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3 Computer Peripheral Stocks to Watch in a Promising Industry
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The Zacks Computer - Peripheral Equipment industry is benefiting from the coronavirus-led rise in the use of PC systems, stemming from higher remote work, web-based learning, video conferencing, video gaming, social media, consumer entertainment and streaming, and online shopping. Moreover, concerns regarding the spread of the new COVID-19 mutant strain are likely to lead to the continuation of the trend for quite some time. This, in turn, is expected to boost the PC market in the coming days. Demand and supply shortage-led carry-forward of the backlog into 2021 is expected to uphold the momentum in the PC market.
Nevertheless, Logitech (LOGI - Free Report) , LG Display (LPL - Free Report) and Immersion (IMMR - Free Report) are a few industry participants well set to benefit from the growing demand for professional gaming accessories, PC peripherals, touchscreen devices, smart glasses and RFID solutions. Moreover, solid demand for 3D-printed health equipment like face shields, nasal swabs and ventilator parts has been a tailwind.
Industry Description
The Zacks Computer - Peripheral Equipment industry comprises companies offering computer input, output and storage devices. These include keyboards, mouse, LCD panels, smart glass, analog to digital imaging solutions, touch sensors, 3D printers & additive manufacturing, and transaction-based printer products, among others.
Notably, the highly competitive nature of the industry is encouraging participants to come up with innovative and relevant products to meet the current demand trend. This is strengthening their product portfolios.
3 Trends Shaping the Future of the Computer- Peripheral Equipment Industry
Production and Demand on the road to recovery: The computer peripheral equipment industry is slowly overcoming the operational challenges posed by the coronavirus pandemic. Companies are in the process of restarting and arranging their operations according to the new normal. Research and Markets expects the global computer peripheral equipment market to grow from $459.03 billion in 2020 to $499.53 billion in 2021, at a CAGR of 8.8%. However, the completion of Microsoft’s (MSFT - Free Report) Windows 10 replacement cycle is likely to keep denting demand for computer peripherals as the industry is dependent on the PC market to some extent.
Shift in Consumer Preference a Key Catalyst: The gradual shift in consumer preference from mobile gaming to a more professional gaming experience is a major growth driver. Launch of advanced gaming devices and the growing popularity of e-sports leagues are expected to boost prospects. Markedly, e-sports is also likely to continue driving the total addressable market in the gaming peripherals industry. Moreover, the 3D printing market presents a favorable long-term investment opportunity as a large number of engineers, designers, architects and entrepreneurs are resorting to 3D solutions for primary designing and product modeling. Also, the coronavirus outbreak is resulting in massive demand for gaming equipment and 3D-printed medical equipment, which is a major driving force for this industry during these trying times.
Expanding Global Footprint: Expansion of the total addressable market bodes well for industry participants. Improving penetration into price-sensitive regions like the Asia Pacific and the Middle East & Africa through low-cost quality products enhances prospects. However, uncertainties surrounding the U.S.-China trade war make us anxious about the near-term prospects of the industry.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Computer-Peripheral Equipment industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #83, which places it at the top 33% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s position in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are optimistic about this group’s earnings growth potential. Since Jul 31, 2020, the industry’s 2021 earnings estimates have widened 52% from 75 cents to $1.14 per share.
Notably, a few stocks have the potential to outperform the market, based on a strong earnings outlook. But before we present the top industry picks, it is worth taking a look at the industry’s shareholder returns and current valuation first.
Industry Outperforms S&P 500 and Sector
The Zacks Computer-Peripheral Equipment industry has outperformed the S&P 500 composite and the broader Zacks Computer and Technology sector in the past year.
The industry has risen 76.9% over this period compared with the S&P 500’s increase of 18.7% and the broader sector’s rally of 40.9%.
One-Year Price Performance Industry’s Current Valuation
On the basis of the trailing 12-month P/S, which is a commonly used multiple for valuing computer peripheral stocks, we see that the industry is currently trading at 1.23X compared with the S&P 500’s 4.42X and the Zacks Computer and Technology sector’s 6X.
Over the last five years, the industry has traded as high as 1.24X, as low as 0.08X and at the median of 0.53X, as the chart below shows.
Trailing 12-Month Price-to-Sales (P/S) Ratio
3 Computer Peripheral Stocks to Keep a Close Eye on
Switzerland-based Logitech is benefiting from strong momentum in video collaboration, gaming, and creativity & productivity businesses. It has been able to leverage its software and go-to-market capabilities to drive market share gains and growth.
Moreover, the thriving cloud-based video conferencing services will continue to be the key catalyst. Stay-at-home orders due to the coronavirus outbreak are boosting sales. Rising adoption of new mobile platforms in both mature and emerging markets is fueling demand for Logitech’s peripherals and accessories. Further, partnerships with cloud providers like Zoom Video (ZM - Free Report) , Microsoft and Google are major positives for this Zacks Rank #1 (Strong Buy) company. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for its fiscal 2021 earnings increased 40.53% to $5.79 over the past 30 days. Logitech’s shares are up 129.6% in the past year.
Seoul, Republic of Korea-based LG Display Co., Ltd. primarily manufactures and sells thin-film transistor liquid crystal display panels in a range of sizes and specifications primarily for use in televisions, notebook computers and desktop monitors, as well as for handheld application products, such as mobile phones; and medium and large-size panels for industrial and other applications, including entertainment systems, portable navigation devices, e-paper, digital photo displays and medical diagnostic equipment. The company supplies its products to original equipment manufacturers and multinational corporations.
This Zacks Rank #2 (Buy) stock recently reported high quarterly earnings, on the back of increased shipments of Apple's new iPhone models.
The consensus mark for 2020 loss has narrowed from 63 cents to 56 cents per share over the past 30 days. The stock has gained 56.8% in the past year.
San Jose, CA-based Immersion develops hardware and software technologies that enable users to interact with computers using the sense of touch. The company’s patented technologies, which are branded TouchSense, enable devices such as mouse, joysticks, knobs and medical simulation products to deliver tactile sensations that correspond to on-screen events.
The Zacks Consensus Estimate for 2020 earnings has been stable at 28 cents per share over the past 30 days for this Zacks Rank #3 (Hold) stock. Immersion’s shares have gained 87.2% in the past year.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
3 Computer Peripheral Stocks to Watch in a Promising Industry
The Zacks Computer - Peripheral Equipment industry is benefiting from the coronavirus-led rise in the use of PC systems, stemming from higher remote work, web-based learning, video conferencing, video gaming, social media, consumer entertainment and streaming, and online shopping. Moreover, concerns regarding the spread of the new COVID-19 mutant strain are likely to lead to the continuation of the trend for quite some time. This, in turn, is expected to boost the PC market in the coming days. Demand and supply shortage-led carry-forward of the backlog into 2021 is expected to uphold the momentum in the PC market.
Nevertheless, Logitech (LOGI - Free Report) , LG Display (LPL - Free Report) and Immersion (IMMR - Free Report) are a few industry participants well set to benefit from the growing demand for professional gaming accessories, PC peripherals, touchscreen devices, smart glasses and RFID solutions. Moreover, solid demand for 3D-printed health equipment like face shields, nasal swabs and ventilator parts has been a tailwind.
Industry Description
The Zacks Computer - Peripheral Equipment industry comprises companies offering computer input, output and storage devices. These include keyboards, mouse, LCD panels, smart glass, analog to digital imaging solutions, touch sensors, 3D printers & additive manufacturing, and transaction-based printer products, among others.
Notably, the highly competitive nature of the industry is encouraging participants to come up with innovative and relevant products to meet the current demand trend. This is strengthening their product portfolios.
3 Trends Shaping the Future of the Computer- Peripheral Equipment Industry
Production and Demand on the road to recovery: The computer peripheral equipment industry is slowly overcoming the operational challenges posed by the coronavirus pandemic. Companies are in the process of restarting and arranging their operations according to the new normal. Research and Markets expects the global computer peripheral equipment market to grow from $459.03 billion in 2020 to $499.53 billion in 2021, at a CAGR of 8.8%. However, the completion of Microsoft’s (MSFT - Free Report) Windows 10 replacement cycle is likely to keep denting demand for computer peripherals as the industry is dependent on the PC market to some extent.
Shift in Consumer Preference a Key Catalyst: The gradual shift in consumer preference from mobile gaming to a more professional gaming experience is a major growth driver. Launch of advanced gaming devices and the growing popularity of e-sports leagues are expected to boost prospects. Markedly, e-sports is also likely to continue driving the total addressable market in the gaming peripherals industry. Moreover, the 3D printing market presents a favorable long-term investment opportunity as a large number of engineers, designers, architects and entrepreneurs are resorting to 3D solutions for primary designing and product modeling. Also, the coronavirus outbreak is resulting in massive demand for gaming equipment and 3D-printed medical equipment, which is a major driving force for this industry during these trying times.
Expanding Global Footprint: Expansion of the total addressable market bodes well for industry participants. Improving penetration into price-sensitive regions like the Asia Pacific and the Middle East & Africa through low-cost quality products enhances prospects. However, uncertainties surrounding the U.S.-China trade war make us anxious about the near-term prospects of the industry.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Computer-Peripheral Equipment industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #83, which places it at the top 33% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
The industry’s position in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are optimistic about this group’s earnings growth potential. Since Jul 31, 2020, the industry’s 2021 earnings estimates have widened 52% from 75 cents to $1.14 per share.
Notably, a few stocks have the potential to outperform the market, based on a strong earnings outlook. But before we present the top industry picks, it is worth taking a look at the industry’s shareholder returns and current valuation first.
Industry Outperforms S&P 500 and Sector
The Zacks Computer-Peripheral Equipment industry has outperformed the S&P 500 composite and the broader Zacks Computer and Technology sector in the past year.
The industry has risen 76.9% over this period compared with the S&P 500’s increase of 18.7% and the broader sector’s rally of 40.9%.
One-Year Price Performance
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Industry’s Current Valuation
On the basis of the trailing 12-month P/S, which is a commonly used multiple for valuing computer peripheral stocks, we see that the industry is currently trading at 1.23X compared with the S&P 500’s 4.42X and the Zacks Computer and Technology sector’s 6X.
Over the last five years, the industry has traded as high as 1.24X, as low as 0.08X and at the median of 0.53X, as the chart below shows.
Trailing 12-Month Price-to-Sales (P/S) Ratio
3 Computer Peripheral Stocks to Keep a Close Eye on
Switzerland-based Logitech is benefiting from strong momentum in video collaboration, gaming, and creativity & productivity businesses. It has been able to leverage its software and go-to-market capabilities to drive market share gains and growth.
Moreover, the thriving cloud-based video conferencing services will continue to be the key catalyst. Stay-at-home orders due to the coronavirus outbreak are boosting sales. Rising adoption of new mobile platforms in both mature and emerging markets is fueling demand for Logitech’s peripherals and accessories. Further, partnerships with cloud providers like Zoom Video (ZM - Free Report) , Microsoft and Google are major positives for this Zacks Rank #1 (Strong Buy) company. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for its fiscal 2021 earnings increased 40.53% to $5.79 over the past 30 days. Logitech’s shares are up 129.6% in the past year.
Seoul, Republic of Korea-based LG Display Co., Ltd. primarily manufactures and sells thin-film transistor liquid crystal display panels in a range of sizes and specifications primarily for use in televisions, notebook computers and desktop monitors, as well as for handheld application products, such as mobile phones; and medium and large-size panels for industrial and other applications, including entertainment systems, portable navigation devices, e-paper, digital photo displays and medical diagnostic equipment. The company supplies its products to original equipment manufacturers and multinational corporations.
This Zacks Rank #2 (Buy) stock recently reported high quarterly earnings, on the back of increased shipments of Apple's new iPhone models.
The consensus mark for 2020 loss has narrowed from 63 cents to 56 cents per share over the past 30 days. The stock has gained 56.8% in the past year.
San Jose, CA-based Immersion develops hardware and software technologies that enable users to interact with computers using the sense of touch. The company’s patented technologies, which are branded TouchSense, enable devices such as mouse, joysticks, knobs and medical simulation products to deliver tactile sensations that correspond to on-screen events.
The Zacks Consensus Estimate for 2020 earnings has been stable at 28 cents per share over the past 30 days for this Zacks Rank #3 (Hold) stock. Immersion’s shares have gained 87.2% in the past year.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by referendums and legislation, this industry is expected to blast from an already robust $17.7 billion in 2019 to a staggering $73.6 billion by 2027. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot stocks we're targeting >>