The continued hybrid working structures and digital transformation have led to increased demand for electronics products from individuals to industries worldwide. However, the persisting chip shortage, other production challenges, and aggressive policy tightening have made many electronics stocks suffer lately.
Consistent efforts to ease chip shortage by ramping production and the growing demand for electronics integrated with AI/ML, IoT, and other emerging technologies should drive the industry’s growth. The global consumer electronics market is expected to grow at a 4.8% CAGR to reach $964.60 billion by 2028.
Therefore, it could be wise to buy quality electronics stocks AstroNova, Inc. (ALOT), Arrow Electronics, Inc. (ARW), Avnet, Inc. (AVT), CTS Corporation (CTS), and Wayside Technology Group, Inc. (WSTG) on their current dips.
AstroNova, Inc. (ALOT)
ALOT designs, manufactures, and distributes specialty printers and data acquisition and analysis systems through its Product Identification (PI) and Test & Measurement (T&M) segments internationally.
For its fiscal 2023 first quarter ended April 30, 2022, ALOT’s net revenue increased 6.6% year-over-year to $31.01 million. The company’s operating income came in at $764,000, up 4% from the year-ago period. Its pre-tax income came in at $485,000, representing a 32.5% year-over-year improvement. As of April 30, 2022, the company had $5.75 million in cash and cash equivalents.
The consensus revenue estimate of $125.03 million for its fiscal 2022 ending January 31, 2023, represents a 6.4% year-over-year improvement. The stock has gained 4.1% over the past five days to close the last trading session at $12.26, down 33.8% from its 52-week high of $18.52.
ALOT’s POWR Ratings reflect this promising outlook. The stock has an overall A grade, which equates to Strong Buy in our proprietary rating system.
It has an A grade for Value and Sentiment and a B for Quality and Momentum. Click here to see the additional ratings for ALOT’s Growth and Stability. ALOT is ranked #1 of 49 stocks in the B-rated Technology - Hardware industry.
Arrow Electronics, Inc. (ARW)
ARW provides products, services, and solutions to industrial and commercial users of electronic components and enterprise computing solutions worldwide. It serves OEMs, value-added resellers, managed service providers, contract manufacturers, and other commercial customers.
On May 30, 2022, ARW collaborated with Senseye, an Industry 4.0 company specializing in AI-based predictive maintenance, to introduce an AI and ML-powered machine monitoring and predictive maintenance solution for industrial organizations with pre-configured hardware that sends machine data to the Senseye PdM platform in Microsoft Azure.
By monitoring key parameters, such as current and vibration, Senseye PdM can determine machine health and help organizations boost machine availability, integrate their key systems, and guarantee their ROI.
ARW’s sales for its fiscal 2022 second quarter ended April 2, 2022, increased 8.2% year-over-year to $9.07 billion. The company’s non-GAAP gross profit came in at $1.21 billion, indicating a 29.8% rise from the year-ago period. Its non-GAAP operating income came in at $524.29 million for the quarter, representing a 66.7% rise from the prior-year period.
ARW’s non-GAAP consolidated net income came in at $373.49 million, up 73.3% from the prior-year period. Its non-GAAP EPS increased 91.2% year-over-year to $5.43. As of April 2, 2022, the company had $242.79 million in cash and cash equivalents.
The consensus EPS estimate of $22.20 for fiscal 2022 ending December 31, 2022, represents a 43.2% rise from the prior-year period. It surpassed Street EPS estimates in each of the trailing four quarters, which is impressive. Analysts expect the company’s revenue to reach $37.55 billion for the same fiscal year, indicating an 8.9% rise from the prior-year period.
The company’s EPS is expected to grow at a 4.8% rate per annum over the next five years. The stock has gained 0.6% over the past five days to close the last trading session at $111.76, down 19% from its 52-week high of $137.95.
ARW’s POWR Ratings reflect this promising outlook. The stock has an overall A grade, equating to Strong Buy in our proprietary rating system.
It has a B grade for Value and Growth. Click here to see the additional ratings for ARW’s Sentiment, Quality, Stability, and Momentum. ARW is ranked #3 of 47 stocks in the C-rated Technology - Electronics industry.
Avnet, Inc. (AVT)
AVT is a technology solutions company that distributes computer products and semiconductors, as well as interconnect, passive, and electromechanical components. The company operates through Electronic Components; and Farnell segments. It markets and distributes these products and provides supply-chain integration, engineering design, and technical services.
On June 21, 2022, AVT and Amazon.com, Inc. (AMZN) Amazon Web Services (AWS) announced a strategic collaboration agreement that allows AVT to create a scalable, secure IoTConnect Platform to include pre-configured and managed AWS IoT services to enable simple, fast, and secure IoT implementations for OEMs. This will help OEMs accelerate their efforts and reduce overhead.
AVT’s sales for its fiscal 2022 third quarter ended April 2, 2022, increased 32% year-over-year to $6.49 billion. The company’s gross profit came in at $813.03 million, indicating a 43.1% rise from the prior-year period. Its adjusted operating income came in at $303.74 million, representing a 174.8% rise from the prior-year period.
AVT’s adjusted net income came in at $213.86 million for the quarter, up 186.9% from the year-ago period. Its adjusted EPS rose 190.5% year-over-year to $2.15. As of April 2, 2022, the company had $199.46 million in cash and cash equivalents.
The consensus EPS estimate of $6.98 for fiscal 2023 ending June 30, 2023, indicates a 1.9% year-over-year improvement. It surpassed Street EPS estimates in each of the trailing four quarters. Analysts expect the company’s revenue to hit $24.81 billion for the same fiscal year, indicating a 2.5% rise from the prior-year period.
Its EPS is expected to grow at a rate of 10.4% per annum over the next five years. The stock has lost 1% over the past five days to close the last trading session at $42.27, down 15.8% from its 52-week high of $50.19.
AVT’s POWR Ratings reflect its solid prospects. The stock has an overall A rating, equating to Strong Buy in our proprietary rating system. It has an A grade for Growth and a B grade for Value.
In addition to the POWR Ratings grades we have just highlighted, one can see AVT’s Momentum, Stability, Sentiment, and Quality ratings here. AVT is ranked #4 in the Technology - Electronics industry.
CTS Corporation (CTS)
Founded in 1896, CTS designs, manufactures, and sells a line of sensors, electronic components, and actuators mainly to OEMs in automobile, industrial, medical, IT, defense and aerospace, and telecommunications industries. It markets its products through its sales engineers, independent manufacturers’ representatives, and distributors.
On June 30, 2022, CTS acquired Ferroperm Piezoceramics, a manufacturer of high-performance piezoceramic components for use in complex and demanding medical, industrial, and aerospace applications, from Meggitt PLC for DKK525 million ($72.61 million) in cash.
Ferroperm’s wide market reach in Europe and experience in medical therapeutic markets will help CTS enhance its product offering and accelerate growth.
CTS’ revenue for its fiscal 2022 third quarter ended April 2, 2022, increased 15% year-over-year to $147.70 million. The company’s adjusted gross profit came in at $54.90 million, representing a 28.9% year-over-year improvement. Its adjusted operating earnings came in at $28 million for the quarter, up 48.9% from the year-ago period.
While its adjusted net earnings increased 44.7% year-over-year to $21.70 million, its adjusted EPS grew 45.7% to $0.67. As of March 31, 2022, it had $126.12 million in cash and cash equivalents.
Analysts expect the company’s EPS to improve 23.8% year-over-year to $2.39 for fiscal 2022 ending December 31, 2022. It surpassed Street EPS estimates in each of the trailing four quarters.
The consensus revenue estimate of $578.13 million for the same fiscal year represents a 12.7% rise from the prior-year period. Its EPS is expected to grow at an 11% rate per annum over the next five years.
The stock has gained 2.3% over the past five days to close the last trading session at $34.14, down 18.3% from its 52-week high of $41.77.
CTS’ POWR Ratings reflect this promising outlook. The stock has an overall A rating, equating to Strong Buy in our proprietary rating system.
It has an A grade for Growth and Quality and a B for Stability and Sentiment. Click here to see the additional ratings for CTS’ Value and Momentum. CTS is ranked #2 in the Technology - Electronics industry.
Wayside Technology Group, Inc. (WSTG)
WSTG provides IT distribution and solutions for companies in the security, data management, cloud, connectivity, storage and HCI, virtualization, and software and ALM industries internationally.
It offers a line of products and tools for virtualization/cloud computing, security, networking, storage and infrastructure management, application lifecycle management, and other technically sophisticated domains and computer hardware.
On June 8, 2022, WSTG’s subsidiary Climb Channel Solutions, an international specialty technology distributor, partnered with Hammerspace, a software-defined data platform, to help organizations advance their accessibility and manage their massive data sets across the hybrid cloud.
On May 24, 2022, WSTG’s subsidiary Climb Channel Solutions, an international specialty technology distributor, partnered with Trilio, a leading provider of cloud-native data protection, to bring scalable Kubernetes backup, DR and management tools to organizations building cloud-native applications.
Both collaborations will help companies provide the solutions required to give businesses more power and control over their cloud and container environments.
WSTG’s net sales for its fiscal 2022 fourth quarter ended March 31, 2022, increased 13.5% year-over-year to $71.32 million. The company’s gross profit came in at $11.98 million, indicating a 10.5% rise from the prior-year period. Its income from operations came in at $3.38 million, representing a 66.1% year-over-year improvement.
WSTG’s net income came in at $2.71 million for the quarter, up 78.4% from the year-ago period. Its EPS rose 74.3% year-over-year to $0.61. As of March 31, 2022, the company had $37.05 million in cash and cash equivalents.
The stock has lost 5.8% over the past five days to close the last trading session at $32.41, down 17.9% from its 52-week high of $39.45.
WSTG’s POWR Ratings reflect its solid prospects. The stock has an overall A rating, equating to Strong Buy in our proprietary rating system. It has a B grade for Growth, Stability, Sentiment, and Quality.
In addition to the POWR Ratings grades we have just highlighted, one can see WSTG’s Value and Momentum ratings here. WSTG is ranked #1 in the Technology - Electronics industry.
ALOT shares were unchanged in after-hours trading Tuesday. Year-to-date, ALOT has declined -11.85%, versus a -18.98% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market.
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