3 Electronics Stocks to Purchase From a Prospering Industry – February 14, 2022

The Zacks Electronics measuring industry has benefited from the increasing deployment of 5G and the increase in the number of electric vehicle (EV) users. In addition, the firm adoption of smart consumer-focused IoT devices, including smart speakers, wearables, and home security equipment, is helping industry players such as Keysight Technology (KEYS Free report), Advanced (ATHEAS Free report) and inTest (INTT Free report). Increasing demand for security and surveillance has become another boon for industry players.

Description of the industry

Zacks Electronics – Measuring Instruments includes companies that offer wearables, test solutions and equipment, electronic design, measuring systems, metrology solutions and products for thermal control. In particular, industry players are increasing their spending on research and development as well as sales and marketing to stay afloat in an era of technological advances and changing industry standards. The main end markets served by the stressed industry are consumer, automotive, industrial, aerospace and defense, semiconductor, healthcare and communications, and there are several. In addition, the rising costs of semiconductor manufacturers, automobiles, machines, mobile phones and LED displays worldwide are contributing to the industry.

3 trends shaping the future of electronics – the measuring instrument industry

5G – key catalyst: The increasing deployment of 5G promises industry players in the near future. The growing demand for 5G testing solutions, which are needed to deploy 5G, is a major positive. Another accompanying wind is the growing number of high-speed data centers around the world. The current wave of home-based work on a global scale, caused by the coronavirus, which is boosting demand for high-speed Internet services, promises good to e-companies that are stepping up their 5G efforts. Given the optimistic scenario, it is assumed that the industry will remain on a growth trajectory backed by strong efforts to strengthen 5G capacity.

Distribution of EV – growth driver: The key catalyst remains the growth of worldwide pulses of EVs, including hybrid and self-driving vehicles. Increasing investment in advanced automotive technology and increasing demand for EV testing solutions are contributing to the prospects of industry players who are working hard to benefit from the growth opportunities associated with EV. Another positive point remains the constant innovations in the EV infrastructure that support the demand for simulation software, radars and other electronic measuring instruments. The growing proliferation of advanced driver assistance systems has increased the demand for electronics testing solutions. It is expected that these factors will continue to benefit the industry in the short term.

Solid acceptance of fitness trackers: Increased attention to personal fitness, health and well-being amid the pandemic has highlighted the importance of fitness and wellness trackers, as well as smart watches that help monitor personal health. The growing proliferation of these devices has prompted the use of flat panel display (“FPD”) technology. The growing demand for augmented reality / virtual reality devices and OLED displays is playing another significant role in stimulating demand for FPD. These factors create extremely favorable conditions for the growth of industry players.

Sachs Industry Rank points to bright prospects

Zacks Electronics Industry – Measuring instruments are located in the wider Zacks computer and technology technology sector. It has a Zacks Industry Rank # 34, which is in the top 14% of the more than 250 Zacks industries.

The group’s Zacks Industry Rank, which is largely the average of Zacks ’rankings for all participants’ stocks, points to solid prospects in the short term. Our study shows that the top 50% of industries that rank Zacks outperform the bottom 50% by more than 2: 1.

The industry’s positioning in the 50% of the best industries in the Zacks rankings is the result of a positive earnings forecast for the companies that make up its aggregate. Looking at the revision of the aggregate income estimate, it seems that analysts are optimistic about the growth potential of this group. From October 31, 2021, the industry’s revenue estimates for the current year increased by 5.4%.

Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s latest performance and stock valuation.

The industry lags behind the S&P 500, surpassing the sector

The Zacks Electronics – Measuring Instruments industry was lower than the Zacks S&P 500 last year, while it surpassed the wider Zacks Computer and Technology sector last year.

Shares of the industry together grew by 7.2% compared to the growth of the Zacks S&P 500 index by 12.2%. Notably, Zacks ’computer and technology technology sector lost 2.5% over the same period.

Performance cost in one year

Current industry assessment

Based on the front 12-month price-to-sales ratio (P / S), which is the commonly used plural for stock valuation Electronics – Measuring Instruments, the industry is currently trading at 4.56X, which is higher than the S&P 500, 4 , 4 X and 4.34X sectors.

Over the past five years, the industry has traded up to 4.56X and up to 1.54X, with a median of 2.57X, as the charts below show.

Promising 12-month value for money (P / S).

3 stocks of gauges to consider

Keysight Technologies: The company from Santa Rosa, California, is fully prepared to take advantage of the acceleration of 5G deployment due to growing demand for 5G test solutions. In addition, the company is benefiting from a larger investment in 400G / 800G Ethernet for data centers. In addition, Keysight Technologies is in high demand for its semiconductor measurement solutions as semiconductor companies increasingly develop chips based on next-generation technology.

In addition, this company Zacks rank № 2 (Buy), which is a provider of electronic systems design and testing instruments, is likely to benefit from high government spending and momentum in investment aimed at technology development.

You can see The full list of today’s shares of Zacks # 1 rank (strong buy) is here.

It is noteworthy that Keysight Technologies for the year increased by 7.6%. Sachs ’consensus estimate for the company’s earnings in fiscal 2022 has been revised upward by 0.3% over the past 60 days to $ 6.92 per share.

Price and Consensus: KEYS

The best: The Japanese semiconductor test equipment company benefits from increased supplier costs for increased production capacity and advanced technology. The growing demand for semiconductors in data centers, artificial intelligence and automotive applications, servers and PCs due to the constant digitization caused by the coronavirus pandemic remains a serious turning point.

This Zacks company rank № 2 remains well prepared to take advantage of the solid demand for semiconductor test products due to its reliable product portfolio. In addition, the company remains optimistic about the increasing complexity of devices associated with miniaturization, which is expected to lead to further growth in demand for tests.

It should be noted that Advantest lost 8.3% last year. Sachs ’consensus estimate for the company’s earnings in fiscal year 2023 has moved north by 3.3% to $ 4.95 per share over the past 60 days.

Cost and consensus: ATEYY

inTEST: Mount Laurell, New Jersey, is benefiting from growing demand for semiconductors. In addition, the company is gaining momentum among electric vehicle manufacturers.

This company Za Zacks rank № 2, which offers products for thermal control and interface solutions ATE, is ready to take advantage of the growing demand for cryogenic coolers.

It should be noted that inTEST shares grew by 35.1% last year. Over the past 60 days, Sachs ’consensus estimate for 2022 has moved north by 1.7% to $ 1.17 per share.

Cost and Consensus: INTT


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