IT Tech Spending Going Higher: 3 Stocks to Buy That Could Benefit

By Lee Jackson Updated Jan 13, 11:16AM EST · Published Apr 1, 9:35AM EDT

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IT Tech Spending Going Higher: 3 Stocks to Buy That Could Benefit — © Thinkstock

There are lots of things that the chief financial officer at a company can cut to lower corporate spending. They range from travel and entertainment to bonus compensation to a host of other line items. One area that few can choose to cut spending on in this day and age is information technology (IT).

A new poll of chief information officers by SunTrust Robinson Humphrey indicates that companies will continue to see increases in technology spending. In fact, 78% of those surveyed spent the same level or more in the past three months, while only 22% indicated that they are slowing the rates of spending.

Three companies could be big beneficiaries of the continued strong spending, and all are rated Buy at SunTrust.

Accenture

This company was hit hard during the beginning of the year sell-off, but it has roared back since. Accenture PLC (NYSE: ACN) is a leading global professional services company, providing a broad range of services and solutions in strategy, consulting, digital, technology and operations. It combines unmatched experience and specialized skills across more than 40 industries and all business functions, underpinned by the world’s largest delivery network.

Accenture is a leader in IT services and should deliver solid and consistent earnings growth over the next few years as it is well positioned to benefit from solid global IT spending trends and the migration of corporate and government IT infrastructure to the cloud.
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The company announced last year it was launching five advanced analytics applications for the resources industries, which include utilities, oil and gas, chemicals and metals and mining companies, to enable insight-driven decision making for improved business outcomes. The new analytics applications are designed to support pricing, risk management, energy trading, credit collection and workforce planning decisions.

Accenture shareholders are paid a solid 1.90% dividend. The SunTrust price objective for the stock is $131, and the Thomson/First Call consensus price target is $118.38. The stock closed Thursday at $115.40 per share.

Cognizant Technology Solutions

This tech stock is well-liked across Wall Street. Cognizant Technology Solutions Corp. (NASDAQ: CTSH) provides IT consulting and business process outsourcing services worldwide. The company operates through four segments: Financial Services; Healthcare; Manufacturing, Retail and Logistics; and Other. It offers consulting and technology services, such as IT strategy, program management, operations improvement, strategy and business consulting services.

Cognizant is based in the United States but primarily uses an offshore workforce in India. The company is well positioned for a variety of trends in IT services, and many expect it to increase earnings well in excess of the industry average. The company solid second-quarter results that were broad based. In addition, the company raised second-half guidance and it a solid conservative technology holding to add

The $67 SunTrust price target is less than the consensus target of $69.52. The stock closed trading on Thursday at $62.70.

Globant

This lesser known IT company has solid high-end business. Globant S.A. (NYSE: GLOB) develops software solutions in the United States, Europe and Latin America. It designs and develops Internet-based solutions, such as e-commerce applications, consumer application and portals; games, social and digital platforms that function across Web and mobile channels; big data and high performance solutions; enterprise solutions, which include talent development solutions, open collaboration, enterprise operations and enterprise cloud development solutions; design methodologies and creative services, including service, user experience, visual and industrial design, and creative direction services; and mobile applications and user interfaces.

The company posted very solid fourth-quarter and full-year numbers in February. The revenue for the full year increased to $253.8 million, the company’s highest annual revenue to date, representing 27.2% year-over-year growth. Revenue for the fourth quarter amounted to $71.6 million, representing 29.8% year-over-year growth.

The SunTrust price target is set at $42, and the consensus target is $33.75. The stock closed most recently at $30.86.
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Today, companies can ill afford to fall behind their competition, and the increased IT spending shows that few are willing to take the chance that they will. These three companies all make sense for more aggressive growth accounts.

About the Author Lee Jackson →

Lee Jackson has covered Wall Street analysts' equity and debt research and equity strategy daily for 24/7 Wall St. since 2012. His broad and diverse career, which included a stint as the creative services director at the NBC affiliate in Austin, Texas, gives him unique insight into the financial industry and world.

Lee Jackson's journey in the financial industry spans over 30 years, with nearly two decades as an institutional equity salesperson at Bear Stearns, Lehman Brothers, and Morgan Stanley. His career was marked by his presence on the sell side during pivotal Wall Street events, from the dot.com rise and bubble to the Long Term Capital Management debacle, 9/11, and the Great Recession of 2008. This is a testament to his resilience and adaptability in the face of market volatility.

Lee Jackson’s practical financial industry experience, acquired from a career at some of the biggest banks and brokerage firms, is complemented by a lifetime of writing on various platforms. This unique combination allows him to shed light on the intricacies and workings of Wall Street in a way that only someone with deep insider experience and knowledge can. Moreover, his extensive network across Wall Street continues to provide direct access for him and 24/7 Wall St., a privilege few firms enjoy.

Since 2012, Jackson’s work for 24/7 Wall St. has been featured in Barron’s, Yahoo Finance, MarketWatch, Business Insider, TradingView, Real Money, The Street, Seeking Alpha, Benzinga, and other media outlets. He attended the prestigious Cranbrook Schools in Bloomfield Hills, Michigan, and has a degree in broadcasting from the Specs Howard School of Media Arts.