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4 Top Electronics Stocks to Watch From a Prospering Industry

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Shalu Saraf
·7 min read
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The Zacks Electronics - Miscellaneous Components industry is benefiting from the solid adoption of AI and the democratization of IoT techniques that is transforming robotics, industrial automation, transportation systems, retail and healthcare. The continuous development of new products and solutions in this space should drive growth.

Also, the demand for electronics is rising, driven by different factors including growing use of electronic devices, increasing complexity of electronic products, and the development of new solutions for energy generation and conservation. These should benefit the industry participants like TE Connectivity Ltd. (TEL), Littelfuse, Inc. (LFUS), Vicor Corporation (VICR) and Rogers Corporation (ROG).

Industry Description

The Zacks Electronics - Miscellaneous Components industry primarily comprises companies that provide a wide range of accessories and parts that are used in electronic products. Their offerings include power control and sensor technologies to mitigate equipment damage, testing products for safety, along with advanced medical solutions.

The industry participants cater to varied end markets such as telecommunications, automotive electronics, medical devices, industrial, transportation, energy harvesting, defense and aerospace electronic systems, as well as consumer electronics. Its customers mainly consist of original equipment manufacturers, independent electronic component distributors and electronic manufacturing service providers.

What’s Shaping the Future of the Electronics - Miscellaneous Components Industry

Rapid Adoption of IoT Devices Drives Growth: Electronics aids efficiency and automation of almost any work, rendering it virtually ubiquitous in this day and age. The growing demand for IoT devices like smart speakers, smart watches and home security solutions, dual-screen laptops, high graphics performance gaming PCs, is a tailwind. The current scenario seems to have favored this industry that has been gaining from increased demand for electronic goods and appliances fueled by coronavirus-induced safety rules and precautions.

Automation Boom is a Tailwind: The requirement of faster, more powerful and more energy efficient electronics is leading to increased automation. The use of control systems, such as computers and robots, and information technologies for handling different processes and machineries is driving the industry’s growth. The rising installation of collaborative robots, which add efficiency to the production process by working with the production workers, will benefit the industry participants. Also, the IoT-supported factory automation solutions are a contributing factor. In addition, the evolution of smart cars & autonomous vehicles is expected to boost this industry.

Miniaturization Remains a Key Factor: Industry participants are benefiting from the ongoing transition in semiconductor manufacturing technology. The demand for advanced packaging that enables the miniaturization of electronic products remains strong. Consistent shift to smaller dimensions, rapid adoption of new device architectures like FinFET transistors and 3D-NAND, along with increasing utilization of new manufacturing materials to increase transistor and bit density, are driving demand for solutions provided by the industry players.

Healthcare Presents Immense Prospects: Fitness and wellness trackers that require flat-panel display technology have opened up new avenues for the electronics stocks. Moreover, increasing usage of electrical instruments and software in the interrogation of biological properties of molecules and cells in clinical and medical science research work is driving growth.

Zacks Industry Indicates Impressive Prospects

The Zacks Electronics - Miscellaneous Components industry is housed within the broader Computer and Technology sector. It carries a Zacks Industry Rank #85, which places it in the top 34% of more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is basically 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 outperforms the bottom 50% by a factor of more than 2 to 1.

Before we present a few 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 Outperforms Sector and the S&P 500

The Zacks Electronics - Miscellaneous Components industry has outperformed the broader Zacks Computer and Technology sector, and the S&P 500 composite over the past year.

The industry has surged 74.7% over this period compared with the S&P 500 and broader sector’s rally of 61.6% and 74.3%, respectively.

One-Year Price Performance



Industry’s Current Valuation

On the basis of forward 12-month price to earnings, which is a commonly used multiple for valuing electronics - miscellaneous components stocks, the industry is currently trading at 21.30X compared with the S&P 500’s 22.14X and sector’s 26.91X.

Over the past five years, the industry has traded as high as 23.05X, as low as 14.15X and recorded a median of 17.53X, which is depicted in the charts shown below.

Price-to-Earnings (P/E) Ratio (F1)




Price-to-Earnings (P/E) Ratio (F1)

4 Electronics - Miscellaneous Components Stocks to Keep a Close Eye on

Vicor Corporation: The company is expected to keep benefiting from strong demand for its products, solid execution and disciplined cost management actions. Notably, the company is likely to gain from its advanced products portfolio, driven by rising shipments of lateral power solutions for AI acceleration.

Further, this Zacks Rank #1 (Strong Buy) company is well positioned to benefit from its huge customer base and new high-density AC front end products. Vicor has gained 128% in the past year.

The Zacks Consensus Estimate for 2021 earnings has been revised 20.2% upward to $1.25 per share over the past 30 days.

Price and Consensus: VICR



Littelfuse, Inc.: The company is benefiting from strong demand for its products, solid execution and disciplined cost management actions. Further, solid demand in the automotive and strength in several electronics and industrial markets is driving growth. The higher-than-expected demand for electronics from ongoing work, study and stay-at-home trends is a key catalyst.

Further, this Zacks Rank #2 (Buy) company is well positioned to benefit from robust design activity with several strategic wins in high-growth industrial, electronics and transportation applications. Littelfuse has gained 95.4% in the past year.

The Zacks Consensus Estimate for 2021 earnings has remained stable at $7.80 per share over the past 30 days.

Price and Consensus: LFUS



TE Connectivity Ltd.: The company is well poised to gain from strong momentum across data centers. The solid demand for data and devices in cloud applications and data centers, courtesy of increasing work-from-home trend due to the ongoing coronavirus pandemic, is likely to drive growth. Further, prospects in the medical business, owing to the strong position of the company in interventional procedures and partnerships with leading device makers, are expected to benefit the company going forward.

Shares of TE Connectivity have gained 104.3% in the past year. This Zacks Rank #2 company is likely to gain from increasing growth opportunities in the Transportation segment. The proliferation of autonomous features is expected to act as a tailwind. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for fiscal 2021 earnings has remained stable over the past 30 days at $5.88 per share.

Price and Consensus: TEL



Rogers Corporation: The company is expected to gain from accelerating growth in Advanced Mobility markets, along with operational execution. We note that a solid momentum in the company’s Industrial and automotive markets isa positive. Further, growing momentum, design wins and new product introductions in the Defense market are anticipated to aid the company in winning customers.

Shares of Rogers Corporation have gained 127.9% in the past year. The Zacks Consensus Estimate for 2021 earnings has been revised 13.5% upward to $7.65 per share over the past 30 days.

Price and Consensus: ROG

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