As the "BRIC" nations of Brazil, Russia and China badly stumble, the fourth member of the club, the sprawling democracy of India, is faring the best. India's economy is growing, its politics are cacophonous but relatively free of scandal, and its IT services sector is propelling the country to further growth in the years ahead.
That's why a smart move now is to buy India's tech sector bellwether, outsourcing giant Infosys Limited (INFY - Get Report) , ahead of its scheduled earnings report this week. In a turbulent global market that's rife with dangers, Infosys is a compelling tech sector play that should beat the market in 2016.
India's BRIC cohorts, meanwhile, are in a world of pain. Brazil is increasingly paralyzed by economic and political crises; Russia faces sharp economic decline as badly needed oil revenue dries up; and China is beset by slowing growth, indebted banks and turbulent financial markets. India shines as an exception.
In India, lower global oil prices have stimulated the tech-centric economy; businesses in many sectors, not just technology, are vibrant; a growing number of entrepreneurial start-ups are fueling innovation; and an expanding domestic economy with vast untapped potential makes wider concerns about other emerging markets largely irrelevant.
What's more, India's reform-minded government, led by Prime Minister Narendra Modi, has launched several bold initiatives, such as opening once-protected industries to foreign capital and helping millions of impoverished Indians start bank accounts. As many of its emerging-market neighbors struggle with intractable economic and social problems, India is becoming both pro-poor and pro-growth.
These trends all constitute tailwinds for Infosys. With a market cap of $40.97 billion, Infosys is the third-largest India-based IT services company based on annual revenue, behind competitors Tata Consultancy Services and Cognizant Technology Solutions.
Founded in 1981 and a pioneer in the booming business of IT outsourcing, the company is emblematic of India's rise as a global technology hub. Infosys now boasts 1,045 clients across 50 countries and the company has been on an acquisition spree to strategically align with the explosion of mobile e-commerce. Most recently, Infosys bought mobile commerce provider Skava in 2015.
Infosys is scheduled to report fourth-quarter and full-year fiscal 2015 earnings (ending March 31) on Friday, April 15. Analysts at Zacks expect Infosys to beat earnings expectations.
Last quarter, Infosys met earnings estimates after beating them in the quarter before that.
Infosys stock rose nearly 10% since its last operational report, when adjusted earnings per share came in at 23 cents. According to analysts, there is a nearly 67% probability for the share price to rise in the wake of Friday's earnings report. That's a compelling reason to grab the stock now, before the rest of the investment herd gets to the party too late.
Here's a sweetener: Infosys' valuation is a bargain. Its 12-month price-to-earnings ratio of 20.69 is cheaper than Tata's (22.95); Cognizant's (22.49); Microsoft's (38.41); Alphabet's (31.28); and the industry's (25).
Infosys is one of the most promising long-term technology growth stocks you can find in this risky and volatile market.
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