With the ongoing global economic recovery, investors have been rotating away from expensive tech stocks to stocks that are well-positioned to capitalize on the re-engagement of economic activities. This is evident in the Technology Select Sector SPDR Fund’s (XLK) 7.7% returns so far this year versus SPDR S&P 500 ETF Trust ETF’s (SPY) 12.9% gains.
However, the tech industry has immense growth potential given continuous technological advancements and increasing adoption of advanced technologies, such as artificial intelligence (AI) and machine learning (ML), by almost all industries. The tech industry is expected to hit a $5 trillion market value by the end of this year. So, we think it could be wise to invest in mid-cap stocks from the tech space because they might hold attractive growth potential, like small-cap stocks, amid the economic recovery, while offering a level of stability similar to large-cap stocks.
We believe mid-cap companies Littelfuse, Inc. (LFUS – Get Rating), Kulicke and Soffa Industries, Inc. (KLIC – Get Rating), and Cornerstone OnDemand, Inc. (CSOD – Get Rating) have sufficiently solid financials to capitalize on the industry’s growth and the economic recovery. So, shares of these companies could be solid bets now.
Industrial technology manufacturing company LFUS manufactures and sells circuit protection, power control, and sensing products. The company operates through three segments: electronics, automotive, and industrial. Its product portfolio includes fuses, semiconductors, polymers, ceramics, relays and sensors. It has a $6.42 billion market capitalization.
The company’s net sales came in at $463.79 million for fiscal first quarter, ended March 27, 2021, which represents a 34% year-over-year increase. LFUS’ net income increased 134.2% year-over-year to $57.71 million. Its non-GAAP EPS came in at $2.67, up 107% year-over-year. LFUS’ revenue has grown at a 4.9% CAGR over the past three years, while its EPS has grown at a 9.9% CAGR.
Analysts expect LFUS’ EPS and revenue to increase 212.7% and 68.9%, respectively, year-over-year to $2.22 and $463.32 million for the current quarter, ending June 30, 2021. It surpassed consensus EPS estimates in each of the trailing four quarters.
LFUS completed the acquisition of Hartland Controls in January 2021. Hartland Controls is a manufacturer and leading supplier of electrical components used primarily in heating, ventilation, air conditioning, and refrigeration (HVAC/R) and other industrial and control systems applications. This merger is expected to strengthen LFUS’ business capabilities. The stock has gained 41.4% over the past year to close yesterday’s trading session at $257.17.
It’s no surprise that LFUS has an overall B 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 a B grade for Growth, Stability and Sentiment. Click here to see LFUS’ ratings for Momentum, Quality and Value as well.
LFUS is ranked #24 of 45 stocks in the A-rated Industrial-Manufacturing industry.
Headquartered in Singapore, KLIC designs, manufactures and sells capital equipment and expendable tools used to assemble semiconductor devices, such as integrated circuits (ICs). It has a $3.30 billion market capitalization. The company operates through two segments: capital equipment, and aftermarket products and services (APS).
KLIC’s total revenue increased 125.7% year-over-year to $340.16 million for its fiscal second quarter ended April 3. Its non-GAAP net income came in at $79.45 million, up 367.1% from the year-ago period. KLIC’s non-GAAP EPS was $1.26, up 384.6% year-over-year. The company’s revenue has grown at an 11.3% CAGR over the past five years, while its EPS has grown at a 57.1% CAGR over the past three years.
KLIC’s EPS is expected to increase 547.6% year-over-year to $1.36 for the current quarter, ending June 30, 2021. It surpassed consensus EPS estimates in…
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