The demand for electronics soared last year because people were forced to spend most of the time indoors amid the COVID-19 pandemic, relying on smart gadgets for their work, education, and entertainment. With pandemic-related restrictions gradually easing, the production of electronics is expected to gradually return to pre-pandemic levels.
While the global semiconductor shortage could continue affecting the manufacture of electronics in the near term, increasing government and private investments to address the shortage should help the industry gradually meet high demand that is being driven by an accelerated pace of digitization and the increasing adoption of advanced technologies, such as Internet of things (IoT) and artificial intelligence (AI). According to a Globe Newswire report, the value of the consumer electronics market is expected to be more than $1.5 trillion by 2027.
Because the long-term prospects of the electronics industry look promising, we think it could be wise to bet on fundamentally-sound electronics companies Panasonic Corporation (PCRFY), Toshiba Corporation (TOSYY), and Arrow Electronics, Inc. (ARW). They are each currently trading below their 52-week highs but have immense upside potential.
Panasonic Corporation (PCRFY)
Headquartered in Kadoma, Japan, PCRFY is one of the top players in the consumer electronics space, developing, producing, and selling various electronic products worldwide. It operates through five segments: Appliances; Life Solutions; Connected Solutions; Automotive; and Industrial Solutions. The company’s products include air conditioners, refrigerators, microwave ovens and other products.
PCRFY announced on April 23, 2021, that it has agreed to acquire Blue Yonder, the leading end-to-end, digital fulfillment platform provider. This acquisition strengthens its portfolio and accelerates the companies’ shared autonomous supply chain mission, empowering consumers to optimize their supply chains using the combined power of AI/ML and internet of things (IoT) and edge devices.
The company’s operating income from its appliances segment increased 187% year-over-year to ¥104.3 billion ($953.09 million) for its fiscal year ended March 31, 2021. Its total assets increased 10.1% year-over-year to ¥6,847.07 billion ($62.57 billion). Its total operating income grew 14.9% year-over-year to ¥971.86 billion ($8.88 billion). Also, its operating income from its automotive segment came in at ¥10.9 billion yen ($99.6 million) compared to a ¥45.6 billion yen ($416.69 million) operating loss in the prior-year period.
For the quarter ended June 30, 2021, analysts expect PCRFY’s EPS and revenue to increase 425% and 18.2%, respectively, year-over-year to $0.13 and $14.8 billion. The stock has gained 35% over the past nine months to close yesterday’s trading session at $11.76. It is currently trading 19.2% below its 52-week high of $14.55, which it hit on February 16, 2021.
It’s no surprise that PCRFY has an overall A rating, which equates to Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting. The stock has an A grade for Value, and a B grade for Growth and Stability.
Click here to see PCRFY’s ratings for Sentiment and Quality also. PCRFY is ranked #4 of 45 stocks in the B-rated Technology - Hardware industry.
Toshiba Corporation (TOSYY)
TOSYY provides electronic devices and storage solutions worldwide. Its segments include Energy Systems & Solutions; Retail & Printing Solutions; Electronic Devices & Storage Solutions; and Digital Solutions. Its offerings include rechargeable lithium-ion batteries, computers, visual products, and home appliances.
On March 23, TOSYY announced that Toshiba Infrastructure Systems & Solutions Corporation had entered a strategic business alliance with Fortem Technologies, Inc. This alliance could expand TOSYY’s product portfolio in the radar-based security solutions space.
For its fiscal year ended March 31, 2021, the company’s income from continuing operations before taxes came in at ¥153.5 billion ($1.39 billion) compared to a ¥47.5 billion ($431.81 million) loss in the prior-year period. Its net income came in to ¥114 billion ($1.04 billion) compared to a ¥114.60 billion ($1.04 billion) net loss in the year-ago period. Its EPS came in at ¥251.25 ($2.28) compared to ¥236.39 ($2.15) in the year-ago period.
The company’s revenue is expected to be $29.32 billion in fiscal 2022, which represents a 4,210.2% year-over-year rise. The stock has soared 67.5% over the past nine months to close yesterday’s trading session at $22.24. It is currently trading 5.8% below its 52-week high of $23.60, which it hit on April 13, 2021.
TOSYY’s POWR Ratings reflect solid prospects. The company has an overall B rating, which translates to Buy in our proprietary ratings system. It has an A grade for Value, and a B grade for Growth and Stability.
Click here to see the additional POWR Ratings for TOSYY (Quality, Momentum, and Sentiment). TOSYY is ranked #18 in the Technology - Hardware industry.
Arrow Electronics, Inc. (ARW)
ARW provides products, services, and solutions to industrial and commercial users of electronic components and enterprise computing solutions. The Centennial, Colo., company operates in two segments: Global Components and Global Enterprise Computing Solutions. It serves original equipment manufacturers, value-added resellers, as well service providers, contract manufacturers, and other commercial customers.
On June 29, 2021, ARW and Submer signed an agreement to provide highly efficient, high-density computing to enterprise customers in Europe, Middle East and Africa. The collaboration helps ease the deployment of environmentally sustainable data center solutions at a global scale, thereby increasing the company’s customer base.
ARW’s non-GAAP consolidated sales increased 27.4% year-over-year to $8.38 billion for its fiscal first quarter, ended April 3, 2021. Its non-GAAP operating income grew 101% year-over-year to $314.54 million. Its non-GAAP consolidated net income increased 172.8% year-over-year to $216.59 million. The company’s non-GAAP EPS increased 192.8% year-over-year to $2.84.
Analysts expect ARW’s EPS to increase 56.5% year-over-year to $12.13 in its fiscal year 2021. It surpassed the consensus EPS estimates in each of the trailing four quarters. Its revenue is expected to be $8.60 billion for the quarter ending September 30, 2021, which represents a 27.9% year-over-year rise. The stock has surged 66.4% over the past year to close yesterday’s trading session at $110.94. It is currently trading 11.1% below its 52-week high of $124.76, which it hit on May 25, 2021.
ARW’s POWR Ratings reflect this promising outlook. The company has an overall A , which translates to Strong Buy in our proprietary ratings system. The stock has a B grade for Growth and Value.
Within the B-rated Technology - Electronics industry, ARX is ranked #3 of 47 stocks. To see ARW’s ratings for Sentiment, Momentum, Stability, and Quality as well, click here.
PCRFY shares were trading at $11.99 per share on Friday afternoon, up $0.33 (+2.81%). Year-to-date, PCRFY has gained 2.98%, versus a 17.03% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
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