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Forget Apple, Buy These 3 Consumer Electronics Stocks Instead

Stock MarketsNov 29, 2021 10:31AM ET
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© Reuters. Forget Apple, Buy These 3 Consumer Electronics Stocks Instead

While Apple (NASDAQ:AAPL) remains one of the most popular consumer electronics manufacturers, its current plans to expand its product portfolio and rising raw materials costs could adversely impact its short-term earnings growth prospects. Therefore, we think it could be wise to invest instead in consumer electronics stocks Sonos (NASDAQ:SONO), VIZIO Holdings (VZIO), and Turtle Beach Corporation (NASDAQ:HEAR). Let’s discuss.Apple, Inc. (AAPL) has been the biggest name in the consumer electronics industry for some time. While the Cupertino, Calif.-based company is a market leader and enjoys substantial brand loyalty, the recent crackdown on its anti-trust practices and an increasing focus on developing autonomous vehicles will likely put pressure on its consumer electronics business. Furthermore, supply chain disruptions and a semiconductor shortage are expected to shrink AAPL’s profit margins as its cost of goods sold (COGS) rises substantially. Consequently, analysts expect AAPL’s EPS to decline 5.7% in its fiscal first quarter (ending March 2022).

Given its bleak short-term earnings growth prospects, shares of AAPL look overvalued at their current price level. They are trading at a 2.49x forward PEG, which is 53.2% higher than the 1.63x industry average.

Therefore, we think it could be better to invest in fundamentally sound consumer electronics stocks Sonos, Inc. (SONO), VIZIO Holdings Corp. (VZIO), and Turtle Beach Corporation (HEAR) instead.

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Forget Apple, Buy These 3 Consumer Electronics Stocks Instead
 

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