We all want to know the one sector which is always in demand, here it is: Computer and Technology. But looking deeper there is many different industries. One of those industries provide better returns than others. Today we will have a look at “miscellaneous components” (always in demand)
There are just few stocks which catches our eye, let’s start with the first one AVX Corporation (AVX):
With it’s market cap nearly $3.5b and forward-looking PE in growing mood, you can’t just ignore it. Looks more like small cap growth stock in constantly growing sector. There is a few ways to see it true- with it’s small cap it’s very attractive as a buyout. Institutions own just a tiny 27% of the company’s stocks & shares, while insiders own massive 72%, we just love to see numbers like this. But here is more- Nil of debt, $744m of cash, current assets cover total liabilities 3 times, massive cash flow, slowly increases dividends with its pay-out ratio at 33.58% this is very attractive.
But there are few issues, let’s have a look at them- inventories piling up, could it be because of global manufacturing slowdown or the edge of market correction? (we’ll find it out some time soon)
Peg ratio 1.74- says it’s a little bit overpriced. Book value is at 14.33- way overpriced. Current ratio is at 5.78 – to high if we look at undervalued stock, but this one looks more like a growth stock, right?
Company has only 2% of short float and brokers average target price is at $19.5 – just by fraction below the current price. We’ll be waiting for Jan 23rd because they release 3rd quarter earnings report, then we’ll have a better look at company’s results and make up our minds.
There is more- Vicor Corporation (VICR)
With it’s market cap of $2 billion and with $0 debt, current assets of $165m and current liabilities only $35m looks very attractive. It has only $81m of cash while R&D constantly growing, might show some great results in near future. While cash flow is unstable but creeping higher and revenues increasing QoQ, we might find it attractive. Inventory levels looks like stabilised since December 2018.
We have PEG ratio of 6.26 and price to book value of 10.34 – it does look overpriced, but institution ownership of only 40% says there is more room to increase stock price level.
Brokers average price target is $46.33 and short float of 8% we would suggest to wait for earnings report, examine it and try to be good at timing while entering this constantly growing company.
We can’t stop, there is another one- Ballard Power Systems, Inc (BLDP)
Market cap at $2.1b with $5m debt and negative income with cash pile of $153m and stable R&D investments- it might be a nice pick, but we have to be right with timing entering the trade in this market conditions.
Current assets of $261m easily covers total liabilities, which is over $85m. VICR has the best book value of 1.1 comparing to those above in this article. Current return on equity is negative, but it looks like turnaround is not far with it’s very specific niche products & services. It is well diversified in major countries.
There is only 16% of institution ownership- plenty of space to increase. Short float around 4% and brokerage recommendation of 3.25 with target price of $5.38, which is way below current price levels. That’s why this is on our watchlist. They release earnings on 29th of January.
Please bare in mind this analysis is done on curiosity reasons. Before entering any position you must do Due Diligence and be responsible for your own actions in trading environment.
