Chicago, IL – February 24, 2025 – Today, Zacks Equity Research discusses AppLovin Corp. APP, Byrna Technologies Inc. BYRN and LiveRamp RAMP.
Industry: Tech Services
Link: https://www.zacks.com/commentary/2419651/3-stocks-to-buy-from-the-booming-technology-services-industry
The Technology Services domain has witnessed healthy growth since the pandemic, fueled by the swift adoption of remote work, augmenting the global digital transition. Technological advancements like 5G, blockchain, artificial intelligence (AI) and machine learning (ML) have expanded the industry.
AppLovin Corp., Byrna Technologies Inc. and LiveRamp are set to capitalize on the current trends.
The Zacks Technology Services industry encompasses companies producing, developing, and designing various software support, data processing, computing hardware and communications equipment. These offerings range from integrated powertrain technologies, advanced analytics, technology solutions and contract research services to semiconductor packaging and interconnect technologies, collaboration software, specialty printers, and data acquisition and analysis systems.
This industry caters to consumer and business markets and serves diverse end markets and customer segments. Furthermore, some industry players offer advanced analytics, clinical research services, data storage technology and solutions, and technology-enabled financial services for consumers and small business owners.
Rising Demand Environment: The industry is mature, with the demand for services remaining healthy over time. Revenues, income and cash flows are expected to reach the pre-pandemic levels, benefiting most industry players to pay out stable dividends.
Economic Recovery: The sector is a major beneficiary of the broader economy and service activities. According to the Bureau of Economic Analysis, GDP grew at an annual rate of 2.3% in the fourth quarter of 2024 compared with 3.1% growth in the preceding quarter. Economic activities in the non-manufacturing sector are on a good trajectory. The Services PMI measured by the Institute for Supply Management has stayed above the 50% mark in 53 out of 56 months.
Technological Advancement Takes the Lead: The global shift toward digitization creates opportunities in various markets, including 5G, blockchain and AI. The United States, an important player in the IT sector, is positioned for growth in the widespread adoption of smart technologies and increased investments in security. Companies adopt generative AI, ML, blockchain and data science faster to gain a competitive advantage. According to Bloomberg, the worldwide generative AI is expected to grow, witnessing a 42% CAGR over the next 10 years, and become a $1.3-trillion market by 2032.
The Zacks Technology Services industry, which is housed within the broader Zacks Business Services sector, carries a Zacks Industry Rank #78 at present. This rank places it in the top 31% of more than 248 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates continued outperformance in the near term. Our research shows that the top 50% of Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
Before we present a few stocks that you may want to consider for your portfolio, let us look at the industry’s recent stock market performance and current valuation.
The Zacks Technology Services industry has outperformed the broader Zacks Business Services sector and the Zacks S&P 500 composite over the past year.
The industry has returned 101.9% in a year compared with the 33.8% rise of the broader sector and the 21.2% rally of the Zacks S&P 500 Composite.
On the basis of EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation and amortization), which is used for valuing staffing stocks because of their high debt levels, the industry is trading at 115.6X at present compared with the S&P 500’s 17.7X and the sector’s 28.4X.
Over the past five years, the industry has traded as high as 119.3X and as low as 64.1X, with the median being 81.7X.
Here, we have recommended three high-potential technology services stocks expected to benefit from the booming market.
AppLovin: This company engages in building a software-based platform for advertisers to improve the marketing and monetization of their content in the United States and across the globe.
APP’s platform surpasses the 1 billion people mark in mobile games daily. The engagement times are analogous to social networks, thereby providing a sufficient base for advertising. The users engaging with the company’s network are not shifting away from existing purchases; rather, they are discovering new products while playing games, which boosts demand.
Improved performance of the company’s mobile gaming partners, coupled with promising results from e-commerce advertisers, are driving AppLovin’s advertising business.
APP flaunts a Zacks Rank #1 (Strong Buy) at present. The Zacks Consensus Estimate for its 2025 bottom line has increased 16.6% in the past 60 days. APP shares have gained 401.6% in the past six months.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Byrna Technologies: This less-lethal self-defense technology company is benefiting from continuing its celebrity endorsement programs. Strongly engaged audiences and influential platforms of these celebrities are driving factors for brand awareness and delivering strong results.
Additional sales via BYRN’s higher-margin DTC channels, an intensive cost component reduction effort led by the company’s engineering team, and economies of scale resulting from rising production volumes are driving its gross margins. Also, the company is building physical stores to reach customers better. Even though this brick-and-mortar approach can affect capital expenditure, long-term value generation is certain.
BYRN currently sports a Zacks Rank #1. The Zacks Consensus Estimate for its 2025 bottom line has increased 21.7% in the past 60 days. BYRN shares have gained 165.3% in the past six months.
LiveRamp: This technology company runs a data collaboration platform and is benefiting from a surge in subscription revenues, driven by upsell. Strength in digital advertising markets is aiding revenues generated from the marketplace.
Market demand for data collaboration has not plateaued, and the company is in a position to meet the demand. The need for measurable marketing outcomes and the recognition that many companies lack data to operate independently is driving the demand.
RAMP flaunts a Zacks Rank #1 at present. The Zacks Consensus Estimate for 2024 earnings per share has increased marginally in the past 60 days. RAMP shares have gained 28.3% in the past six months.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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