Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Electronic Equipment & Parts industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Latest Electronic Equipment & Parts Stock News

Before choosing which top Electronic Equipment & Parts stock to buy, be sure to conduct proper due diligence: analyze various financial metrics and look at historical data, public statements and news coverage.

The Electronic Equipment & Parts sub-industry outlook is neutral. The Purchasing Managers Index (PMI) is often used to gauge the manufacturing sector of the economy. A PMI score over 50 represents expansion, while 50 represents neutral, and under 50 contraction or decline in business. As of July 2021, the PMI score according to the Institute for Supply Management (ISM) was 59.5, a 1.8% decline over the score in June. While this indicates an expanding manufacturing market, the PMI score has declined over the previous three months. While manufacturing has increased since the heights of the pandemic, we are starting to see a slight decline in the demand. However, demand for electronic equipment has some prospects. Increased demand for automotive, computers, and other electronic goods is often associated with times of economic prosperity and consumer spending. Electronic equipment & parts are associated with nearly every other sub-industry, so it is hard to imagine long term that revenues will stay suppressed.

Why Focus on Undervalued Electronic Equipment & Parts Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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3 Undervalued Electronic Equipment & Parts Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Electronic Equipment & Parts industry for Friday, February 02, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Electronic Equipment & Parts industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Flex Ltd’s Value Grade

Value Grade:

Flex Ltd. is engaged in providing a portfolio of manufacturing solutions and services. The Company operates through three segments: Flex Agility Solutions (FAS), and Flex Reliability Solutions (FRS). The FAS segment is comprised of various end markets, such as Communications, Enterprise, and Cloud (CEC), including data infrastructure, edge infrastructure and communications infrastructure; Lifestyle, including appliances, consumer packaging, floorcare, micro mobility and audio; and Consumer Devices, including mobile and high velocity consumer devices. The FRS segment consists of end markets, such as Automotive, including mobility, autonomous, connectivity, electrification, and smart technologies; Health Solutions, including medical devices, medical equipment, and drug delivery; and Industrial, including capital equipment, industrial devices, and renewables and grid edge.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Flex Ltd has a Value Score of 71, which is considered to be undervalued.

When you look at Flex Ltd’s price-to-sales ratio at 0.37 compared to the industry median at 1.47, this company has a lower price relative to revenue compared to its peers. This could make Flex Ltd’s stock more attractive for value investors.

Flex Ltd’s price-earnings ratio is 14.51 compared to the industry median at 20.88. This means it has a lower share price relative to earnings compared to its peers. This could make Flex Ltd more attractive for value investors.

Now, let’s assess Flex Ltd’s EV/EBITDA ratio, also known as enterprise multiple. At 5.3, when compared to the industry median of 10.5, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Flex Ltd’s shareholder yield is higher than its industry median ratio of (0.92%). Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Flex Ltd’s price-to-book ratio is higher than its industry median ratio of 1.45. This could make Flex Ltd less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Flex Ltd’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Flex Ltd’s price-to-free-cash-flow ratio is lower than its industry median ratio of 22.77. This could make Flex Ltd more attractive because the lower P/FCF ratio indicates that Flex Ltd is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

LG Display Co Ltd (ADR)’s Value Grade

Value Grade:

LG Display Co Ltd is a Korea-based company principally engaged in the manufacture and sale of display panels. The Company produces and sells display panels for televisions (TVs), smart phones, monitors, notebooks and tablets. The Company holds liquid crystal display (LCD) and organic light emitting diodes (OLED) technology patents. In addition, the Company manufactures raw materials.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

LG Display Co Ltd (ADR) has a Value Score of 93, which is considered to be undervalued.

LG Display Co Ltd (ADR)’s price-to-book ratio is higher than its peers. This could make LG Display Co Ltd (ADR) less attractive for value investors when compared to the industry median at 1.45.

You can read more about LG Display Co Ltd (ADR)’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Sanmina Corp’s Value Grade

Value Grade:

Sanmina Corporation is a provider of integrated manufacturing solutions, components, products and repair, logistics and after-market services. The Company provides these offerings primarily to original equipment manufacturers (OEMs), in industries, such as industrial, medical, defense and aerospace, automotive, communications networks and cloud infrastructure. The Company's operations are managed as two businesses: Integrated Manufacturing Solutions (IMS) and Components, Products and Services (CPS). IMS business consists of printed circuit board assembly and test, high-level assembly and test and direct-order-fulfillment. Its CPS components include printed circuit boards, backplanes and backplane assemblies, cable assemblies, fabricated metal parts, precision machined parts, and plastic-injected molded parts. Its products include memory solutions, high-performance storage platforms, optical, radio frequency (RF) and microelectronic (microE) design and manufacturing services and others.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Sanmina Corp has a Value Score of 82, which is considered to be undervalued.

Sanmina Corp’s price-earnings ratio is 12.9 compared to the industry median at 20.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Sanmina Corp more attractive for value investors.

Sanmina Corp’s price-to-book ratio is lower than its peers. This could make Sanmina Corp more attractive for value investors when compared to the industry median at 1.45.

You can read more about Sanmina Corp’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Electronic Equipment & Parts Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Electronic Equipment & Parts stocks as well as other industrys.

Choosing Which of the 3 Best Electronic Equipment & Parts Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Flex Ltd stock has a Value Grade of B.
• LG Display Co Ltd (ADR) stock has a Value Grade of A.
• Sanmina Corp stock has a Value Grade of A.

Now that you have a bit more background about each of the 3 undervalued stocks in the Electronic Equipment & Parts industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Electronic Equipment & Parts Stocks

Want to learn more about Electronic Equipment & Parts stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 3 Undervalued Electronic Equipment & Parts Stocks for Friday, February 02
• 3 Undervalued Electronic Equipment & Parts Stocks for Thursday, February 01
• Why Applied Optoelectronics Inc’s (AAOI) Stock Is Up 5.02%
• Why Benchmark Electronics Inc’s (BHE) Stock Is Up 9.14%

AAII Disclaimer

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