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4 Computer Peripheral Stocks to Watch Amid Prospering Industry Trends

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The Zacks Computer-Peripheral Equipment industry players like Logitech (LOGI - Free Report) , LG Display (LPL - Free Report) , Immersion (IMMR - Free Report) and TransAct Technologies (TACT - Free Report) are well-poised to benefit from the growing demand for professional gaming accessories, touchscreen and wireless devices, smart glasses and RFID (Radio Frequency Identification) solutions. A continuously improving shipment of personal computers (PCs) bodes well for PC peripheral market prospects. Moreover, the solid demand for 3D-printed health equipment like face shields, nasal swabs and ventilator parts has been a tailwind.

However, the industry has been suffering from macroeconomic headwinds, including inflationary pressures and higher interest rates. These have induced sluggishness in IT spending, affecting the demand for computer peripherals. The industry is also showing signs of struggle as demand for remote working and online learning-related computer peripherals has slowed in the post-pandemic era.

Industry Description

The Zacks Computer-Peripheral Equipment industry comprises companies offering computer input, output and storage devices. These include keyboards, mice, LCD panels, smart glass, analog to digital imaging solutions, touch sensors, 3D printers & additive manufacturing and transaction-based printer products, among others. Moreover, video gaming accessories, including gaming mice, wired gaming headsets, in-ear gaming headphones and controllers for Xbox One and Playstation, are offered by these companies. The highly competitive nature of the industry is encouraging participants to come up with innovative and relevant products to meet the current demand trend. This is strengthening their product portfolios.

Trends Shaping the Future of the Computer-Peripheral Equipment Industry

A Shift in Consumer Preference Acts as a Key Catalyst: The gradual shift in consumer preference from mobile gaming to a more professional gaming experience is a major growth driver. The launch of advanced gaming devices and the rising popularity of e-sports leagues are expected to boost prospects. Markedly, e-sports is also likely to continue aiding the total addressable market in the gaming peripherals industry. In addition, the 3D printing market presents a favorable long-term investment opportunity as a large number of engineers, designers, architects and entrepreneurs are resorting to 3D solutions for primary designing and product modeling. Also, increasing demand for gaming equipment and 3D-printed medical equipment are the major driving forces for this industry’s prospects.

PC Market Recovery to Aid Growth: Recovery in PC shipment will aid the industry’s growth as PCs are the main sales booster for computer peripheral products. According to the latest data released by the International Data Corporation, PC shipments increased 3% year over year in the second quarter of 2024, marking the second consecutive quarter of growth following two years of decline. Moreover, the research firm projects that global PC shipments will increase by 2% in 2024, which bodes well for the Computer-Peripheral Equipment industry’s growth prospects.

Expanding Global Footprint: The expansion of the total addressable market bodes well for the industry participants. Deepening penetration into price-sensitive regions like the Asia Pacific and the Middle East & Africa through low-cost quality products boosts growth prospects.

Macroeconomic Headwinds Might Hurt IT Spending: Still-high interest rates and protracted inflationary conditions are hurting consumer spending. On the other hand, enterprises are postponing their large IT spending plans due to a weakening global economy amid ongoing macroeconomic and geopolitical issues. This does not bode well for the Computer-Peripheral Equipment market’s prospects in the near term.

Elevated Operating Expenses to Hurt Profitability: To survive in the highly competitive computer peripheral market, each player is aggressively investing in research and development to enhance their product portfolio and broaden their capabilities. Moreover, companies are looking to improve their sales and marketing capabilities, particularly by increasing their sales force. Therefore, elevated operating expenses to capture more market share are likely to dent margins in the near term.

Zacks Industry Rank Indicates Bright Prospects

The Zacks Computer-Peripheral Equipment industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #103, which places it in the top 41% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates solid near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.

The industry’s position in the top 50% of the Zacks-ranked industries is a result of the positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are optimistic about this group’s earnings growth potential.

Given the bright industry outlook, a number of stocks are worth watching. However, before we present the stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.

Industry Lags the Sector & the S&P 500

The Zacks Computer-Peripheral Equipment industry has underperformed the S&P 500 composite and the broader Zacks Computer and Technology sector in the trailing 12 months.

The industry has declined 13.6% during this period. Meanwhile, the S&P 500 and the broader sector have risen 18.6% and 25.8%, respectively, over the same time frame.

One-Year Price Performance

Industry's Current Valuation

On the basis of the forward 12-month P/S, which is a commonly used multiple for valuing computer peripheral stocks, we see that the industry is currently trading at 0.64X compared with the S&P 500’s 4.98X and the Zacks Computer and Technology sector’s 6.07X.

Over the last five years, the industry has traded as high as 5.36X, as low as 0.32X and at the median of 0.74X, as the chart below shows.

Trailing 12-Month Price-to-Sales (P/S) Ratio

 

4 Stocks to Watch

Immersion: The company develops hardware and software technologies that enable users to interact with computers using their sense of touch. Their patented technologies, which are branded TouchSense, enable devices such as mice, joysticks, knobs and medical simulation products to deliver tactile sensations that correspond to on-screen events.

Immersion is a small company with a market cap of around $355 million. However,  it is seeing solid growth because of its innovative technology and new customer wins. This Zacks Rank #1 (Strong Buy) company focuses on four application areas — computing and entertainment, medical simulation, professional and industrial, and three-dimensional capture and interaction. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for 2024 earnings has been revised upward by 31.6% in the past 60 days to $1.54 per share. IMMR stock has soared 59.4% in the past 12 months.

Price and Consensus: IMMR

 

LG Display: This Seoul, Republic of Korea-based company primarily manufactures and sells thin-film transistor liquid crystal display panels in a range of sizes and specifications, primarily for use in televisions, notebook computers and desktop monitors, as well as for handheld application products, such as mobile phones, and medium and large-size panels for industrial and other applications, including entertainment systems, portable navigation devices, e-paper, digital photo displays and medical diagnostic equipment.

LG Display is riding on the healthy demand for its display panels from PC vendors. Recent data releases by International Data Corporation depict that PC vendors have witnessed increasing PC shipments for the past two quarters. Furthermore, the research firm’s prediction of a 2% overall increase in 2024 PC shipments bodes well for LG Display’s prospects. The solid sales of smartphones are also likely to spur demand for this Zacks Rank #2 (Buy) company’s display panels.

LG Display supplies products to original equipment manufacturers and multinational corporations. The Zacks Consensus Estimate for its 2024 bottom line is pegged at a loss of 74 cents per share, 25 cents narrower than a loss of 99 cents per share projected 30 days ago. The stock has declined 26.5% in the past year.

Price and Consensus: LPL

 

Logitech: It is a global leader in peripherals for personal computers and other digital platforms. The company develops and markets innovative products in PC navigation, Internet communications, digital music, home entertainment control, video security, interactive gaming and wireless devices.

Logitech’s strong first-quarter fiscal 2025 results have boosted investors’ confidence in its recovery from the post-pandemic downturn. The latest results marked the second consecutive quarter of year-over-year sales growth after two and a half years of downturn post-pandemic-driven boom.

Increasing hybrid work trends are likely to boost demand for its video collaboration, keyboards & combos and pointing device tools. Thriving cloud-based video conferencing services continue to be its key catalyst. The rising adoption of new mobile platforms in both mature and emerging markets should fuel the demand for its peripherals and accessories. Its partnerships with cloud providers like Zoom Video, Microsoft and Google are major upsides.

The Zacks Consensus Estimate for fiscal 2025 earnings has been revised upward by 11 cents in the past 30 days to $4.39 per share. Shares of this Zacks Rank #3 (Hold) company have rallied 28.1% over the past year.

Price and Consensus: LOGI

 

TransAct Technologies: The company designs, develops, manufactures and markets transaction-based printers and related products under the ITHACA, MAGNETEC and TRANSACT.COM brand names. This Zacks Rank #3 company focuses on five vertical markets — point-of-sale (POS), gaming and lottery, financial services, kiosks and the Internet.

TransAct Technologies is benefiting from the growing demand for its products and services amid accelerated digital transformation and business automation across organizations. The company's printers are trusted worldwide to provide crisp, clean transaction records from receipts, tickets and coupons, register journals and other documents.

The Zacks Consensus Estimate for the 2024 bottom line has remained unchanged at a loss of 45 cents per share in the past 60 days. The stock has plunged 51.5% over the past year.

Price and Consensus: TACT


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