Plexus ( PLXS Quick Quote PLXS - Free Report) is one stock investors may want to keep an eye on in the current market conditions, given its upside potential. The company currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Widespread supply chain issues, inflation, rising crude prices and geopolitical instability in Europe are roiling the U.S. and global equity markets. Recently, the Federal Reserve hiked its interest rate by 75 basis points.
In such a scenario, growth-rated stocks like Plexus with solid fundamental drivers can be an appropriate investment bet.
Apart from having solid fundamentals, Plexus has the favorable combination of a
VGM Score of B and a Zacks Rank #2. Per Zacks’ proprietary methodology, stocks with a combination of a Zacks Rank #1 (Strong Buy) or #2 and a VGM Score of A or B offer solid investment opportunities.
The stock is down 21.8% from its 52-week high level of $99.12 reached on Jan 5, 2022, making it more affordable for investors. Plexus has an average earnings surprise of 8.6% in the trailing four quarters.
The Zacks Consensus Estimate of $4.10 per share for fiscal 2022 earnings rose 7% in the past 60 days. For fiscal 2023, the Zacks Consensus Estimate of $5.48 per share for fiscal 2022 earnings moved up 2.8% in the past 60 days.
Strong Fundamental Drivers
Neenah, WI. -based Plexus is a leading provider of electronic contract manufacturing services to original equipment manufacturers in a wide range of industries, including networking/ communications, health care/life sciences, industrial/ commercial and defense/security/aerospace.
Plexus’ performance is benefiting from global expansion and revenue growth in the industrial segment. Plexus won 38 manufacturing contracts during the second fiscal quarter of 2022, worth $313 million in annualized revenues. Trailing four-quarter manufacturing wins totaled a record $1.1 billion in annualized revenues.
The company’s cost-cutting initiatives and strong growth in higher-margin engineering agreements are aiding it in strengthening its gross and operating margins over the long run. Plexus’ efforts to streamline its manufacturing facilities to optimize its operations bodes well.
However, supply chain woes, widespread component shortages and inflationary pressure remain major concerns for Plexus. These supply chain challenges limit the company’s ability to cater to robust demand in the near term.
Other Stocks to Consider
A few other top-ranked stocks from the broader technology sector worth consideration are
InterDigital ( IDCC Quick Quote IDCC - Free Report) , Avnet ( AVT Quick Quote AVT - Free Report) and Vishay Intertechnology ( VSH Quick Quote VSH - Free Report) . While Avnet and InterDIgital sport a Zacks Rank #1, Vishay Intertechnology carries a Zacks Rank #2. The Zacks Consensus Estimate for Vishay Intertechnology’s 2022 earnings is pegged at $2.68 per share, rising 10.3% in the past 60 days. The long-term earnings growth rate is anticipated to be 22.7%. Vishay Intertechnology’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average 5%. Shares of VSH have declined 18.2% in the past year. The Zacks Consensus Estimate for InterDigital 2022 earnings is pegged at $3.33 per share, up 46.1% in the past 60 days. IDCC’s long-term earnings growth rate is pegged at 15%.
InterDigital’s earnings beat the Zacks Consensus Estimate in all the preceding four quarters, with the average being 141.1%. Shares of IDCC have lost 17% of their value in the past year.
The Zacks Consensus Estimate for Avnet’s fiscal 2022 earnings is pegged at $6.83 per share, rising 20.5% in the past 60 days. The long-term earnings growth rate is anticipated to be 37.2%.
Avnet’s earnings beat the Zacks Consensus Estimate in all of the last four quarters, the average being 21.2%. Shares of Avnet have grown 6.5% in the past year.