Although the coronavirus (COVID-19) pandemic, which has been wreaking havoc on global trade, investments and supply chains, has severely affected most industries, the electronics industry has emerged as a deviant. In fact, the scenario seems to have favored the industry that has been gaining on increased demand for electronic goods and appliances fuelled by the coronavirus-induced lockdowns, quarantines, social distancing and shelter-in-place rules.
Electronics aids to efficiency and automation of almost any work, rendering it virtually ubiquitous in this day and age. Moreover, ongoingglobal digital wave has been driving growth for the electronic components and equipments providers. Thereby, the industry has been benefiting from the growing proliferation of electronic devices in every major sector including technology, consumer, healthcare, transportation and communications. Additionally, the current work-from-home and learn-from-home trends on account of the pandemic are accelerating the demand for laptops and other office equipments, and network peripherals. Hence, electronic companies offering devices that support remote working are well poised to gain from this scenario. Furthermore, growing proliferation of electronics in healthcare to manage the COVID-19-pandemic remains a major positive. The exponential increase in the number of people contracting the deadly virus has accelerated the demand for electronic monitoring devices. Also, devices like infrared laser thermometer and thermal imaging cameras have been aiding in the frontline management of COVID-19. Other Growth Prospects to Consider Apart from coronavirus-led surge in demand for electronics, there are other factors that have been driving the electronic stocks. Increasing adoption of Artificial Intelligence (AI) and industrial revolution 4.0 that focuses on interconnectivity, automation, machine learning (ML) and real time data are shaping the future growth trajectory of the electronic industry. Robust demand in the consumer sector for connected appliances is a primary catalyst. Growing proliferation of smart TVs, high-end smartphones, AI-backed smart speakers and many more remains a tailwind. Further, rapid adoption of IoT technology and the emergence of 5G technology present solid prospects for the electronics companies. Ongoing modification in the Internet infrastructure and evolution of smart cars & autonomous vehicle are also bolstering the demand for electronics testing equipments. Furthermore, robust demand for collaborative robots, strong adoption of fitness and wellness trackers, and smart watches, growing proliferation of Augmented Reality (AR)/Virtual Reality (VR) devices and OLED displays are creating an extremely conducive environment of growth for electronics stocks. Additionally, increasing usage 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. Our Picks Per the Zacks’ proprietary methodology, stocks 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. Based on this, here we pick five stocks that boast a perfect mix of elements and strong fundamentals. You can see the complete list of today’s Zacks #1 Rank stocks here. LightPath Technologies, Inc. ( LPTH Quick Quote LPTH - Free Report) is riding on solid momentum across its infrared lenses utilized in temperature reading, heat imaging and sensing technologies. Moreover, the company’s thermal imaging lens that are used in medical and sensing infrared applications are witnessing strong adoption on account of the ongoing fight against COVID-19. LightPath currently has a Zacks Rank #1 and a Growth Score of B. The consensus mark for 2020 earnings has moved north to 2 cents per share from the break-even point in the past 60 days. Silicon Motion Technology Corporation ( SIMO Quick Quote SIMO - Free Report) is benefiting from improvement in demand for SSD Solutions. Further, high demand for eMMC and UFS controllers courtesy of growing adoption of mobile embedded memory controllers is expected to drive growth. Further, the company anticipates gaining from increased PC sales triggered by online learning and work-from-home wave. Silicon Motion currently has a Zacks Rank #2 and a Growth Score of B. The consensus mark for 2020 earnings has been revised upward by 1.6% in the past 60 days to $3.18 per share. Rambus, Inc. ( RMBS Quick Quote RMBS - Free Report) is gaining on the growing momentum of tokenization solutions. In addition to mobile payments and retail, the company has expanded tokenization offerings inmarkets like account-based payments, e-commerce and blockchain. Rambus has also rolled out Vaultify Trade that provides bank-grade tokenization for blockchain. Currently, Rambus has a Zacks Rank #2 and a Growth Score of A. The consensus mark for 2020 earnings has been revised upward by 7.7% in the past 60 days to 98 cents per share. CEVA, Inc. ( CEVA Quick Quote CEVA - Free Report) is riding on robust licensing environment, which is driving licensing revenues. Further, the target applications for the company’s technologies that include 5G for base station run, 5G fixed wireless access, 5G back-haul and Wi-Fi 6 for IoT devices remain promising. Moreover, its solid momentum across 5G OEM customers is a major positive. CEVA currently has a Zacks Rank #2 and a Growth Score of A. The consensus mark for 2020 earnings has been revised upward by 7% in the past 60 days to 46 cents per share. Celestica, Inc. ( CLS Quick Quote CLS - Free Report) is gaining on strengthening momentum in health tech space. Increasing customer wins owing to the COVID-19 scare remain noteworthy. Further, its collaboration with Medtronic to ramp up the ventilators is likely to contribute to the performance. Also, its partnership with a Canadian based medical company to produce ventilators for the Canadian government is a tailwind. Celestica currently has a Zacks Rank #2 and a Growth Score of A. The consensus mark for 2020 earnings has been revised upward by 1.6% in the past 60 days to 62 cents per share.
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