Electronics companies are likely to sustain their strong momentum in 2022, owing to the ongoing global digital wave. Worldwide digitization, which will prevail in the upcoming year and beyond, will continue to drive growth for electronic component and equipment providers.
The coronavirus pandemic, which will continue in 2022, given the rising health risks due to the widely spreading Omicron variant, has turned out to be a boon for several electronics stocks. It is expected to continue fueling the demand for electronic goods and appliances. The current work-from-home and learn-from-home trends on account of the pandemic are accelerating the demand for laptops and other office equipment, and network peripherals. Hence, electronic companies offering devices that support remote working are well-poised to gain from this scenario. The growing proliferation of electronics in healthcare to manage the COVID-19 pandemic remains another major positive. The increasing number of people contracting the deadly virus is accelerating the demand for electronic monitoring devices. Other Growth Prospects to Consider
Apart from the coronavirus-led surge in demand for electronics, other factors have been driving the electronic stocks.
The increasing adoption of AI, cloud computing and industrial revolution 4.0 that focuses on interconnectivity, automation, machine learning (ML) and real-time data are shaping the growth trajectory of the electronic industry. The emergence of software-enabled testing instruments and devices is driving the electronics industry. The increasing deployment of 5G remains another tailwind. The growing proliferation of smart cars and autonomous vehicles is expected to contribute well. Further, the increasing installation of collaborative robots, which add efficiency to production processes by working with production workers, will continue to benefit the electronics industry. The rapid adoption of consumer-focused IoT devices like smart speakers, smartwatches, home security solutions, smart TVs, dual-screen laptops, and high graphics performance gaming PCs is aiding electronics solution providers. The increasing use of electrical instruments and software in the interrogation of biological properties of molecules and cells in clinical and medical science research work is another positive. Stocks to Buy
Per the Zacks’ proprietary methodology, companies with the combination of a
Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer solid investment opportunities. You can see . the complete list of today’s Zacks #1 Rank stocks here Based on this, we have picked five stocks that boast a perfect mix of elements and solid fundamentals. Further, these stocks carry a market cap of more than $1 billion. Also, all the stocks have outperformed the rally of the S&P 500 index year to date. Year-to-Date Price Performance
Image Source: Zacks Investment Research
WESCO International’s ( WCC Quick Quote WCC - Free Report) shares have gained 65.9% on a year-to-date basis. The company is riding on its strength across its electrical and electronic solutions, driven by solid momentum among construction and industrial businesses, and original equipment manufacturers. Further, robust communications and security solutions are contributing well, owing to the well-performing network infrastructure business. The company is also benefiting from the growing traction among utility and broadband businesses. The Zacks Rank #1 company, which is one of the largest players in the highly fragmented distribution market for electrical construction products, is expected to continue gaining from solid execution, cost-reduction activities, portfolio expansion and positive contributions from the Anixter acquisition. WESCO has a market cap of $6.6 billion. WCC has a Growth Score of A. The Zacks Consensus Estimate for the company’s 2022 earnings has moved north by 9.1% to $10.63 per share over the past 60 days. Nova Measuring Instruments’ ( NVMI Quick Quote NVMI - Free Report) shares have surged102.8% on a year-to-date basis. The company is benefiting from the solid momentum across large foundry/logic customers and memory providers. It is gaining strong traction on the back of its proactive service packages, which are designed to improve the install base productivity and metrology capabilities. Additionally, solid contributions from the NOVA ASTERA platform are expected to continue driving its prospects. The Zacks Rank #1 company, which offers advanced metrology solutions, including monitoring and measurement systems for the semiconductor manufacturing industry, remains well-poised to penetrate the semiconductor industry further on its strengthening memory portfolio and enhancements in 3D NAND. Nova has a market cap of $4.2 billion. NVMI has a Growth Score of A. The Zacks Consensus Estimate for the company’s 2022 earnings has moved north by 13.7% to $4.31 per share over the past 60 days. Broadcom’s ( AVGO Quick Quote AVGO - Free Report) shares have gained 52.8% year to date. The company is gaining from the strong momentum across semiconductor solutions and infrastructure software verticals. The rising demand for wireless solutions, and continued momentum in networking and broadband solutions are acting as tailwinds. Routing from service providers in the expansion of 5G networks for backhaul, metro, and call along with growing traction in ethernet network interface controllers within data centers remain major positives. The Zacks Rank #2 company, which is a premier designer, developer and global supplier of a broad range of semiconductor devices, is expected to continue riding on synergies from acquisitions of CA and Symantec’s enterprise security business. Also, solid demand for next-generation PON, with Wi-Fi 6 and 6C access gateways, is likely to drive the company’s prospects. Broadcom has a market cap of $276.2 billion. AVGO has a Growth Score of B. The Zacks Consensus Estimate for fiscal 2022 earnings has moved north by 6.5% to $33.03 per share over the past 60 days. Advanced Micro Devices’ ( AMD Quick Quote AMD - Free Report) shares have returned 67% on a year-to-date basis. The company is riding on the robust performance delivered by the Computing and Graphics, and Enterprise Embedded and Semi-Custom segments. AMD is benefiting from the growing adoption of Ryzen and EPYC server processors. The increasing proliferation of AI and ML in the cloud, gaming and supercomputing domains remains a tailwind. The growing clout of 7 nanometer (nm) products in the data center vertical, driven by the work-from-home and online learning trends, is likely to continue acting as another key catalyst. The Zacks Rank #2 company, which is a well-known provider of microprocessors, servers and embedded processors, and semi-custom System-on-Chip products and technology for game consoles, is expected to gain further momentum in its data center business on the back of its Xilinx acquisition. Advanced Micro Devices has a market cap of $184.9 billion. AMD has a Growth Score of A. The Zacks Consensus Estimate for the company’s 2022 earnings has moved north by 0.3% to $3.29 per share over the past 60 days. Keysight Technologies’ ( KEYS Quick Quote KEYS - Free Report) shares have gained 56.6% year to date. The company is benefiting from accelerated 5G deployments, 6G-related research applications and higher investments in 400G/ 800G ethernet for data centers. Increasing investment in defense technology modernization across main regions is contributing well to its business growth. The company’s strengthening efforts to bolster its footprint in the IoT and high-speed data centers market remain noteworthy. The Zacks Rank #2 company, which is a provider of electronic design and test instrumentation systems, remains well-positioned to gain from the solid demand for semiconductor measurement solutions, as semiconductor companies are increasingly developing chips based on next-generation process technologies. Keysight has a market cap of $37.9 billion. KEYS has a Growth Score of B. The Zacks Consensus Estimate for the company’s fiscal 2022 earnings has moved north by 3% to $6.90 per share over the past 60 days.