Shares of technology company International Rectifier (IRF) hit a new 52-week high of $39.95 on Jan 2, eventually closing at $39.94. The company delivered a one-year return of more than 53% and returned the same amount over the last year. Average volume of shares traded over the last three months was roughly 1,016K.
What is Driving International Rectifier?
The El Segundo, CA-based company manufactures power-efficient electrical components for satellites, cars, aircrafts and lighting systems. With the need for more advanced and efficient power management semiconductors, International Rectifier continues to develop innovative products which are rapidly gaining steam and in turn driving growth.
The price appreciation may also be attributed to the company’s recent merger with Infineon Technologies AG (IFNNY), expected to close in early 2015. This seems to be a wise move by the company as Infineon’s scale and capacity will improve distribution of International Rectifier’s products. Also, International Rectifier has been streamlining its operations, which helped it to return to profit in fiscal 2014 (ended in June). The merger will further cut costs at International Rectifier, expanding profits for the combined entity.
Moreover, International Rectifier gained momentum from strong fundamentals and better-than-expected fiscal first-quarter results released on Oct 29. The company’s top line increased 6.4% from the year-ago period to $297.6 million. The company benefitted from strength in the company’s power management, automotive applications, high power industrial and appliance module business. Also, non-GAAP earnings came in at 34 cents per share beating the Zacks Consensus Estimate by a penny.
Also, the Zacks Consensus Estimate for revenues increased 13.2%, while that for earnings jumped 68.4% for fiscal 2015 from the prior year. Further, the stock has seen a cumulative upward earnings estimate revision of 3.8% for the fiscal year, over the last 60 days. Additionally, the company has delivered an average earnings surprise of nearly 6.9% over the trailing four quarters. International Rectifier’s strong revenue growth, solid financial conditions, reasonable debt level and strong long-term growth potential position it favorably.
International Rectifier currently has a Zacks Rank #3 (Hold).
Stocks to Consider
Some well-placed stocks in the technology space include Alps Electric Co. Ltd. (APELY) and Nitto Denko Corporation (NDEKY), sporting a Zacks Rank #1 (Strong Buy), and Broadcom Corp. (BRCM) carrying a Zacks Rank #2 (Buy).
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