Bull of the Day: Sanmina (SANM)

If you’ve been around markets long enough, you know the real money isn’t always made chasing the shiny headline stocks. Sometimes the best opportunities are hiding in plain sight inside the industrial backbone of the tech economy. Today’s Bull of the Day is one of those stocks. It’s not the poster-child for the semiconductor industry, but rather, a behind-the-scenes force that helps power some of the most complex electronics manufacturing on the planet.

I’m talking about Zacks Rank #1 (Strong Buy) Sanmina (SANM). Sanmina operates in the Electronics - Manufacturing Services industry which ranks in the Top 2% of our Zacks Industry Rank. In simple terms, these are the companies that build the guts of modern technology, which includes circuit boards, complex systems, communications equipment, cloud hardware, medical devices, and aerospace electronics. The flashy brands get the spotlight, but Sanmina is the one doing the heavy lifting behind the curtain.

At Zacks, the game starts with earnings estimate revisions. Over time, stock prices tend to follow earnings. It’s one of the most reliable relationships in the market. When analysts start raising estimates, that’s usually a signal that something good is happening under the hood.

Sanmina has been seeing positive estimate revisions for both the current year and next year, which is the primary reason it currently carries a Zacks Rank #1 (Strong Buy). Over the last 60 days, the bullish moves from analysts have pushed up our Zacks Consensus Estimate for the current year from $9.64 to $10.06 while next year’s number is up from $11.46 to $12.11.

Sanmina Corporation Price and Consensus

Sanmina Corporation price-consensus-chart | Sanmina Corporation Quote

The growth is coming from several structural tailwinds including cloud infrastructure demand, AI and data center hardware, defense and aerospace electronics, medical device manufacturing and industrial automation

In other words, Sanmina sits right in the middle of some of the most powerful trends driving global technology spending. Here’s the best part, valuations are that of a value stock. Forward PE sits down at 12.3x, Price-to-sales is under 1 at 0.73, and the PEG Ratio is just 0.47. This is a stock with 58% year-over-year sales growth with huge growth forecasts for the future that is trading at these paltry multiples. Eventually, something has to give. Either the numbers come crashing back down to Earth on earnings and sales or the stock has to rise.

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Sanmina Corporation (SANM): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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