This Little-Known Tech Stock Could Be Your Best Opportunity Right Now in Cloud Computing

Editors' pick: Originally published March 11.

Given the volatility of this year's stock market, you might assume that the tech sector has been particularly hard hit. In fact, the tech-heavy NASDAQ has weathered the stormy first quarter of 2016 better than the S&P 500 has.

Check out this long track record of picking winners in the fast-moving technology sector. Here's the next in line: Tech Data Corp. (TECD) . The Clearwater, Fla.-based company is one of the world's largest wholesale distributors of technology products and services. Its advanced logistics capabilities and other services enable 120,000 resellers in more than 100 countries to support the various technology needs of their customers.

Tech Data is among a group of growth momentum stocks in the tech sector that should prosper even amid this year's challenging investment conditions.

The firm is notable both for its strong position in the rapidly growing world of cloud computing, and for its relationships with several tech titans, including Apple and Microsoft.

The company's net income jumped 8% for the quarter that ended January 31, from $74.9 million last year to $80.9 million this year, or $2.29 per share. This was an all-time, fourth-quarter earnings-per-share high, easily beating analysts' expectations of about $2.10 per share.

CEO Robert Dutkowsky said on an earnings call that the company's status as a distributor gives it the flexibility to prevail in the ever-changing world of technology. A few years ago, some analysts said that tablets would completely replace laptops, but that hasn't really happened. Dutkowsky keeps scanning the horizon for emerging tech trends like that, and adjust the firm's business relationships accordingly.

"Remember, our Apple business is much broader than just the iPhone," Dutkowsky observed. "It's the notebooks. It's the desktops. It's iPads. It's Beats. It's Apple TV. It's Apple Watch. The Apple product line has gotten much broader than what it was a few years ago. So there's a lot more to sell. We're selling it to more customers, and we're executing very well and gaining share in selected places."

After being one of the pioneers of cloud computing, Tech Data's management has turned its attention to the "connected home" -- systems that will allow you to manage almost all your domestic electronic devices remotely.

Tech Data has an exclusive distribution agreement with Microsoft to offer select mobile device accessories to national retailers and solution providers in the United States.

Through the agreement, Tech Data will offer Microsoft's wide array of accessories across categories including portable power solutions, wireless charging solutions, audio solutions, connected gadgets, mobile accessories, and mobile essentials such as Bluetooth headsets, chargers, and batteries via its Tech Data Mobile Solutions division.

Tech Data currently offers the same portfolio of Microsoft products through its Tech Data Mobile division in Europe.

Revenues for fiscal year 2016 were nearly $26.5 billion, down slightly from a year ago. But the company is no flash in the pan: It was founded in 1974, back when pocket calculators were considered high-tech.

Through Tech Data Cloud, the company provides resellers with the full capabilities to capitalize on cloud opportunities in the marketplace, including the tools to navigate and transform their businesses.

The high-tech world changes quickly, but Tech Data's established relationships with its business partners and its record of innovation make it one of the safer bets for continued growth.

Despite its close relationships with some of the best known technology juggernauts in the world, the company's price-earnings ratio is a very reasonable 11.5. 

We've found a small-cap biotech "rocket stock" that's about to take off. UCLA researchers are stunned by a Nobel Prize-winning cancer breakthrough that's proven in clinical trials to eliminate lethal forms of cancer with a single dose. One small company owns the patent to this life-saving treatment. Now trading at about $5 a share, the stock of this innovative company is projected to surge 2,700% on an imminent FDA announcement. To download the full report, click here.

 

 

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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