The coronavirus-induced lockdowns have been weighing on corporate earnings and disrupting supply chains.
Nevertheless, courtesy of the ongoing adoption of digital transformation technologies and evolving IT and networking infrastructure, there has been a spike in demand for relevant electronics devices.
For instance, the stay-at-home and work-from-home wave has bolstered adoption of office equipment, gaming and other leisure devices. Utilization of drones and other robots, contactless delivery tools, has surged globally. Most importantly, an uptick in demand for electronics devices utilized in ventilators and telemedicine applications deserves a special mention.
Growth Prospects Abound
The companies involved in developing the next-generation electronic devices are looking forward to carving out a niche for themselves in the fourth industrial revolution or Industry 4.0.
Ongoing democratization of IoT techniques and AI is transforming robotics, industrial automation, transportation systems, retail, healthcare, defense, banking and finance, aerospace, utility, among other sectors.
Moreover, evolution of semiconductor manufacturing processes from 10 nanometer (nm) to 7 nm and even 5 nm technology, is expected to boost innovation in electronics. This, in turn, will bolster prospects of the industry.
Further, rapid adoption of innovative consumer-focused IoT devices like smart home devices, fitness trackers and home security solutions, smart TVs with 8K resolution, dual-screen laptops, high graphics performance gaming PCs amid accelerated deployment of 5G is fueling demand for the products offered by electronics solution providers.
Major breakthroughs in cloud computing, predictive analysis, AI, virtual assistants, robotics and IoT, have set the stage for solid growth in the electronics stocks.
Considering the alluring long-term growth prospects of electronics stocks, we believe fundamentally strong companies have greater possibilities of bouncing back once the impact of coronavirus subsides.
In order to boost your returns, we have zeroed in on five electronics stocks that have also seen positive earnings estimate revisions.
Markedly, rising earnings estimates generally indicate that the stock will outperform the market in the near future. After all, earnings estimates are a crucial indicator of the fundamental strength of the company.
To top it, these stocks currently flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Year-to-Date Price Performance
5 Rock-solid Bets
SMTC Corporation SMTX is expected to gain from strengthening footprint in the new end-markets.
We note that a solid momentum in the company’s Industrial, Power and Clean Technology business is expected to boost the Test and Measurement revenues. Further, growing momentum across the Aerospace and Defense market is anticipated to aid the company in winning customers.
Moreover, rising adoption among medical customers and growing clout of SMTC’s products required in 5G implementation are expected to be tailwinds.
The Zacks Consensus Estimate for its current-year earnings has risen 4.5% over the past 30 days to 23 cents per share.
Koninklijke Philips N.V. PHG is expected to benefit from strong demand for portable ventilators amid the coronavirus pandemic. The company is gradually evolving as a healthcare company, primarily driven by an expanding Diagnosis & Treatment business.
Further, recent waiver grant by FDA for the use of readily available consumer monitors at home with the Philips IntelliSite Pathology Solution, bodes well. Markedly, the IntelliSite Pathology Solution is designed for in-vitro diagnostic purposes, helping pathologists to review and interpret digital images of surgical pathology slides prepared from formalin-fixed paraffin-embedded (FFPE) tissue samples.
Moreover, robust performance in growth geographies, boosted by strength in China, and Central & Eastern Europe, is expected to drive the top line.
The Zacks Consensus Estimate for its current-year earnings has improved 1.3% over the past 30 days to $2.34.
Ultra Clean Holdings, Inc. UCTT is riding on improvement in fab utilization, which is expected to bolster growth in services division.
Moreover, the company is well poised to deal with the COVID-19 crisis led supply bottlenecks on uptick in memory segment.
The Zacks Consensus Estimate for earnings for 2020 has improved 35% to $1.89 per share over the past 60 days.
Camtek Ltd. CAMT is anticipated to gain from high demand of its metrology and inspection equipment solutions for different applications including CMOS image sensors and interconnect packaging devices.
The company recently clinched an order worth $8 million for its robust inspection Eagle-i systems from a notable CMOS Image Sensor manufacturer. It anticipates delivering the systems “during the second and the third quarters of 2020.”
Further, strong demand across other territories and improvement in backlog is expected to reduce the near-term business impact led by coronavirus, owing to which the company recently provided an update.
The Zacks Consensus Estimate for its current-year earnings has moved up 9.1% to 72 cents per share over the past 60 days.
Methode Electronics, Inc. MEI is well poised to gain from strong adoption of its advanced LED lighting, sensors and other technology products.
Moreover, increasing demand for its magneto-elastic sensor technology, digital instrument cluster offering, and electric vehicle technology are expected to boost the top line. Further, synergies from Grakon acquisition hold promise.
The Zacks Consensus Estimate for fiscal 2020 earnings has moved 2.7% north over the past 60 days to $3.42 per share.
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Ultra Clean Holdings, Inc. (UCTT) : Free Stock Analysis Report
Koninklijke Philips N.V. (PHG) : Free Stock Analysis Report
Methode Electronics, Inc. (MEI) : Free Stock Analysis Report
Camtek Ltd. (CAMT) : Free Stock Analysis Report
SMTC Corporation (SMTX) : Free Stock Analysis Report
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