Needless to say, even though technology has had its struggles this year, mobile and cloud networking has hung in very well. With earnings season and the second half underway, many investors are looking for opportunities in technology, and this may be an outstanding part of the sector to look at.
A new report from RBC cites the strong growth potential, some very reasonable valuations and the potential for strong free cash flow generation as three good reasons to look at mobile and cloud networking stocks heading into earnings. Four top stocks to buy are the analysts’ favorites now, and they are all rated Outperform.
This company has been the subject of takeover chatter recently. Amdocs Ltd. (NYSE: DOX) is a customer management software company that provides billing and customer relationship management software and services for communications, media and entertainment industry service providers worldwide. With revenue of $3.6 billion in fiscal 2014, Amdocs has more than 22,000 employees who serve customers in over 80 countries.
The RBC team sees carrier consolidation as a market positive longer term. They also have pointed out in past reports the company has strong visibility and revenues coverage generating an outstanding $600 million in free cash flow a year. They think the company can continue growing this business organically and through additional acquisitions. Plus the analysts see the company generating close to $600 million in free cash flow much, of which they think could be returned to shareholders.
Amdocs investors are paid a 1.21% dividend. The RBC price target is $62. The Thomson/First Call consensus price target is $58.60. Shares closed Monday at $56.30.