Despite commanding a population of about nine million people, Israel consistently churns out an impressive number of innovative technology firms. Many nickname the country “Startup Nation” for its pioneering spirit and its hosting of research centers for the world’s top blue chips. However, economic realities force a rethink in Israeli tech stocks toward fiscally stable enterprises. Therefore, the companies Check Point (NASDAQ:CHKP), NICE (NASDAQ:NICE), and Camtek (NASDAQ:CAMT) present much intrigue.
Specifically, with the Federal Reserve consistently (and aggressively) raising the benchmark interest rate, incentives for growth-oriented businesses diminished due to higher borrowing costs. As a result, investors seek safety in the form of established organizations that enjoy predictable profitability. Unfortunately, this dynamic often runs counter to tech stocks, which align themselves with aspirational narratives.
Still, not all innovators are built exactly the same. Some Israeli tech stocks feature an enticing balance between growth potential and fiscal stability. With layoffs in the broader tech ecosystem accelerating recently, it’s never been more important for investors to elect financially resilient names. Otherwise, if a long economic winter materializes, purely growth-dependent organizations could suffer disproportionately.
Below then are three Israeli tech stocks to consider that can weather a storm if necessary.
Check Point (CHKP)
Headquartered in Tel Aviv, Check Point represents one of the more well-known Israeli tech stocks to buy. A multinational provider of software hardware products for IT security, Check Point commands significant relevance. With cyberattacks and data breaches imposing an ever-present threat to organizations everywhere, the company cynically enjoys an expansive total addressable market.
According to a Forbes report, in 2021, “the average number of cyberattacks and data breaches increased by 15.1% from the previous year.” Because of the clear need for cybersecurity solutions, CHKP is one of the few investments that are up year-to-date, gaining 11% since the January opener. In contrast, the benchmark S&P 500 index slipped over 17% during the same period.
On a quantitative basis, Check Point arguably delivers one of the best financial profiles among tech stocks. First, its balance sheet features incredible stability, backed by zero debt and an Altman Z-Score of 7.95, reflecting a very low bankruptcy risk.
On the bottom line, Check Point represents a highly profitable business, with a net margin of 34.35%. This stat ranks higher than over 97% of software-focused tech stocks to buy.
Is CHKP Stock a Buy?
Turning to Wall Street, CHKP stock has a Hold consensus rating based on five Buys, seven Holds, and three Sells assigned in the past three months. The average CHKP price target is $136.53, implying 3.11% upside potential.
Specializing in contact center software, telephone voice recording, data security, and surveillance systems, NICE ultimately seeks to remove friction or pain points between companies and their customers. Per its website, NICE forged its positive reputation by delivering a comprehensive end-to-end CX (consumer experience) approach for its enterprise-level clients.
Given the intersection of open cloud platforms and CX-focused frameworks, NICE also commands a large total addressable market. According to a March 2020 report by Deloitte, “more than 90% of global enterprises will rely on hybrid cloud by 2022.”
In addition, “[a]nother survey from the same month found that 97% of IT managers planned to distribute workloads across two or more clouds in order to maximize resilience, meet regulatory and compliance requirements, and leverage best-of-breed services from different providers.”
Moving forward, NICE provides a resilient fiscal profile that makes it attractive relative to other purely growth-oriented tech stocks. For instance, the company features an Altman Z-Score of 5.51, again reflecting low bankruptcy risk. In addition, NICE enjoys consistently strong free cash flow, giving it the flexibility to weather economic blows.
However, it’s not all just about resilience, as NICE also features an operating and net margin of 14.68% and 11.56%, respectively. Both stats rank within the top 20% of software-related tech stocks to buy.
Is NICE Stock a Buy?
Turning to Wall Street, NICE stock has a Moderate Buy consensus rating based on five Buys, two Holds, and zero Sell ratings. The average NICE price target is $262.14, implying 36.62% upside potential.
One of the lesser-known Israeli tech stocks, Camtek is a leading developer and manufacturer of high-end inspection and metrology equipment for the semiconductor industry. Specifically, Camtek’s systems inspect and measure wafers throughout the production process of semiconductor devices, covering the front and mid-end and up to the beginning of assembly.
As with the other tech stocks to buy, Camtek enjoys a relatively large addressable market. According to research by ReportLinker, the semiconductor metrology and inspection equipment market may reach a valuation of $12.4 billion by 2027. This would represent a compound annual growth rate of 5.5% between 2022 and 2027. For the record, Camtek presently features a market capitalization of just over $1 billion.
For now, what will likely appeal to investors regarding CAMT stock is the underlying financial resilience. On the balance sheet, Camtek features an Altman Z-Score of 4.31, indicating a safe enterprise with low risks of bankruptcy.
On the income statement, Camtek enjoys a three-year revenue growth rate of 21.3%, beating out nearly 77% of the competition. Further, its net margin stands at 22.82%, higher than almost 81% of its rivals.
Is CAMT Stock a Buy?
Turning to Wall Street, CAMT stock has a Moderate Buy consensus rating based on three Buys, three Holds, and zero Sell ratings. The average CAMT price target is $31.33, implying 31.69% upside potential.
Israeli Tech Stocks That Won’t Leave You Stranded
Some of the most compelling tech stocks hail from the Holy Land – no one disputes this statement. However, global economic challenges imply that purely growth-centric market ideas may flounder due to a lack of established substance. However, the tickers CHKP, NICE, and CAMT bring a combination of resilience and earnings predictability, making them relevant trades in an ambiguous environment.