15 Most Promising Technology Stocks to Buy Now

10. Cognex Corp. (NASDAQ:CGNX)

Number of Hedge Funds: 34

Potential Upside: 27%

Cognex Corp. (NASDAQ:CGNX) is a global provider of machine vision products and solutions that improve efficiency and quality in high-growth potential businesses across attractive industrial end markets. Machine vision products are used to automate the manufacturing or distribution and tracking of discrete items, such as mobile phones, electric vehicle batteries and e-commerce packages, by locating, identifying, inspecting, and measuring them. Its solutions blend physical products and software to capture and analyze visual information, allowing for the automation of manufacturing and distribution tasks for customers worldwide.

Cognex Corp. (NASDAQ:CGNX) reported its Q4 2024 results on February 12. Quarterly revenue increased by 17% year-over-year (YoY) to $230 million, with the acquisition of Moritex contributing around 5% of this growth. Adjusted EBITDA came in at $42 million with an 18.5% margin reflecting a 580 basis point YoY improvement. Net income per diluted share was $0.2, an 84% YoY increase. For Q1 2025, the company guided for revenue to be between $200 million and $220 million, with a projected adjusted EBITDA margin of 12%-15%. Management expects momentum to continue in logistics and semi, automotive to remain weak, and other factory automation growth to be relatively in line with macro indicators such as PMI.

As a result of the slightly softer guidance, Needham analyst has reduced his price target on Cognex Corp. (NASDAQ:CGNX) to $41 from $47 earlier, but maintained his Buy rating. Street has been focusing on the Q1 2025’s guidance and is concerned about the slowdown inthe  automotive end-market. The automotive sector is the company’s second-largest end-market and declined around 14% over the full year of 2024. However, Logistics end-market grew 20% supported by demand from global e-commerce leaders as well as regional e-commerce, retail and parcel, and post providers. Growth in this end-market is expected to offset some of the pressure in automotive. Moreover, strict cost discipline should continue to support earnings.