3 Buy-Rated Information Technology Services Stocks to Buy for 2022As the hybrid work-structure culture regains traction owing to the resurgence of COVID-19 cases, the demand for information technology services is set to accelerate. So, we think it could be...
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As the hybrid work-structure culture regains traction owing to the resurgence of COVID-19 cases, the demand for information technology services is set to accelerate. So, we think it could be wise to scoop up shares of quality information technology stocks Accenture (ACN), International Business Machines (IBM), and EPAM Systems (EPAM). Also, they each have a "Buy' rating in our proprietary rating system. Read on.
The COVID-19 omicron variant hasreached almost 25 states, and most organizations are returning to a hybrid working environment. This is driving increased demand for information technology services. Investors' interest in the information technology services sector is evident in the Vanguard Information Technology Index Fund ETF' (VGT) 2.3% returns in the past month and 9.3% gains over the past three months.
Furthermore, the information technology services market is expected to grow exponentially due to increasing demand from almost every industry as part of their digital transformation efforts. According to Statista, IT spending worldwide is expected to reach approximately$4.2 trillion in 2021.
Given this backdrop, we think it could be wise to bet on fundamentally strong information technology services stocks Accenture plc (ACN), International Business Machines Corporation (IBM), and EPAM Systems, Inc. (EPAM). They each have an overall B (Buy) rating in our proprietaryPOWR Ratingssystem.
Accenture plc (ACN)
Based in Dublin, Ireland, ACN is a professional services company that provides strategy and consultation, interactive, and technology and operations services worldwide. The company also offers several application services.
On November 18, 2021, ACN acquired BRIDGEi2i, an artificial intelligence (AI) and analytics firm headquartered in Bengaluru, India. The acquisition is expected to enhance the company's operations, especially in the analytics domain.
For its fiscal fourth quarter, ended August 31, 2021, ACN's revenues increased 23.8% year-over-year to $13.42 billion. Its operating income came in at $1.96 billion, up 26.8% year-over-year. And itsnet incomeincreased 10.1% year-over-year to $1.44 billion. Also, its EPS increased 10.6% year-over-year to $2.20.
ACN's revenue is expected to be $50.53 billion in its fiscal year 2022, representing a 12.7% year-over-year rise. The company's EPS is expected to increase 14.6% year-over-year to $8.94 in the current year. Over the past year, the stock has gained 54.1% in price to close Friday's trading session at $379.46.
It is no surprise that ACN has an overall B rating, which equates to a Buy in ourPOWR Ratingssystem. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
In addition, it has a B grade for Momentum, Stability, and Quality. ACN is ranked #5 of 11 stocks in theOutsourcing - Tech Servicesindustry. Clickhereto see the additional POWR Ratings for ACN (Growth, Value, and Sentiment).
International Business Machines Corporation (IBM)
IBM in Armonk, N.Y., provides integrated solutions and services worldwide. It operates in Cloud & Cognitive Software; Global Business Services; Global Technology Services; Systems; and Global Financing segment.
On November 30, 2021, IBM announced the acquisition of SXiQ, an Australian digital transformation services company. John Granger, Senior Vice President, Hybrid Cloud Services, IBM Consulting, said, "IBM's acquisition of SXiQ brings additional hybrid and multicloud expertise that is at the core of open innovation for clients."
IBM's total revenue came in at $17.62 billion for the third quarter, ended September 30, 2021, compared to $17.56 billion in the previous period. Its goodwill was $61.38 billion for the period ended September 30, 2021, versus $59.62 billion for the period ended December 31, 2020. Furthermore, its total liabilities were $121.86 billion, compared to $135.24 billion for the same period.
IBM's EPS is expected to grow 12.2% to $9.73 in the current year. Also, its EPS is expected to grow 6.9% per annum for the next five years. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past month, the stock has gained 3.2% in price to close Friday's trading session at $124.10.
IBM's strong fundamentals are reflected in its POWR ratings. The stock has an overall B rating, which equates to a Buy in our proprietary rating system.
In addition, it has a B grade for Value, Momentum, and Quality. IBM is ranked #10 of 51 stocks in theTechnology - Hardwareindustry. Clickhereto see the additional POWR Ratings for IBM (Growth, Stability, and Sentiment).
EPAM Systems, Inc. (EPAM)
EPAM provides digital platform engineering and software development services in North America, Europe, Russia, Belarus, Kazakhstan, Ukraine, Georgia, East Asia, Southeast Asia, and Australia. The Newtown, Pa.-based company offers several engineering services.
On November 9, 2021, EPAM announced the acquisition of Emakina Group. Balazs Fejes, President of EU and APAC Markets at EPAM, stated, "We're pleased to welcome the Emakina Group to EPAM. Their teams add a layer of strategy, creativity and digital experience expertise to EPAM's global digital and design portfolio."
For its fiscal third quarter, ended September 30, 2021, EPAM's total revenues increased 51.6% year-over-year to $988.54 million. The company's net income increased 29.3% year-over-year to $115.66 million. Also, its EPS came in at $1.95, up 27.5% year-over-year.
EPAM's revenue is expected to be $3.74 billion in its fiscal 2021, representing a 40.6% year-over-year rise. The company's EPS is expected to increase 38.6% year-over-year to $8.79 in the current year. It surpassed the Street's EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 116% in price to close Friday's trading session at $697.13.
It is no surprise that EPAM has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has a B grade for Growth, Momentum, Sentiment, and Quality.
EPAM is ranked #29 of 168 stocks in theSoftware - Applicationindustry. Clickhereto see the additional POWR Ratings for EPAM (Value and Stability).
Click here to check out our Software Industry Report for 2021
ACN shares rose $0.36 (+0.09%) in premarket trading Monday. Year-to-date, ACN has gained 47.20%, versus a 27.37% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With amaster's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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