4 Stocks to Watch From a Prospering Technology Solutions Industry

Industry Overview - The Zacks Computer – Integrated Systems industry includes companies like IBM, HPE, Agilysys, and PAR Technology, benefiting from trends such as advancements in data management, integrated deployment techniques, and 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 expectations of recovering global IT spending [3] - The multi-cloud model is being robustly adopted, allowing enterprises to optimize resource utilization and scalability, with emerging economies playing a crucial role in future growth [4] Challenges - Industry participants face 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 across Data-Center Systems [6] Performance Metrics - The Zacks Computer – Integrated Systems industry ranks 77, placing it in the top 31% of over 250 Zacks industries, indicating a positive earnings outlook [7] - The industry has underperformed compared to the broader Computer and Technology sector and the S&P 500, returning 17.9% over the past year compared to 23.3% and 32.4% respectively [8] Valuation - The industry is currently trading at a trailing 12-month Price-to-Sales (P/S) ratio of 1.82X, below the S&P 500's 4.04X and the sector's 5.25X [9] Company Highlights - PAR Technology: Focuses on microprocessor-based transaction processing systems, with a growing software business and recent acquisitions to expand its offerings [10][11] - IBM: Experiencing growth in its software segment due to hybrid cloud adoption, with significant acquisitions to enhance its capabilities [13][14][15] - Hewlett Packard Enterprise (HPE): Benefiting from backlog clearance and investments in networking capabilities, with a strategic acquisition of Juniper Networks [17][18] - Agilysys: Gaining from demand for cloud-native products and record high services revenues, although shares have declined year to date [20]