The other day, I was streaming my favorite TV show and, all of the sudden, my internet went out.
The last thing I wanted to do was call my internet provider and wait on hold for an hour.
Now, I know that this kind of thing is just a minor inconvenience in the grand scheme of things.
But when an outage occurs on a larger scale, businesses can lose thousands — or even millions — in revenue as the outage drags on.
That’s why companies spend millions to ensure their networks, internet and data processing run smoothly.
Better to spend millions now, than millions (or more) later.
Data firm Statista projects global spending on IT infrastructure will reach $237.3 billion by 2027.
That’s a 24% increase over the next five years!
Using our Stock Power Ratings system, I’ve found the perfect stock to capitalize on this trend.
Today’s Power Stock provides IT infrastructure to some huge clients in the U.S.: Science Applications International Corp. (NYSE: SAIC).
Do you ever wonder where the Department of Defense, NASA and the Department of Justice get their powerful IT infrastructure?
It comes from SAIC.
The company was recently awarded a $349 million contract to provide these services for the U.S. Navy’s tactical networks.
And that’s led to some nice tailwinds for its stock.
SAIC scores a “Strong Bullish” 87 out of 100 on our Stock Power Ratings system. We expect it to beat the broader market by 3X in the next 12 months.
SAIC Stock: Solid Quality and Value
SAIC reported a strong third quarter of fiscal 2022.
Here are two high points:
- It reported operating income of $133 million — a 17% increase from the same period a year ago!
- It has one-year annual earnings per share growth rate of 34%.
These sales figures show why SAIC stock scores a 73 on our growth factor in Stock Power Ratings.
It’s also a fantastic quality stock. SAIC’s returns on assets, equity and investment are all positive, while its industry peers average negative returns.
SAIC’s operating margin is 6.7%. By comparison, the industry average is -19.1%. This tells us company management knows how to keep profits rolling in.
The stock earns a 74 on our quality metric.
But where I’m most impressed is its momentum, especially in the short term.
From its recent low in September 2022 to now, SAIC stock has jumped up 22.7%.
Zooming out to the last 12 months, the stock is up 22.3% compared to the S&P 500, which is down 7.4% during the same time.
SAIC stock scores an 87 overall on our proprietary Stock Power Ratings system.
That means we’re “Strong Bullish” and expect it to beat the broader market by at least 3X in the next 12 months.
Companies spend millions each year to reinforce their IT infrastructure.
Science Applications International calls some of the biggest government entities as close clients in this space.
This makes SAIC a great addition to your portfolio.
Stay Tuned: Is Artificial Intelligence a Top Investment for 2023?
AI is all the rage right now, and this innovative tech is finding its way into many aspects of our lives.
But is it worth investing in right now?
I’ll explore AI’s various applications in tomorrow’s Stock Power Daily and tell you what I think.
Matt Clark, CMSA®
Research Analyst, Money & Markets