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3 Electronics Stocks With Bright Industry Prospects to Watch
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The Zacks Electronics – Measuring Instruments industry has been benefiting from the increasing deployment of 5G and the rising user penetration of electric vehicles (EVs). In addition to this, the solid adoption of consumer-oriented smart IoT devices such as smart speakers, wearables and home security equipment has been aiding industry participants like Keysight Technologies (KEYS - Free Report) , Advantest (ATEYY - Free Report) and Camtek (CAMT - Free Report) . The strengthening demand for security and surveillance system has been another boon for the industry players.
Industry Description
The Zacks Electronics – Measuring Instruments industry comprises companies, which offer wearables, test solutions and equipment, electronic design, test instrumentation systems, metrology solutions, and thermo management products. The industry players are increasing their spend on research and development as well as sales and marketing in order to stay afloat in an era of technological advancements and changing industry standards. The major end-markets served by the underlined industry are consumer, automotive, industrial, aerospace & defense, semiconductor, healthcare, and communications, to name a few. Further, rising spending by manufacturers of semiconductors, automobiles, machinery, mobile phones and LED displays worldwide bode well for the industry.
3 Trends Shaping the Future of Electronics ??? Measuring Instruments Industry
EV Proliferation – a Growth Driver: The growing momentum across EVs, including hybrid and self-driving vehicles, remains a key catalyst. Increasing investment in advanced automotive technology and the strengthening demand for EV test solutions have been driving the prospects of the industry participants, who are making efforts to capitalize on the EV-related growth opportunities. Continuous innovations in EV infrastructure, which have been bolstering the demand for simulation software, radars and other electronic measuring instruments, remain other positives. In addition to this, the growing proliferation of advanced driver-assistance systems has boosted the demand for electronics testing solutions. The factors are expected to continue to benefit the industry in the near term.
5G – Key Catalyst: The growing deployment of 5G holds near-term promise for the industry participants. An uptick in the demand for 5G test solutions, which are required for 5G deployment, is a major positive. The growing number of high-speed data centers worldwide is a tailwind. The current coronavirus-triggered work-from-home wave globally, which has been bolstering the demand for high-speed Internet services, bodes well for electronic companies, which are enhancing their 5G efforts. Given the upbeat scenario, the industry is anticipated to remain on the growth trajectory, backed by strong efforts made to bolster 5G strength.
Solid Adoption of Fitness Trackers: The increased focus on personal fitness, health and wellness amid the pandemic has emphasized the importance of fitness and wellness trackers and smartwatches, which help in monitoring personal health. The growing proliferation of the devices has fuelled the use of the flat-panel display (“FPD”) technology. Further, the rising demand for Augmented Reality (“AR”)/Virtual Reality (“VR”) devices, and OLED displays has been playing a significant role in driving the requirement for FPDs. The factors are creating an extremely conducive growth environment for the industry players.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Electronics - Measuring Instruments industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #113, which places it in the top 45% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates solid 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 positioning in the top 50% of the Zacks-ranked industries is a result of the 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 Jun 30, 2021, the industry’s earnings estimates for the current year have moved up by 4.7%.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Beats S&P 500 & Sector
The Zacks Electronics – Measuring Instruments industry has outperformed the Zacks S&P 500 composite and the broader Zacks Computer and Technology sector in the past year.
The stocks in the industry have collectively gained 132.3% compared with the Zacks S&P 500 and the Zacks Computer and Technology sector’s rallies of 29.7% and 33.7%, respectively.
One-Year Price Performance
Image Source: Zacks Investment Research
Industry's Current Valuation
On the basis of the forward 12-month price-to-sales ratio (P/S), which is a commonly used multiple for valuing Electronics – Measuring Instruments stocks, the industry is currently trading at 3.05X, lower than the S&P 500’s 4.33X and the sector’s 4.48X.
Over the past five years, the industry has traded as high as 3.73X and as low as 1.13X, with a median of 2.1X as the charts below show.
Forward 12-Month Price-to-Sales (P/S) Ratio
Image Source: Zacks Investment Research
3 Measuring Instrument Stocks to Keep a Close Eye on
Keysight Technologies: This Santa Rosa, CA-based company is well-poised to capitalize on the accelerating 5G deployment, courtesy of the rising demand for 5G test solutions. The company is benefiting from higher investments in 400G/ 800G ethernet for data centers. Keysight Technologies is also riding on the solid demand for its semiconductor measurement solutions, as semiconductor companies are increasingly developing chips based on next-generation process technologies.
Additionally, this Zacks Rank #2 (Buy) company, which is a provider of electronic design and test instrumentation systems, is likely to gain from high government spending and the momentum in investments aimed at technology advancements. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Notably, Keysight Technologies has gained 66% over a year. The Zacks Consensus Estimate for the company’s fiscal 2021 earnings has been revised upward by 2.7% over the past 60 days to $6.07 per share.
Price and Consensus: KEYS
Image Source: Zacks Investment Research
Camtek: The Israel-based manufacturer of metrology and inspection equipment benefits from the growing share in the 2D inspection market. The company is benefiting from its robust system performance across 2D applications. Additionally, the increasing demand for 5G-related applications remains a tailwind.
Further, this Zacks Rank #2 company is well-positioned to capitalize on the rising demand for semiconductor devices on the back of its software solutions utilized in advanced packaging, memory and sensors.
Notably, Camtek has returned 128.4% in the past year. The Zacks Consensus Estimate for the company’s 2021 earnings moved north by 9.3% to $1.53 per share over the last 60 days.
Price and Consensus: CAMT
Image Source: Zacks Investment Research
Image Source: Zacks Investment Research
Advantest: The Japan-based company of semiconductor test equipment benefits from increasing spending by suppliers on production capacity enhancements and advanced technologies. Further, the growing requirement of semiconductors in data centers, AI and automotive applications, servers, and PCs, owing to the coronavirus pandemic-induced ongoing digitalization, remains a major tailwind.
Moreover, this Zacks Rank #3 (Hold) company remains well-poised to capitalize on the solid demand for semiconductor test products on the back of its robust product portfolio. Further, the company remains optimistic about the rising device complexity associated with miniaturization, which is expected to lead to a further boost in the test demand.
Notably, Advantest has returned 86.7% in the past year. The Zacks Consensus Estimate for the company’s fiscal 2022 earnings moved north by 3.4% to $3.63 per share over the last 60 days.
Price and Consensus: ATEYY
Image Source: Zacks Investment Research
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3 Electronics Stocks With Bright Industry Prospects to Watch
The Zacks Electronics – Measuring Instruments industry has been benefiting from the increasing deployment of 5G and the rising user penetration of electric vehicles (EVs). In addition to this, the solid adoption of consumer-oriented smart IoT devices such as smart speakers, wearables and home security equipment has been aiding industry participants like Keysight Technologies (KEYS - Free Report) , Advantest (ATEYY - Free Report) and Camtek (CAMT - Free Report) . The strengthening demand for security and surveillance system has been another boon for the industry players.
Industry Description
The Zacks Electronics – Measuring Instruments industry comprises companies, which offer wearables, test solutions and equipment, electronic design, test instrumentation systems, metrology solutions, and thermo management products. The industry players are increasing their spend on research and development as well as sales and marketing in order to stay afloat in an era of technological advancements and changing industry standards. The major end-markets served by the underlined industry are consumer, automotive, industrial, aerospace & defense, semiconductor, healthcare, and communications, to name a few. Further, rising spending by manufacturers of semiconductors, automobiles, machinery, mobile phones and LED displays worldwide bode well for the industry.
3 Trends Shaping the Future of Electronics ??? Measuring Instruments Industry
EV Proliferation – a Growth Driver: The growing momentum across EVs, including hybrid and self-driving vehicles, remains a key catalyst. Increasing investment in advanced automotive technology and the strengthening demand for EV test solutions have been driving the prospects of the industry participants, who are making efforts to capitalize on the EV-related growth opportunities. Continuous innovations in EV infrastructure, which have been bolstering the demand for simulation software, radars and other electronic measuring instruments, remain other positives. In addition to this, the growing proliferation of advanced driver-assistance systems has boosted the demand for electronics testing solutions. The factors are expected to continue to benefit the industry in the near term.
5G – Key Catalyst: The growing deployment of 5G holds near-term promise for the industry participants. An uptick in the demand for 5G test solutions, which are required for 5G deployment, is a major positive. The growing number of high-speed data centers worldwide is a tailwind. The current coronavirus-triggered work-from-home wave globally, which has been bolstering the demand for high-speed Internet services, bodes well for electronic companies, which are enhancing their 5G efforts. Given the upbeat scenario, the industry is anticipated to remain on the growth trajectory, backed by strong efforts made to bolster 5G strength.
Solid Adoption of Fitness Trackers: The increased focus on personal fitness, health and wellness amid the pandemic has emphasized the importance of fitness and wellness trackers and smartwatches, which help in monitoring personal health. The growing proliferation of the devices has fuelled the use of the flat-panel display (“FPD”) technology. Further, the rising demand for Augmented Reality (“AR”)/Virtual Reality (“VR”) devices, and OLED displays has been playing a significant role in driving the requirement for FPDs. The factors are creating an extremely conducive growth environment for the industry players.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Electronics - Measuring Instruments industry is housed within the broader Zacks Computer and Technology sector. It carries a Zacks Industry Rank #113, which places it in the top 45% of more than 250 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates solid 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 positioning in the top 50% of the Zacks-ranked industries is a result of the 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 Jun 30, 2021, the industry’s earnings estimates for the current year have moved up by 4.7%.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Beats S&P 500 & Sector
The Zacks Electronics – Measuring Instruments industry has outperformed the Zacks S&P 500 composite and the broader Zacks Computer and Technology sector in the past year.
The stocks in the industry have collectively gained 132.3% compared with the Zacks S&P 500 and the Zacks Computer and Technology sector’s rallies of 29.7% and 33.7%, respectively.
One-Year Price Performance
Industry's Current Valuation
On the basis of the forward 12-month price-to-sales ratio (P/S), which is a commonly used multiple for valuing Electronics – Measuring Instruments stocks, the industry is currently trading at 3.05X, lower than the S&P 500’s 4.33X and the sector’s 4.48X.
Over the past five years, the industry has traded as high as 3.73X and as low as 1.13X, with a median of 2.1X as the charts below show.
Forward 12-Month Price-to-Sales (P/S) Ratio
3 Measuring Instrument Stocks to Keep a Close Eye on
Keysight Technologies: This Santa Rosa, CA-based company is well-poised to capitalize on the accelerating 5G deployment, courtesy of the rising demand for 5G test solutions. The company is benefiting from higher investments in 400G/ 800G ethernet for data centers. Keysight Technologies is also riding on the solid demand for its semiconductor measurement solutions, as semiconductor companies are increasingly developing chips based on next-generation process technologies.
Additionally, this Zacks Rank #2 (Buy) company, which is a provider of electronic design and test instrumentation systems, is likely to gain from high government spending and the momentum in investments aimed at technology advancements. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Notably, Keysight Technologies has gained 66% over a year. The Zacks Consensus Estimate for the company’s fiscal 2021 earnings has been revised upward by 2.7% over the past 60 days to $6.07 per share.
Price and Consensus: KEYS
Camtek: The Israel-based manufacturer of metrology and inspection equipment benefits from the growing share in the 2D inspection market. The company is benefiting from its robust system performance across 2D applications. Additionally, the increasing demand for 5G-related applications remains a tailwind.
Further, this Zacks Rank #2 company is well-positioned to capitalize on the rising demand for semiconductor devices on the back of its software solutions utilized in advanced packaging, memory and sensors.
Notably, Camtek has returned 128.4% in the past year. The Zacks Consensus Estimate for the company’s 2021 earnings moved north by 9.3% to $1.53 per share over the last 60 days.
Price and Consensus: CAMT
Image Source: Zacks Investment Research
Advantest: The Japan-based company of semiconductor test equipment benefits from increasing spending by suppliers on production capacity enhancements and advanced technologies. Further, the growing requirement of semiconductors in data centers, AI and automotive applications, servers, and PCs, owing to the coronavirus pandemic-induced ongoing digitalization, remains a major tailwind.
Moreover, this Zacks Rank #3 (Hold) company remains well-poised to capitalize on the solid demand for semiconductor test products on the back of its robust product portfolio. Further, the company remains optimistic about the rising device complexity associated with miniaturization, which is expected to lead to a further boost in the test demand.
Notably, Advantest has returned 86.7% in the past year. The Zacks Consensus Estimate for the company’s fiscal 2022 earnings moved north by 3.4% to $3.63 per share over the last 60 days.
Price and Consensus: ATEYY