3 Stocks to Buy From a Prospering Technology Solutions Industry

Industry Overview - The Zacks Computer – Integrated Systems industry includes companies like Seagate Technology, Agilysys, and PAR Technology, benefiting from trends such as advancements in data management, a shift to integrated systems, and increased demand for modern application development [1][2] - Companies are investing in data modernization, cybersecurity, remote work enablement, and supply chain modernization to accelerate digital transformation for enterprise customers [2] Industry Trends - There is a surge in demand for integrated solutions driven by investments in IoT, big data analytics, AI, and blockchain, with opportunities in business analytics, cloud computing, and security solutions [3] - The multi-cloud model is being adopted robustly, allowing enterprises to optimize resource utilization and scalability, with emerging economies expected to drive future growth [4] Challenges - The industry faces supply chain bottlenecks, softening demand for servers, and delays in customer acceptance, leading to significant order backlogs [5] - The ongoing semiconductor chip shortage is impacting the industry, complicating the transition to cloud computing and affecting spending on datacenter systems [6] Market Performance - The Zacks Computer – Integrated Systems industry ranks 79, placing it in the top 32% of over 250 Zacks industries, indicating potential outperformance in the near term [7][8] - The industry's earnings estimate for 2024 has increased by 14.9% since November 30, 2023, reflecting a positive earnings outlook [9] Stock Performance - The industry has underperformed compared to the broader Computer and Technology sector and the S&P 500, returning 25.3% over the past year, while the S&P 500 and sector returned 30% and 32%, respectively [11] - The industry is currently trading at a trailing 12-month P/S ratio of 4.01X, below the S&P 500's 5.63X and the sector's 7.59X [13] Company Highlights - Seagate Technology: Positioned as a leader in mass-capacity storage solutions, benefiting from growth in data storage demands driven by AI and cloud computing, with a 14.6% return year to date [14][17] - Agilysys: A leading provider of hospitality and retail software solutions, achieving record-high service revenues and a 45.2% return year to date [19][23] - PAR Technology: Focused on cloud-based restaurant management solutions, with significant market presence and a 72.1% return year to date [25][27]