The Zacks Analyst Blog Highlights: Microsoft, Intel, Cisco And HP
Zacks Investment Research | Mar 05, 2018 08:12PM ET
For Immediate Release
Chicago, IL – March 6, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Microsoft Corp. (NASDAQ:MSFT) , Intel Corp. (NASDAQ:INTC) , Cisco Systems Inc. (NASDAQ:CSCO) and HP Inc. (NYSE:HPQ) .
Here are highlights from Monday’s Analyst Blog:
4 Tech Stocks to Buy as India Returns to Growth Trajectory
India recently regained its position as the fastest growing economy in the world outshining China. The Indian GDP grew at 7.2% year over year in the October-December 2017 quarter fueled by strong performance in the manufacturing and services sectors. This is the highest quarterly growth recorded since July-September quarter of 2016. It also surpassed the street estimate of 6.9%. Meanwhile, China’s GDP grew at 6.8%.
India is likely to become the fifth largest economy in the world in 2018. The country has a massive population of which 70% are below the age of 35 and are highly tech savvy. Consequently, the potential growth prospects of the U.S. tech companies are very high as these command strong presence in India.
Economic Reforms Pay-Off
Prime Minister Narendra Modi’s administration has undertaken several administrative reforms in the last four years. Initially, these reforms, especially demonetization and imposition of GST (Goods and Services Tax) resulted in economic fluctuations in last two to three quarters. However, all those reforms have finally started to yield results.
During the December quarter, the gross valued added (GVA) for manufacturing grew at 8.9% compared with 6.9% in the previous quarter. The agricultural sector GVA grew at 4.1% compared with 2.7% in the previous quarter.
The construction sector recorded growth of 6.8% outpacing previous quarter’s growth of 2.8%. The services segment including financial services grew at rate of 6.7% from 6.4% in previous quarter. Moreover, infrastructure output grew 6.7% year over year in January 2018.
Momentum Likely to Continue
Notably, in November 2017, the government of India received a shot in the arm, as the country for the first time secured a place in the top 100 of the World Bank’s Ease of Doing Business (EDB) global rankings. According to the World Bank, between Jun 2, 2016 and Jun 1, 2017, India improved in nine out of 10 categories in making processes easy for doing business.
According to the World Bank’s Global Economic Prospects in January 2018, Indian economy is likely to grow at 7.3% in 2018. The country is going to register higher growth rate than other major emerging market economies over the next decade. The World Bank stated strong private consumption and services are expected to continue to support economic activity.
In February 2018, Moody’s Investors Service has projected India’s GDP growth rate at 7.6% for 2018 and 7.5% for 2019. In November 2017, Moody’s Investors Service upgraded India’s sovereign bond rating for the first time in nearly 14 years. The rating agency was optimistic about structural reforms undertaken by the Modi administration is likely to boost growth and reduce the debt burden. Moody’s lifted India’s rating to Baa2 from Baa3 and changed its rating outlook to stable from positive as “risks to its credit profile were broadly balanced”.
Moreover, in its World Economic Outlook Update in October 2017, the IMF (International Monetary Fund) retained India’s growth projections at 7.4 per cent for the next financial year (2018-19). Growth is anticipated to moderate gradually in China but will pick up in India, and remain broadly stable in the Asean-5 region.
Why Tech Stocks?
Currently, India is home to a young and tech savvy population which represents strong growth prospects for tech majors. These “millennials” are the key drivers for growth of Internet-based applications, e-commerce and mobile-transaction related software.
Notably, India has a population of 1.234 billion. The millennials have a strong appetite for new technologies. As this group will comprise 75% of the workforce by 2025, India surely emerges as a long-term investment bet for tech giants.
In December 2017, per a report by National Association of Software and Services Companies (NASSCOM), the market size of Internet industry in India is likely to reach $250 billion by 2020, growing to 7.5% per cent of its gross domestic product (GDP). The number of Internet users in India is expected to reach 730 million by 2020, supported by fast adoption of digital technology.
The public cloud services market in India is slated to grow 35.9% to reach $1.3 billion according to IT consultancy, Gartner in February 2017. Increased penetration of Internet (including in rural areas) and rapid emergence of e-commerce are the primary catalysts for continued growth of data center co-location and hosting market in India.
According to Gartner, the Indian Healthcare Information Technology market is valued at $1 billion currently and is expected to grow 1.5 times by 2020. India's business to business (B2B) e-commerce market is expected to reach $700 billion by 2020 while the business to consumer (B2C) e-commerce market is expected to reach $102 billion by 2020.
Strong Telecom Advancement in India
India is currently the second-largest telecommunication market and has the third-highest number of Internet users in the world, according to the Ericsson (BS:ERICAs) Mobility Report in November 2017. Data usage on Indian telecom operators' networks doubled in six months to 359 petabytes or 3.7 million gigabytes per month. The share of 4G LTE data usage was 80% at the end of 2017.
According to the Ericsson Mobility Report, smartphone subscriptions in India is expected to increase to 810 million users by 2021, while the total smartphone traffic is anticipated to grow to 4.2 Exabytes per month by the same year.
Indian telecommunication companies will be investing $20 billion over the next two years for expansion of network and operations. The telecom industry has attracted FDI (foreign direct investment) worth $24.033 billion between April 2000 and June 2017, according to the data released by Department of Industrial Policy and Promotion (DIPP).
Our Top Pick
India has exhibited tremendous resilience in times of global uncertainty. Improving current account deficit, a recovery in private investment, introduction of the GST, and a stable monetary policy are major positives for the economy.
Given India’s significantly young population and vast scope for expansion in tech related areas, key companies in this domain enjoy strong business prospects. Here we offer four stocks to watch out for from the information technology sector as they have strong business interest in India. Each of these stocks carry a Zacks Rank #2 (Buy). You can seeZacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.