Electronics play a crucial role as the pillar of modern existence, reshaping modern society from revolutionizing healthcare to facilitating communication and seamless transportation.
So, investors could consider investing in top tech stocks Arrow Electronics, Inc. (ARW), TTM Technologies, Inc. (TTMI), and Brother Industries, Ltd. (BRTHY), which hold the potential to gain this month.
The rapid technological progress is fueling a constant demand for faster and more advanced electrical goods. The evolution of innovative electronic products is expected to be propelled by digital marvels like the Internet of Things (IoT), AR/VR, and 5G communication.
Revenue in the U.S. electronic market is projected to reach $108.10 billion this year and is expected to expand at a CAGR of 4.6% to reach $135.30 billion by 2028.
Moreover, the electronics sector experiences heightened momentum fueled by consumer enthusiasm for cutting-edge technologies such as smart home products, smart speakers, and drones. The global consumer electronics market is expected to see a steady rise, reaching a new peak of $1.2 trillion by 2028, with a CAGR of 11.9%.
Furthermore, a growing global population with greater access to technology and the expanding Internet of Things (IoT) ecosystem fuel the electronic market. The widespread integration of IoT technology in manufacturing, automotive, and healthcare industries is a key factor propelling market growth.
The global Internet of Things market is expected to grow from $1.02 trillion in 2023 to $2.06 trillion by 2028, at a CAGR of 15.1%.
Considering these conducive trends, let’s look at the fundamentals of the three best Technology - Electronics stocks, starting with number 3.
Stock #3: Arrow Electronics, Inc. (ARW)
ARW is a global company that delivers electronic components and enterprise computing solutions to industrial and commercial users worldwide. The company operates in two segments: Global Components (distributing semiconductors and related products) and Global Enterprise Computing Solutions (providing computing solutions and services). It serves diverse customers worldwide, including original equipment manufacturers, value-added resellers, and managed service providers.
ARW’s trailing-12-month net income margin of 3.06% is 50.5% higher than the industry average of 2.03%. Its 1.68x trailing-12-month asset turnover ratio is 170.9% higher than the 0.62x industry average.
On October 30, 2023, ARW and Intel Corporation (INTC) announced a collaboration with Remark Holdings, Inc. (MARK) for a sales and marketing initiative. The collaboration expands MARK's access to ARW's customer base, offering Intel-powered AI servers for MARK's Smart Safety Platform with ARW distribution support.
For the third quarter ended September 30, 2023, ARW generated sales and non-GAAP operating income of $8.01 billion and $379.31 million, respectively. The company achieved gross profit of $979.60 million. Its net cash provided by operating activities increased 128.1% year-over-year to $321.71 million.
The company forecasts consolidated sales between $7.50 billion to $8.10 billion, with global components sales in the range of $5.40 billion to $5.80 billion and global enterprise computing solutions sales expected to be $2.10 billion to $2.30 billion for the fourth quarter 2023. Predicted net income per share is expected to be between $3.61 and $3.81 for the same quarter.
ARW's revenue and EPS is expected to be $7.84 billion and $3.72 for the fourth quarter ending December 2023. The company has surpassed the EPS estimates in each of the trailing four quarters, which is impressive.
The stock has soared 12.3% over the past year and 19.5% year-to-date to close the last trading session at $124.97.
ARW’s POWR Ratings reflect this sound outlook. The stock has an overall rating of a B, equating to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
ARW has a B grade for Value and Momentum. Within the Technology - Electronics industry, it is ranked #9 out of 40 stocks.
To see ARW’s additional POWR Ratings for Growth, Stability, Sentiment, and Quality, click here.
Stock #2: TTM Technologies, Inc. (TTMI)
TTMI is a global manufacturer and seller of engineered systems, radio frequency components, and printed circuit boards (PCB). Operating in PCB and RF&S Components segments, the company offers a wide range of products, including HDI PCBs, flexible PCBs, IC substrates, and advanced ceramic RF components. TTM serves the aerospace, defense, automotive, medical, and telecommunications industries, providing custom-designed integrated circuits and thermal management solutions.
TTMI’s trailing-12-month EBITDA margin of 11.69% is 28.9% higher than the industry average of 9.07%. Its 6.17% trailing-12-month CAPEX /Sales is 153.3% higher than the 2.44% industry average.
On November 1, TTMI selected New York State for a new high-tech manufacturing facility in Syracuse, focusing on producing ultra-high-density interconnect (HDI) PCBs for national security.
The project aims to bring around 400 jobs, strengthen the microelectronics ecosystem, and enhance domestic capacity. The facility is anticipated to be the most technologically advanced PCB manufacturing site in North America, with groundbreaking expected in the first half of 2024 and an estimated initial investment of $100 to $130 million.
During the third quarter ended October 2, 2023, TTMI’s net sales amounted to $572.58 million. The company generated non-GAAP net income and EPS of $44.88 million and $0.43, respectively. Also, its adjusted EBITDA and free cash flow amounted to $84.08 million and $25.19 million, respectively.
For the fourth quarter of 2023, TTMI anticipates revenues to fall within the range of $550 million to $590 million. Additionally, the non-GAAP net income is expected to be in the range of $0.34 to $0.40 per diluted share.
Street expects TTMI's revenue and EPS to grow 3.8% and 61.1% year-over-year to $565.21 million and $0.29 for the first quarter ending March 2024. The company has surpassed the EPS estimates in each of the trailing three quarters.
Shares of TTMI increased 17% over the past month to close the last trading session at $14.58.
TTMI’s POWR Ratings reflect this robust outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
TTMI has an A grade for Momentum and Sentiment and a B for Growth. Within the same industry, it is ranked #6
Click here for TTMI’s additional Value, Stability, and Quality ratings.
Stock #1: Brother Industries, Ltd. (BRTHY)
Headquartered in Nagoya, Japan, BRTHY manufactures and sells communication and printing equipment globally. The company offers a diverse range of products, including printers, scanners, industrial sewing machines, and digital printing equipment. Additionally, it provides services such as online karaoke systems and content services.
BRTHY’s trailing-12-month EBIT margin of 7.70% is 61% higher than the industry average of 4.78%. Its 4.29% trailing-12-month CAPEX/Sales is 76.1% higher than the 2.44% industry average.
In the fiscal second quarter ended September 30, 2023, BRTHY's revenue increased 1.2% year-over-year to ¥199.23 billion ($1.32 billion). The company’s gross profit and operating profit rose 14.9% and 42.2% from the previous year's quarter to ¥85.64 billion ($567.77 million) and ¥17.70 billion ($117.35 million), respectively. Moreover, its EPS amounted to ¥49.39.
Analysts expect BRTHY’s revenue to grow 58.7% to $5.44 billion for the fiscal year ending March 2024.
The stock has soared 9.8% over the past year and 12% year-to-date to close the last trading session at $33.74.
BRTHY’s POWR Ratings reflect this positive outlook. The stock has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
BRTHY has an A grade for Stability and a B for Value and Quality. Within the same industry, it is ranked first.
In addition to the POWR Ratings stated above, one can access BRTHY’s additional Growth, Momentum, and Sentiment ratings here.
What To Do Next?
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ARW shares were trading at $124.59 per share on Thursday morning, down $0.38 (-0.30%). Year-to-date, ARW has gained 19.15%, versus a 18.97% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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