This company has had an up-and-down year, but could hold good appreciation potential. Flextronics International Inc. (NASDAQ: FLEX) is rated Outperform at RBC and looks to be a winner from the Cisco gains. It is a leading end-to-end supply chain solutions company that delivers design, engineering, manufacturing and logistics services to a range of industries and end-markets, including data networking, telecom, enterprise computing and storage, industrial, capital equipment, appliances, automation, medical, automotive, aerospace and defense, energy, mobile, computing and other electronic product categories.
Flextronics is an industry leader with more than $26 billion in annualized sales. RBC sees the improvements at Cisco as a positive at the company, which does annually between 6% and 8% of sales via switches, routers and infrastructure equipment with Cisco. The analysts feel that the Cisco guidance takes down the threat of Flextronics guidance being overly aggressive and is a new positive for the company.
The RBC price target on Flextronics is $14, and the consensus target is $12.29. The stock closed Thursday at $11.10.
This stock is down a whopping 15% in the past two months. TE Connectivity Ltd. (NYSE: TEL) designs and manufactures products at the heart of electronic connections for the world’s leading industries, including automotive, energy, broadband communications, consumer devices, health care and aerospace and defense. TE has a long-standing commitment to innovation and engineering excellence, which helps its customers solve the need for more energy-efficiency, always-on communications and ever-increasing productivity demands.
Many on Wall Street are bullish on the stock due to the increasing electronic content in automotive, industrial, consumer and defense industries. Analysts cite the stock’s very reasonable valuation and the high-growth auto sensor business helping to ramp up sales and earnings. While the company has a more modest exposure to Cisco in its communication segment, revenues did grow by 8% year over year. RBC sees this as a modest positive for the company.
TE investors are paid a solid 2.13% dividend. The RBC price objective is $80. The consensus estimate is $75.40. The stock closed Thursday at $61.85.
The resurgence at Cisco not only bodes well for these top companies, but industry peers as well. With an ever increasing need for latency, storage, security and data, we remain perhaps at the beginning of a huge build-out to accommodate current and future needs.
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