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Amphenol Hits 52-Week High on Growth Impetus, Core Focus

Shares of diversified electronics manufacturer Amphenol Corporation APH scaled a new 52-week high of $59.66 on Jun 6, before closing the trading session a notch lower at $59.41. This Zacks Rank #2 (Buy) stock is currently trading at a forward P/E of 22.8x and has a long-term earnings growth expectation of 6.9%.

Growth Drivers

Amphenol’s top-line growth is benefiting from improved end-market demand, new product rollouts and market share gains. Demand continues to be strong in the automotive, industrial, mobile networks and military markets. The diversification in end markets, with a consistent focus on technology innovation and customer support through all phases of the economic cycle, further enable the company to post robust results. A sustained drive for geographic and market diversification has helped Amphenol to expand its customer base and develop new applications.

Amphenol remains encouraged by its expanding presence in the fast-growing commercial aerospace market and is well positioned to capitalize on the proliferation of electronics content on next-generation planes. These advanced electronic systems require new higher technology interconnect solutions to enhance fuel efficiency and improve passenger experience, all of which create excellent opportunities for Amphenol.

In order to fuel growth, Amphenol aims to make acquisitions on a global basis in the high-growth segments that have complementary capabilities from a product, customer and/or geographic standpoint. During first-quarter 2016, Amphenol completed the acquisition of FCI Asia Pte Ltd for $1.275 billion. The acquisition is expected to be accretive to Amphenol’s earnings from the first year of its integration and result in synergistic benefits with advanced technological support and experienced management team. We remain impressed by the company’s activities on the acquisition front and expect the acquisitions to be accretive in the long term with improvement in operating income margin and strong operating discipline.

Despite the uncertainties prevailing in the global economy, Amphenol has bullish revenue and earnings expectations. The ongoing revolution in electronics enables the company to capitalize on the opportunities and strengthen its position in the market. Amphenol also expects to leverage on the solid growth potential of FCI to drive robust performance in the future. Such a bullish outlook with continued growth impetus and core focus boost investor confidence to catapult share prices to newer 52-week highs.

Other Stocks to Consider

Other stocks that look promising in the same industry include BWX Technologies, Inc. BWXT), Stoneridge Inc. SRI and EnSync, Inc. ESNC, each carrying the same Zacks Rank as Amphenol.

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STONERIDGE INC (SRI): Free Stock Analysis Report
AMPHENOL CORP-A (APH): Free Stock Analysis Report
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