QVI Stock Picks Review | Q1 2024 | #8
Quality Value Investing's information technology sector updates for MSFT, AAPL, INTC, LFUS, DOX, CTSH, and NVDA.
Summary
Quality Value Investing reviews the performance, current wealth, and present value of the seven information technology sector holdings in the QVI Real-Time Stock Picks.
The companies in this report include Microsoft, Apple, Intel, Littelfuse, Amdocs, Cognizant Technology Solutions, and NVIDIA.
Changes in my views (buy, hold, or sell) as a result of this updated review are reflected in the QVI Concentrated and Expanded Stock Picks Real-Time Performance Trackers.
When referencing this report, premium (paying) subscribers can access their Quality Value Investing (QVI) Glossary of Investing Terms and Metric Targets. Unless noted, all data presented is sourced from Seeking Alpha Premium as of the intraday market on March 25, 2024, and intended for illustration only.
In this series, Quality Value Investing reviews the QVI Real-Time Stock Picks by sector to update each holding’s performance, current wealth, and present value.
Today’s post covers QVI’s seven information technology sector picks: Microsoft Corporation (MSFT), Apple, Inc. (AAPL), Intel Corporation (INTC), Littelfuse Inc. (LFUS), Amdocs Limited (DOX), Cognizant Technology Solutions Corporation (CTSH), and NVIDIA Corporation (NVDA).
Company Current Wealth
To uncover each company’s current wealth, QVI defines the value proposition, measures returns on management, and assesses enterprise downside risks.
Value Proposition
QVI’s value proposition section defines the competitive advantages of each company’s products or services to its customers compared to the industry.
Economic Moat
Morningstar assigns wide economic moat ratings to Microsoft, Apple, and NVIDIA. Narrow moats surround Littelfuse, Amdocs (assigned by QVI), and Cognizant Technology Solutions. Morningstar has downgraded Intel’s moat rating to none.
Value Proposition Elevator Pitches
Microsoft is the reigning king of productivity software, whether business, personal, cloud, or desktop.
Apple is the preminent leader in productivity hardware and services, whether business or personal, mobile, wearables, television, or desktop, each anchored by its unparalleled iOS ecosystem.
Intel is one of the largest semiconductor companies in the world and holds the lion's share of the PC and server processor markets. Despite newsworthy headwinds of recent, Wall Street's bullish sentiment expects its legacy status and market foothold to continue over the longer term.
Littelfuse is a near-century-old electronic component manufacturer that generates sustainable profit and cash flow by piling 'em high and selling 'em (relatively) cheap. Unlike the consumer, energy, materials, and industrials sectors, Littelfuse operates with a lesser threat of low-cost producer commoditization due to the network effect and switching costs of of the technology space.
Amdocs is a provider of cloud portfolios with close to 1,000 relationships with loyal major content producers, communications services, and media providers worldwide. It offers an array of B2B technology products and services in 5G, automation, cloud, and digital.
Cognizant Technology Solutions is a professional services company that produces a timely, profitable, and enduring business model by helping clients from a representative majority of global healthcare, financial services, media, and internet companies become data-enabled and data-driven in the digital era.
NVIDIA is a semiconductor manufacturer that offers unrivaled graphics performance for gamers and is now strategically full-on in "solving the world's visual computing challenges" with world-class artificial intelligence solutions.
Returns on Management
QVI’s fundamentals section measures the performance strength of each company’s senior management by analyzing revenue growth, net profit margin, and returns on equity and invested capital.
Revenue Growth and Net Profit Margins
NVIDIA had rocket-ship three-year trailing revenue growth, and Littelfuse, Microsoft, and Apple had solid double-digit growth. Amdocs and Cognizant Technology Solutions delivered mid-single-digit topline increases, while Intel had negative growth during the coverage timeframe.
The information technology sector had a +4.18% median revenue growth for comparison.
All seven technology picks had impressive double-digit median net profit margins in the three-year trailing period, led by Microsoft, NVIDIA, Apple, and Intel.
The sector had a +2.50% median net profit margin.
Next, we’ll look at each company’s returns on management and enterprise downsize risks and each stock’s present value, including shareholder yields, valuation multiples, and share price downside risks, exclusive to Quality Value Investing’s premium (paying) subscribers. The post concludes with the updated views on each covered stock.
Disclosure: I/we have beneficial long positions in the common shares of AAPL and MSFT in our family portfolio. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it other than from Substack paid subscriptions. I have no business relationship with any company whose stock is mentioned in this article.
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