Recent jobs data suggest a cooling labor market. While unfortunate for job-seekers, this trend sparks optimism among investors that the central bank’s rake hiking cycle may have reached its conclusion since its start in 2022. Additionally, The Federal Reserve’s central objective has been to promote labor market improvement in tandem with the broader economy.
Often sensitive to interest rate movements, tech stocks are positioned to benefit from this shift as lower rates reduce borrowing costs, boost consumer spending, and encourage investment in these three stocks’ innovative technologies.
With this mind, let’s take a look at three tech stocks that, in my opinion, are poised to deliver stable returns for investors who buy before the end of 2023.
Fortinet Incorporated (FTNT)
Fortinet Incorporated (NASDAQ:FTNT) is a global leader that provides automated security operations to reduce cyber risk. The stock is up 2.06% YTD. Wall Street Journal analysts give 14 buy ratings and forecast a median price target of $56.00, with a high of $90.00 to a low of $49.00.
The global cybersecurity market is projected to grow at a 13.8% CAGR from $172.32 billion in 2023 to $424.97 billion in 2030. The need for cybersecurity systems continues to rise due to the increasing e-commerce platforms that encourage companies to focus on augmenting internet security solutions.
With a 16% YoY growth in revenue to $1.33 billion, Fortinet reported solid Q3 financials. An impressive FCF of $481.1 million and a 24.24% increase in EPS to $0.41 shows positive signs for expansion with a 32.50% levered FCF margin.
Fortinet offers its services to a wide range of industries from manufacturing and healthcare to K-12 schools. On Oct. 16, FTNT announced a new program with Google Cloud, which would expand the company’s secure access service edge (SASE) points of presence (POP). This partnership would effectively boost the company’s presence and deliver a 99.99% service availability. With numerous SASE POPs, Fortinet is well poised to globally scale where it can supply superior user experience to businesses worldwide.
Thanks to its solid financials, the rising need for cybersecurity protection, and a new program with Google Cloud, FTNT is well-positioned for growth.
MercadoLibre Incorporated (MELI)
MercadoLibre Incorporated (NASDAQ:MELI) is an e-commerce business facilitator that combines digital logistics and financing. It is now leading the consumer discretionary sector.
MELI is up 67.38% YTD. Additionally, the consumer discretionary market’s earnings are estimated to grow by 24% annually according to the U.S. Consumer Discretionary Sector Analysis.
MercadoLibre’s strategic expansion into the Latin American market not only sets it apart from competitors like Lamoda but also provides several key advantages for the company. By establishing a strong, multinational presence, MercadoLibre gains access to a vast and growing customer base in the region. This not only increases its revenue potential, but also enhances brand recognition and customer loyalty.
Furthermore, by operating in a region with unique economic moats, MercadoLibre can adapt its services and offerings to better cater to the needs and preferences of the local market. This localization strategy leads to increased customer satisfaction and long-term success, ultimately strengthening MELI’s competitive position and profitability
MELI is now expected to maintain strong growth on the top and bottom lines for the next few years to come, and investors should buy in on this growth stock.
Electronic Arts (EA)
Electronic Arts (NASDAQ:EA) is a video game developer known for its sports franchises such as FIFA, Madden, and Formula 1. EA stock is up 5.64% YTD.
Financials for Electronic Arts are strong. Revenue of $1.91 billion grew 0.53% YoY, net income of $399 million grew 33.44% YoY, and diluted EPS of $1.47 grew 37.38% YoY. Strong indicators of profitability are evident in a net profit margin of 20.85% growing 32.80% YoY.
While FIFA’s trademarks hold significant value, most players prioritize the quality of gameplay, an area where Electronic Arts is poised to excel. The company will no longer have to pay FIFA a $150 million licensing fee deal, which will inherently lure in new sponsors, including Pepsico (NASDAQ:PEP), featuring their brands Gatorade, Pepsi, and Lays in the upcoming game. Although the specifics of this agreement have not been publicly disclosed, its value is expected to be in tens of millions. As a result, Electronic Arts is receiving the paid licensing fees, thus boosting overall long term profitability.
Analysts are very optimistic about the stock, with current projections ranging from a low of $127.00 to a high of $160.00. The unique growth catalyst of no longer paying FIFA’s licensing fees projects EA stock to grow in the long term.
On the date of publication, Michael Que did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
