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Although the Federal Reserve’s aggressiveness to raise interest rates has slowed, the likelihood of a recession remains widespread. However, given the strong demand for technology products and services, the outlook for the industry looks bright. Therefore, investors can buy quality technology stocks Salesforce (CRM) regardless of the recession. However, it may be best to avoid the fundamentally weak BlackBerry (BB). Continue reading….
Despite rising expectations that the pace of federal rate hikes has slowed and the economy can avoid a recession, according to the New York Fed’s recession probability model, 57% recession over the next 12 months.
But the tech giants seem largely unperturbed, bracing for a possible slowdown. Conference Board Chief His Economist Dana Peterson said: Reduce risk by accelerating innovation and digital transformation, pursuing new opportunities in high-growth markets, and revising business models, are the three most cited actions. ”
Moreover, the outlook for the technology industry is bright as the market for new technologies such as artificial intelligence grows.Global AI Solutions Market is Projected to Grow at a CAGR 29.4% by 2028.
Tech stocks were under pressure last year due to macroeconomic issues. While investors can buy quality tech stocks, Salesforce, Inc. (CRM), a fundamentally weak BlackBerry Limited (BB) is best avoided.
Stock to buy:
Sales Force Inc. (CRM)
CRM provides customer relationship management technology that connects businesses and customers around the world.
CRM’s forward price/book was 2.74x, 31.9% lower than the industry average of 4.03x.
Its trailing 12 months gross margin of 72.69% is 47.8% higher than the industry average of 49.18%. With a trailing 12-month leveraged FCF margin of 30.62%, he beats the industry average of 6.75% by 353.7%.
For the third quarter ended October 31, 2022, CRM total revenue was $7.84 billion, up 14.2% year-over-year. Additionally, gross profit was $5.75 billion, reflecting an increase of 14.5% year-over-year. Operating profit was $460 million, an increase of 1,110.5% year-over-year.
Analysts expect CRM revenue to grow 16.9% year-on-year to $30.97 billion in 2023. EPS is expected to grow at an annual rate of 18.3% over the next five years. Exceeded EPS estimates in all four subsequent quarters. CRM shares are up 21.9% year-to-date and closed the last trading session at $161.62.
The strong fundamentals of CRM are POWR ratingThe stock has an overall rating of B, which translates to a ‘Buy’ in our proprietary rating system. POWR Ratings evaluate stocks by 118 different factors, each with its own weighting.
CRM has an A grade for growth and a B grade for sentiment.in the software application The industry ranks 26th out of 137 stocks.click here Additional POWR ratings for CRM Value, Momentum, Stability, and Quality.
Inventory to avoid:
BlackBerry Limited (BB)
Headquartered in Waterloo, Canada, BB provides intelligent security software and services to businesses and governments around the world. The company operates in his three segments. IoT; licensing and more.
BB’s forward EV/sales of 3.61x is 22% higher than the industry average of 2.96x. 3.57x forward price/sales is 23.7% higher than the industry average of 2.89x.
BB’s negative EBITDA and net profit margin for the last 12 months were 13.19% and 13.77%, below industry averages of 11.28% and 2.89%.
BB revenues were $169 million for the quarter ended November 30, 2022, down 8.2% year-over-year. His adjusted EBITDA was negative $22 million, compared with negative $8 million in the same period last year. Additionally, gross profit decreased 6.8% year-over-year to $109 million.
Street expects BB’s revenue to fall 6% year over year to $674.73 million in 2023. His EPS for the same period is expected to be -$0.21, down 110% year over year. Over the past year, the stock has fallen 41.4% and he finished the last trading session at $3.90.
BB’s POWR rating reflects its poor prospects. An overall D grade, equivalent to selling on the POWR rating system.
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CRM stock. Year-to-date, CRM is up 21.89% of him, while the S&P 500 Index is up 4.36% of him over the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments.with MA in Economicsshe helps investors make informed investment decisions through insightful commentary.
post Tech stocks to buy in a recession and tech stocks to avoid first appeared StockNews.com