Remote Working Boosts Sales of PC, Peripherals: 4 Picks
The coronavirus pandemic is keeping everyone indoors, helping the work-and-learn from home culture gain prominence. If health experts are to be believed, the sooner we get used to this new normal the better.
Demand for video collaboration products gained traction over the past few months as schools and offices were shut in a bid to prevent the spread of coronavirus. This sawlocked-down staff relying on video conferencing equipment, software and webcams spurring demand for computers, laptops, tablets, hardware, peripherals and the network software.
Computer Shipments Grow
In spite of huge demand, it was difficult to buy computers, laptops and other peripherals given that lockdowns imposed by other countries halted shipments. Moreover, manufacturing too had come to a standstill, affecting overall sales of computers and related equipment.
However, sales bounced back in the second quarter. According to International Data Corporation (IDC), PC shipments grew in the second quarter despite an economic slowdown. A new report from the research firm says global shipments grew 11.2% year over year to 72.3 million units.
Traditional PC shipments posted double-digit year-over-year growth in the second quarter of 2020. While the first quarter saw the lowest PC shipments in over a decade, the second quarter was record breaking for the opposite reason. IDC also predicts that volumes are expected to surpass 21 million units this year, the highest since the end of 2009.
Companies Report Sales Growth
While a large section of the economy is battered by the pandemic, the tech sector seems to be its biggest beneficiary. Logitech, Inc. LOGI last week reported that it sales rose 23% year over year to $792 million in the second quarter, thanks to strong sales of webcams, headsets and other PC accessories. In fact, the company’s shares hit an all-time high following the announcement.
Also, Microsoft Corporation MSFT reported a 13% year-over-year jump in fiscal fourth-quarter revenues. The company said that licenses for consumer devices accelerated to 34% after falling 10% a quarter earlier. According to a report by Trends Market Research, the global computer peripherals market, which was valued at $4 billion in 2017, is expected to reach $289.3 billion by 2026, at a CAGR of 70.8%.
The pandemic has changed the world completely. Strong demand driven by work-from-home as well as e-learning needs has surpassed previous expectations and has once again put the PC and peripherals market at the center of consumers’ tech portfolio.
Our Choices
The at-home culture is here to stay for a longer time than expected with no signs of the pandemic easing. Demand for PCs, laptops, tablets and other peripherals will only grow in such a situation, helping these four stocks to gain.
Dell Technologies Inc. DELL is a provider of information technology solutions. The company's operating segment consists of Client Solutions, Enterprise Solutions Group and Dell Software Group. The Client Solutions segment includes sales to commercial and consumer customers of desktops, thin client products, notebooks as well as services and third-party software and peripherals of Client Solutions hardware.
The company’s expected earnings growth rate for next year is 7%. The Zacks Consensus Estimate for current-year earnings has improved 5.6% over the past 60 days. Dell has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Logitech International is a global leader in peripherals for personal computers and other digital platforms. It develops and markets innovative products in PC navigation, Internet communications, digital music, home-entertainment control, video security, interactive gaming and wireless devices.
The company’s expected earnings growth rate for the current year is 16.3%. The Zacks Consensus Estimate for current-year earnings has improved 10.6% over the past 30 days. Logitech sports a Zacks Rank #1.
Lenovo Group Ltd. LNVGY is dedicated to building PCs and mobile Internet devices. Lenovo's business is built on product innovation, a highly-efficient global supply chain and strong strategic execution.
The company’s expected earnings growth rate for the current year is 35.8%. The Zacks Consensus Estimate for current-year earnings has improved 2.8% over the past 30 days. Lenovo has a Zacks Rank #2.
Sony Corporation SNE designs, manufactures and sells several consumer and industrial electronic equipment. The company’s product roster comprises audio and video equipment, televisions, displays, semiconductors, electronic components, gaming consoles, computers and computer peripherals, and telecommunication equipment.
The company’s expected earnings growth rate for next year is 53.1%. The Zacks Consensus Estimate for current-year earnings has improved 2% over the past 60 days. Sony carries a Zacks Rank #2.
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