, up 21.8% from the prior-year quarter, and its EBT rose 4.5% from the year-ago value to $13.15 million.

In March, SPSC’s fulfillment solution expanded its support of e-commerce platforms and marketplaces to provide a single solution for omnichannel orders. As a result, third-party suppliers and retailers can efficiently process and manage their orders relatively faster and ensure improved visibility through the fulfillment solution.

Analysts expect SPSC’s revenues and EPS to rise 22.6% and 7.7%, respectively, year-over-year to $94.20 million and $0.42in its  fiscal third quarter, ending September 2021. In addition, SPAC surpassed the consensus EPS estimates in each of the trailing four quarters. The stock has gained 42.2% over the past year and 10.3% over the past month.

It is no surprise that SPSC has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.

The stock has a B grade for Quality, Sentiment, and Stability. Of the 143 stocks in the Software - Application industry, SPSC is ranked #25.

Beyond what we’ve stated above, we have rated SPSC for Growth, Value, and Momentum. Get all SPSC ratings here.

Click here to check out our Software Industry Report for 2021

Nova Ltd. (NVMI)

Based in Israel, NVMI manufactures process control systems used in semiconductors. The company sells its products to the integrated circuit manufacturing industry and process equipment manufacturers with an international market presence.

In the second quarter, ended June 30, NVMI’s net revenue rose 56.2% year-over-year to a record $97.75 million. Its non-GAAP net income increased 95.2% from the same period last year to $26.89 million, and its non-GAAP EPS came in at $0.90, up 87.5% from the prior-year quarter.

The company changed its name to Nova Ltd. on August 2 to accurately represent its technology portfolio and diversified offerings. This is expected to promote its diversified growth ambitions, thereby organically growing its annual revenue by more than $500 million.

A $90.03 million consensus revenue estimate for the current quarter (ending September 2021) indicates a 29.6% improvement year-over-year. Analysts expect NVMI’s EPS to come in at $0.74 in its  fiscal third quarter, indicating a 29.8% rise from the prior-year quarter. Furthermore, NVMI has an impressive earnings surprise history; it beat the consensus EPS estimates in each of the trailing four quarters. Shares of NVMI have gained 83.4% over the past year and 38.2% year-to-date.

NVMI has a B grade for Momentum and Quality. It is ranked #45 out of 99 stocks in the Semiconductor & Wireless Chip industry.

We have also rated NVMI for Growth, Sentiment, Stability, and Value. Get all NVMI ratings here.

Click here to checkout our Semiconductor Industry Report for 2021

Methode Electronics, Inc. (MEI)

Chicago’s MEI designs and develops component and subsystem devices. It operates through four segments: Automotive; Industrial; Interface; and Medical. Its main products include LED lighting systems, power distribution, sensor applications for transportation, industrial equipment, cloud computing, and medical devices.

For its fiscal fourth quarter, ended May 1, MEI’s revenues increased 42.9% year-over-year to $301 million. This can be attributed to a 50.8% rise in its Automotive segment revenues, a 46.6% rise in Industrial segment revenues, and a 125% rise in its Medical segment revenues. Its net income and EPS increased 3.3% and 2.5%, respectively, from the same period last year to $31.10 million and $0.81.

On June 17, MEI announced a $0.14 quarterly dividend payout per share, reflecting a 27% rise from the prior quarter payout. It reflects the company’s commitment toward a balanced capital allocation strategy and maximizing shareholder returns.

The Street expects MEI’s revenues to increase 11.8% year-over-year to $1.22 billion in the current year. Its EPS is expected to come in at $3.59 in the current year, indicating a 5.9% rise from the same period last year. MEI has gained 56.3% over the past year to close yesterday’s trading session at $48.40.

MEI’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which equates to Buy in our POWR Ratings system. In addition, it has a B grade for Momentum, Sentiment, and Quality. It is ranked #7 out of 47 stocks in the B-rated Technology - Electronics industry.

View additional MEI ratings for Growth, Value, and Stability here.

OSI Systems, Inc. (OSIS)

OSIS designs , manufactures, and sells electronics systems and components. The company’s products have applications in the healthcare, defense, and aerospace industries. It operates through three segments: Security; Healthcare; Optoelectronics and Manufacturing.

OSIS’ order backlog increased 23% sequentially to $1.10 billion in its fiscal third quarter ended March 31. Its non-GAAP net income rose 14.5% from its year-ago value to $25.30 million. Its non-GAAP EPS stood at $1.38, reflecting a 15% rise from the same period last year.

On May 13, OSIS’ subsidiary Spacelabs Healthcare extended its in-patient monitoring partnership with Masimo to integrate several Spacelabs devices with the latter’s suite of advanced parameters. Regarding this, Spacelabs President Shalabh Chandra said, “Masimo’s suite of advanced measurements, combined with Spacelabs’ innovative patient monitoring systems, helps us present a clear picture of the patient’s condition, prompting caregivers to take the right action at the right time.”

Spacelabs released the Lifescreen™ Pro event screening system on May 25. This expands OSIS’ non-invasive cardiology offerings significantly.

A $316.94 million consensus revenue estimate for its fiscal fourth quarter (ended June 2021) indicates a 14.4% improvement year-over-year. Analysts expect OSIS’ EPS to come in at $1.49 in the about-to-be-reported quarter, indicating a 22.1% rise from the prior-year quarter. Furthermore, OSIS beat the consensus EPS estimates in each of the trailing four quarters. Shares of OSIS have gained 26.8% over the past year and 6.9% year-to-date.

OSIS has an overall B rating, which equates to Buy in our POWR Ratings system. In addition, the stock has a B grade for Value and Stability. It is ranked #4 out of 61 stocks in the Air/Defense Services industry.

We have rated OSIS for Growth, Momentum, Sentiment, and Quality in addition to the grades highlighted. Get all OSIS ratings here.

SPSC shares were trading at $111.41 per share on Wednesday afternoon, up $0.23 (+0.21%). Year-to-date, SPSC has gained 2.60%, versus a 19.31% rise in the benchmark S&P 500 index during the same period.

Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities.

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