Amphenol Hits 52-Week High On Improved End-Market Demand

Shares of diversified electronics manufacturer Amphenol Corporation (NYSE:APH) scaled a new 52-week high of $74.19 during yesterday’s trading session, before closing a tad lower at $73.93 for a healthy one-year return of 27.5%. Barring minor hiccups, Amphenol’s share price has steadily been on an uptrend since mid-April. This Zacks Rank #2 (Buy) stock has the potential for further price appreciation with long-term earnings growth expectation of 6.9%.

Growth Drivers

Amphenol’s top-line growth is benefiting from improved end-market demand, new product rollouts and market share gains. Demand continues to be strong in the automotive, industrial, mobile networks and military markets. The diversification in end markets, with a consistent focus on technology innovation and customer support through all phases of the economic cycle enabled the company to post solid performances over the past few quarters. A sustained drive for geographic and market diversification has further helped Amphenol to expand its customer base and develop new applications.

In addition, Amphenol remains encouraged by its expanding presence in the fast-growing commercial aerospace market and is well positioned to capitalize on the proliferation of electronics content in next-generation planes. These advanced electronic systems also require new higher technology interconnect solutions to enhance fuel efficiency and improve passenger experience, all of which create excellent opportunities for Amphenol.

In order to fuel further growth, Amphenol aims to make acquisitions on a global basis in the high-growth segments that have complementary capabilities from a product, customer and/or geographic standpoint. The acquisition of Phitek Systems Limited, a New Zealand-based leading manufacturer of in-flight entertainment interconnect products for the commercial aerospace industry, is likely to strengthen its global foothold and enhance its product offering in strategic markets.

Despite the uncertainties prevailing in the global economy, Amphenol has bullish revenue and earnings expectations. The ongoing revolution in electronics enables the company to capitalize on the opportunities and strengthen its position in the market. It also expects to leverage on the solid growth potential of the acquired companies to drive robust performance in the future.

For full-year 2017, Amphenol expects sales in the range of $6.405 billion to $6.525 billion, representing a year-over-year increase of 2–4%. The company expects GAAP earnings per share in the range of $2.91 to $2.97, an increase of 11–14% year over year.

Such a bullish outlook with continued growth impetus and core focus perhaps boosted investors’ confidence and catapulted share prices to a new 52-week high.

Other Stocks to Consider

Some other stocks worth considering in the same space include Altra Industrial Motion Corp. (NASDAQ:AIMC) , Applied Industrial Technologies, Inc. (NYSE:AIT) and Graco Inc. (NYSE:GGG) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Altra Industrial topped estimates in each of the trailing four quarters with an average positive earnings surprise of 15.9%.

Applied Industrial has a long-term earnings growth expectation of 12%. It surpassed estimates thrice in the trailing four quarters with an average positive earnings surprise of 9.8%.

Graco has a long-term earnings growth expectation of 10.3%. It surpassed estimates thrice in the trailing four quarters with an average positive earnings surprise of 13.9%.

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