Shares of Amphenol Corporation (APH) hit a 52-week high of $57.39 during the trading session on Feb 26. The stock closed the session at $56.80, which reflects a solid year-to-date return of 5.9%. The average trading volume aggregated 0.8 million shares.
Despite its strong price appreciation, this Zacks Rank #3 (Hold) stock still has enough fundamentals to further drive its price upward. The stock is currently trading at a forward P/E of 23.0x and has long-term earnings growth expectation of 11.7%.
Growth Drivers
Amphenol’s top-line growth is benefiting from improved end-market demand, new product rollouts, and market share gains. The electronics revolution continues to accelerate, with new applications and higher performance requirements driving increased demand for high technology products across all end markets. This creates a significant long-term growth opportunity for Amphenol.
Recently, the company completed the acquisition of Goldstar Electric Systems – a China-based manufacturer of high technology interconnects assemblies with annual revenues of approximately $40 million. This acquisition will complement Amphenol’s fast growing industrial interconnect business and strengthen its robust presence in the industrial markets of China. We remain impressed by the company’s activity on the acquisition front and expect the acquisitions to be accretive in the long term with improvement in operating income margin and strong operating discipline.
Amphenol reported impressive fourth quarter 2014 results with record earnings and revenues on the back of solid organic and inorganic growth. Excluding one-time items, adjusted earnings (amount adjusted to reflect the company’s 2-for-1 stock split) for the reported quarter stood at 63 cents per share compared with 53 cents in the year-earlier quarter. The adjusted earnings for fourth quarter 2014 beat the Zacks Consensus Estimate of 59 cents per share. Impressive growth in the quarter was primarily attributable to Amphenol’s technology leadership and market and geographic diversification. It further reflected the company’s balanced organic and inorganic growth model. This was achieved on the back of a lean and flexible cost structure and an agile and entrepreneurial management team.
Other Stocks to Consider
Other better-ranked stocks that look promising and are worth a look include AU Optronics Corp (AUO), Intricon Corp (IIN) and ZAGG Inc (ZAGG), each carrying a Zacks Rank #1 ( Strong Buy).
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