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Amphenol Hits 52-Week High: More Upside in Store for 2018?


Shares of diversified electronics manufacturer Amphenol Corporation APH scaled a new 52-week high of $91.51 in yesterday’s trading session, before closing a tad lower at $90.81 for a healthy one-year return of 34.8%. Barring minor hiccups, the company’s share price has steadily been on an uptrend since July last year. This Zacks Rank #2 (Buy) stock has the potential for further price appreciation with long-term earnings growth expectations of 11.1% and looks poised to touch new highs in 2018.

Growth Drivers

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 require new advanced technology interconnect solutions to enhance fuel efficiency and improve passenger experience, all of which create excellent opportunities for the company.

In addition, 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 automotive, industrial and military markets. The diversification in end markets, with consistent focus on technology innovation and customer support through all phases of the economic cycle has enabled the company to post solid results 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.

Moreover, Amphenol generates solid cash flow, which allows management the opportunity to invest in product innovations, acquisitions and business development. At the same time, the company has historically returned significant cash through a combination of share repurchases and dividend to reward shareholders with risk-adjusted returns. Moving forward, a balanced organic and inorganic growth model, a lean and flexible cost structure, and an agile and entrepreneurial management team augur well for long-term growth.

Amphenol also 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 further expects to leverage on the solid growth potential of the acquired companies to drive robust performance in the future.

For 2017, Amphenol expects sales in the range of $6,828 million to $6,868 billion, representing a year-over-year increase of 9%. The company estimates adjusted earnings per share in the range of $3.19 to $3.21, an increase of 17-18% year over year. The projections represent a healthy improvement from the prior guidance of $6,620 million to $6,700 million in sales and adjusted earnings of $3.06 to $3.10 per share.

With continued growth impetus and core focus, investors’ confidence is likely to be boosted and the share price is anticipated to hit new 52-week milestones every now and then in 2018.

Other Stocks to Consider

Some other stocks worth considering in the same space are AMETEK, Inc. AME, Jack Henry & Associates, Inc. JKHY and inTEST Corporation INTT, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AMETEK has a long-term earnings growth expectation of 11.9%. It topped estimates thrice in the trailing four quarters with an average positive earnings surprise of 4.1%.

Jack Henry & Associates has a long-term earnings growth expectation of 11.5%. It topped estimates twice in the trailing four quarters with an average positive earnings surprise of 1.1%.

inTEST Corporation has a long-term earnings growth expectation of 10%.

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