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Amphenol is a leading provider of electrical components.
Explosive AI and EV spending is creating high demand for APH's products.
APH sports high margins and explosive and consistent EPS growth.
Amphenol: Enabling the Electronics Revolution
Zacks Rank #1 (Strong Buy) stock Amphenol ((APH - Free Report) ) is one of the world’s largest designers, manufacturers, and marketers of connectors and interconnect systems, antennas, solutions, sensors, and high-speed cable. Investors can think of Amphenol technology as the “electronic highway” that allows electronic devices to interface, shift electricity, and operate correctly. Amphenol does not rely on one specific industry or customer to generate business. Instead, the company serves a diverse set of high-growth industries, including:
· Automotive
· Broadband
· Commercial Aerospace
· Defense
· Industrial
· IT Datacom/Data Centers
· Mobile Devices
· Mobile Networks
Amphenol: Powering High-Growth Industries
IDC predicts that artificial intelligence will contribute a staggering $20 trillion to the global economy by 2030, driving 3.5% of global GDP. Currently, much of the billions being spent by big tech juggernauts like Alphabet ((GOOGL - Free Report) ),Meta Platforms ((META - Free Report) ), and Amazon ((AMZN - Free Report) ) is aimed at data centers used to train large language models (LLMs) such as ‘ChatGPT.’ According to Advanced Micro Devices ((AMD - Free Report) ) and other leading AI providers, this growth is not expected to slow any time soon. APH provides the “picks and shovels” to the AI revolution. Data center expansion will require more of the company’s high-speed interconnects.
In 2017, electric vehicles accounted for only ~1% of global automotive sales. Today, EVs account for 25% of all new car sales, and some projections anticipate that they will account for 40% by the end of the decade. Similar to data centers, the more EVs sold, the more automotive manufacturers will need to purchase APH’s high-speed interconnects.
Amphenol Fundamentals
At a juicy 36%, Amphenol has some of the best profit margins on Wall Street.
Image Source: Zacks Investment Research
In addition to its juicy profit margins, APH is one of the most consistent earnings growers. The company has grown quarterly EPS at a double-digit clip for seven consecutive quarters. Meanwhile, Zacks Consensus Analyst Estimates suggest that the robust double-digit growth will continue into next year.
Image Source: Zacks Investment Research
Moreover, APH continues to beat Wall Street estimates by a wide margin. Over the past four quarters, APH has delivered an average positive EPS surprise of 17.90%.
Image Source: Zacks Investment Research
APH Technical Analysis
From a price action perspective, it’s difficult to find a smoother trending stock than APH. Currently, the stock is retreating to its 50-day moving average – a level it which it has found buyers at all year.
Image Source: TradingView
Bottom Line
Amphenol is uniquely positioned as a top supplier of the world’s most powerful technology trends, supplying the essential components that enable modern electronics to function. Its diversified customer base, exposure to secular themes, and outstanding execution track record give it one of the strongest fundamental profiles in the hardware ecosystem.
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Bull of the Day: Amphenol (APH)
Key Takeaways
Amphenol: Enabling the Electronics Revolution
Zacks Rank #1 (Strong Buy) stock Amphenol ((APH - Free Report) ) is one of the world’s largest designers, manufacturers, and marketers of connectors and interconnect systems, antennas, solutions, sensors, and high-speed cable. Investors can think of Amphenol technology as the “electronic highway” that allows electronic devices to interface, shift electricity, and operate correctly. Amphenol does not rely on one specific industry or customer to generate business. Instead, the company serves a diverse set of high-growth industries, including:
· Automotive
· Broadband
· Commercial Aerospace
· Defense
· Industrial
· IT Datacom/Data Centers
· Mobile Devices
· Mobile Networks
Amphenol: Powering High-Growth Industries
IDC predicts that artificial intelligence will contribute a staggering $20 trillion to the global economy by 2030, driving 3.5% of global GDP. Currently, much of the billions being spent by big tech juggernauts like Alphabet ((GOOGL - Free Report) ), Meta Platforms ((META - Free Report) ), and Amazon ((AMZN - Free Report) ) is aimed at data centers used to train large language models (LLMs) such as ‘ChatGPT.’ According to Advanced Micro Devices ((AMD - Free Report) ) and other leading AI providers, this growth is not expected to slow any time soon. APH provides the “picks and shovels” to the AI revolution. Data center expansion will require more of the company’s high-speed interconnects.
In 2017, electric vehicles accounted for only ~1% of global automotive sales. Today, EVs account for 25% of all new car sales, and some projections anticipate that they will account for 40% by the end of the decade. Similar to data centers, the more EVs sold, the more automotive manufacturers will need to purchase APH’s high-speed interconnects.
Amphenol Fundamentals
At a juicy 36%, Amphenol has some of the best profit margins on Wall Street.
Image Source: Zacks Investment Research
In addition to its juicy profit margins, APH is one of the most consistent earnings growers. The company has grown quarterly EPS at a double-digit clip for seven consecutive quarters. Meanwhile, Zacks Consensus Analyst Estimates suggest that the robust double-digit growth will continue into next year.
Image Source: Zacks Investment Research
Moreover, APH continues to beat Wall Street estimates by a wide margin. Over the past four quarters, APH has delivered an average positive EPS surprise of 17.90%.
Image Source: Zacks Investment Research
APH Technical Analysis
From a price action perspective, it’s difficult to find a smoother trending stock than APH. Currently, the stock is retreating to its 50-day moving average – a level it which it has found buyers at all year.
Image Source: TradingView
Bottom Line
Amphenol is uniquely positioned as a top supplier of the world’s most powerful technology trends, supplying the essential components that enable modern electronics to function. Its diversified customer base, exposure to secular themes, and outstanding execution track record give it one of the strongest fundamental profiles in the hardware ecosystem.