Electronics Manufacturing Services is at #11 out of 256 industries (in the top 4%) within the Zacks Industry Ranks.

Any industry group can’t do better. And it’s not a ranking fluke. This one has 5 companies in it.

The Electronics Manufacturing Services – known by its abbreviation as EMS – industry took off after the late 1970s when Selectron was established.

At the time, in-house assembly handled most electronics manufacturing for large-scale product runs. These new companies offered flexibility and eased human resources issues for smaller companies doing limited runs.

What is the typical business model for the EMS industry?

EMS companies specialize in large economies of scale in manufacturing and raw materials procurement. Then, they pool together the needed resources and apply their industrial design expertise. They also create added-value services such as warranty and repairs.

This frees up the end customer, who does not need to manufacture and keep huge inventories of products. The final customer can respond to sudden spikes in their demand more quickly and efficiently.

In today’s world, think about ‘wearables’ as a solid electronics product example, aka smart watches, activity trackers and wrist-bound health care devices.

What’s the stock market opportunity?

Stocks in this industry have seen some rough sledding since peaking in either 2017, or at the latest, in early 2018.

Yet now, the share price bottoms may be in.

They are a good value.

Here are the top 2 picks--

(1) Jabil (JBL Quick QuoteJBL - Free Report) ) has a VGM score of B and a Zacks #1 (STRONG BUY) Rank

Valuations are good. The PEG ratio is quite low at 0.72 and the forward P/E is low at 8.64. Shares price at around $25 and the market cap is $4B.

I put up the Zacks Price and Consensus chart below. That shows these undervalued shares should price at $31.

Annual earnings estimates look stable. 2018 is at $2.99 a share and 2019 is at $3.37. The projected EPS growth is +14%.

This company has beat on earnings the last 11 times in a row! The average of the last 3 earnings surprises have been +4.4%.

Jabil Inc. provides electronic manufacturing services and solutions.

The company's operating segment includes EMS and Diversified Manufacturing Services (DMS).

• The EMS segment is focused on leveraging information technology, supply chain design and engineering, technologies centered on core electronics.
• The DMS segment is focused on providing engineering solutions and a focus on material sciences and technologies.

It provides electronic design, production and product management services to automotive, capital equipment, consumer lifestyles and wearable technologies, computing and storage, defense and aerospace, digital home, emerging growth, healthcare, industrial and energy, mobility, packaging, point of sale and printing industries.

Jabil Inc., formerly known as Jabil Circuit Inc., is based in Florida in the United States.

(2) Celestica (CLS Quick QuoteCLS - Free Report) ) has a VGM score of B and a Zacks #3 (HOLD) Rank

Valuations are good again. The PEG ratio is OK at 1.98 while the forward P/E is low at 8.01. Shares price at $9.60 and the market cap is $1.3B. This price and consensus chart also shows undervaluation. The shares are likely worth $12.

Note: They report quarterly earnings after the market closes on Jan. 31^st.

Celestica, Inc. is one of the largest electronics manufacturing services company in the world, serving the computer and communications sectors.

The company provides competitive manufacturing technology and service solutions for printed circuit assembly and system assembly, as well as post-manufacturing support to many of the world's leading original equipment manufacturers.

Celestica'sextensive depth and breadth of offerings supports a wide variety of customer requirements from low volume, high complexity custom products to high volume commodity products.