Since the end of the first half of 2022 is not far off, it seems that it will be remembered as a difficult period for investors, especially for those invested in technology stocks. Since the beginning of 2022, the Nasdaq Composite Index, identified by technology companies, has fallen by a third. The decline in the index began earlier after reaching a peak last November, when investors’ tastes changed in anticipation of rising interest rates.
Israeli stocks traded in New York, most of which are technology companies, also showed mostly double-digit negative returns since the beginning of the year as investors shifted their money from growth stocks to value stocks.
However, in the Israeli technology sector, it is also possible to find some surprising stocks that have gone through this period with positive returns, some even quite high. The shares in question belong to the stable, profitable, veteran companies Check Point (Nasdaq: CHKP), Amdocs (Nasdaq: DOX) and Elbit Systems (Nasdaq: ESLT) (which as a defense company benefits from increased defense budgets), and companies awaiting the completion of acquisition deals, such as Tower Semiconductor (Nasdaq: TSEM) and Tufin Software Technologies (NYSE: TUFN).
There are also stocks that, despite falling along with the general decline, still outpaced the Nasdaq index. Among them are solar technology company SolarEdge (Nasdaq: SEDG), which fell 5.7%, and Radcom (Nasdaq: RDCM), which fell 15.8%.
Check Point: Dropped from the index and beat it
Cybersecurity company Check Point is one of the longest-running Israeli shares on Wall Street and the most valuable, with a current market capitalization of $ 15.2 billion. Last year, the company, led by Gil Swede, performed weaker than the Nasdaq 100 index, in which it was listed, and was excluded from the index at the end of the year. However, the trend has changed since then, and while the index is falling, Check Point has hit 4% so far this year.
Investors see Check Point as a secure and reliable company that reports profits and generates cash quarter after quarter. Profits did fall in the first quarter, but the reason for this was to expand the workforce in order to increase, with Check Point seeing revenue growth of 5.6% this year, higher than in recent years.
Check Point also has a very large cash cushion of $ 3.8 billion at the end of the first quarter, nearly a quarter of its current market capitalization. For the past few years, in addition to a few small acquisitions, he has used his money to repurchase his own shares on a quarterly basis to keep his stock price down.
Amdocs: Still close to its highest value of all time
Another Israeli veteran company is Amdocs, which provides IT systems and services to telecommunications companies. The company, led by Joshua (Shuki) Schaeffer, has a market capitalization of $ 9.5 billion and although its share price has fallen over the past few sessions, it is still quite close to its all-time high. reached very recently (adjusted for dividends) and reported a 5.6% positive return since the beginning of the year.
Like Check Point, Amdocs also has a single-digit growth rate. He forecasts revenue growth of 5.2-7.2% this year and also repurchases shares quarterly. In the first quarter, it bought back shares worth $ 130 million.
In addition, Amdocs pays a quarterly dividend. At the end of its second fiscal quarter (until the end of March), Amdocs had $ 856 million in cash. He recently announced the acquisition of a British company for $ 188 million in cash.
Elbit Systems: Rising stock prices hurt performance
The share price of Elbit Systems rose sharply in the first quarter, to the extent that this negatively affected the results. Earnings for the first quarter were lower than expected as the company spent $ 35 million on employee compensation programs. As part of the compensation paid to retain employees was in the form of phantom options, the rise in the share price forced the company to make provisions to cover them.
The share price rose 26.6% in the first quarter, and although it has fallen back since then, Elbit Systems still has a 12.1% positive return since the beginning of the year.
Elbit Systems, led by Behalel Mahlis, has reportedly benefited from rising defense budgets, especially in Europe and NATO, following Russia’s invasion of Ukraine and the Asia-Pacific region over fears of China’s growing military power.
The company’s retained orders at the end of the first quarter were $ 13.7 billion. It reported revenue of $ 1.35 billion for the quarter and reported a net profit (non-GAAP) of $ 54.3 million.
Elbit Systems had $ 277 million in cash at the end of the quarter and had long-term debt to bondholders. The company pays a quarterly dividend. By the way, another defense of Israel with a positive return for the year so far is RADA Electronic Industries (Nasdaq: RADA), which rose 22.7% to a market capitalization of $ 575 million.
Tower Semiconductor: Intel’s sale creates security
Migdal Ha’emek’s Tower Semiconductor maker, led by Russell Eluanger, has a positive return of 17% for the year so far and 67% for the past twelve months. In February this year, it was announced that Intel would buy Tower for $ 5.8 billion ($ 5.4 billion without its money), and in late April, Tower shareholders approved a deal that now awaits all conditions for its closure. .
The sale of Intel creates security for investors, and the price of shares of Tower Semiconductor has fallen much less than the prices of other shares in the sector. However, while it was trading at a price close to the price of the deal ($ 53), it is now about 12% below it, reflecting some degree of uncertainty as to whether the deal will be completed.
Tuffin: Awaiting sale
Another company that has been sold and is awaiting the completion of the deal is Tufin, which specializes in data security policy. The company, founded by Reuven Kitov and Reuven Harrison, announced in late April that it would be sold for $ 570 million to US investment firm Turn / River Capital, with a deal to be completed in the next few weeks.
Tufin’s share price in the deal was $ 13, lower than the New York Stock Exchange IPO in 2019, which was $ 14, but reflected a 44% premium on the share price the day before the announcement. The current share price of Tufin is $ 11.50, after a slight decline in the last few sessions, about 11.5% below the acquisition price.
Posted by Globes, Israel Business News – en.globes.co.il – on June 16, 2022.
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