As the U.S. economy witnesses a steady recovery despite heightened geopolitical tensions and deepening supply chain disruptions, industrial production is regaining momentum. This should drive the demand for industrial electronics. Therefore, we think it could be wise to add under-the-radar industrial electronics stocks Arrow Electronics (ARW) and Avnet (AVT) to one’s watchlist. Let’s discuss.
The U.S. economy continues to recover despite geopolitical tensions generated by Russia’s invasion of Ukraine and deepening supply chain disruptions. The resumption of industrial activities is driving the demand for industrial electronics. In January, industrial production jumped 1.4%, surpassing the 0.5% estimates. Capacity utilization also saw its highest increase after March 2019, rising 77.6%.
Industrial electronics are known to play a vital role in improving the efficiency and productivity of various industries. It deals with power electronic switches, actuators, IEDs, meters, sensors, automation equipment, etc. As industrial production rises, the industrial electronics industry benefits. According to Precedence Research, the power electronics market is expected to grow at a 5.2% CAGR to $37.30 billion by 2030.
Given this backdrop, we think it could be wise to add under-the-radar industrial electronic stocks Arrow Electronics, Inc. (ARW) and Avnet, Inc. (AVT) to your watchlist.
Click here to check out our Industrial Sector Report for 2022
Arrow Electronics, Inc. (ARW)
ARW provides products, services, and solutions to industrial and commercial users of electronic components and enterprise computing solutions. The Centennial, Colo.-based company operates through the Global Components business and the Global Enterprise Computing Solutions (ECS) business.
On Feb. 10, 2022, ARW announced that it had signed an agreement with Finland-based Real-Time Location Systems specialist Quuppa, whose Intelligent Locating System tracks tags and devices within a few centimeters and with millisecond latency. ARW’s VP product management and supplier marketing EMEA, Matthias Hutter, said, “Location services are being adopted across many markets, and the addition of Quuppa’s portfolio gives our customers further choice and flexibility in their product designs.”
ARW’s net sales increased 6.6% year-over-year to $9.01 billion for the fourth quarter, ended Dec. 31, 2021. The company’s non-GAAP net income increased 55.9% year-over-year to $379 million. Also, its non-GAAP EPS came in at $5.37, representing a 69.4% increase year-over-year.
Analysts expect ARW’s EPS for the quarter ending March 31, 2022, to increase 60.2% year-over-year to $4.55. Its revenue for fiscal 2022 is expected to increase 4.9% year-over-year to $36.17 billion. And it surpassed the Street’s EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 11.6% in price to close the last trading session at $113.88.
ARW’s strong fundamentals are reflected in its POWR Ratings. It has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has a B grade for Growth and Value. It is ranked first of 47 stocks in the Technology – Electronics industry. Click