TE Connectivity's Form 144 Filing: A Catalyst for Strategic Entry?

Market Volatility or Value Opportunity?
TE Connectivity (TEL) has recently filed a Form 144, signaling an upcoming sale of 30,000 shares by executive John S. Jenkins. While this move may spark near-term volatility, the broader narrative of TEL's dominance in electric vehicle (EV) connectivity, robust cash flows, and undervalued multiples suggests this could be a prime entry point for long-term investors.

The Short-Term Catalyst: Executive Share Sales and Market Sentiment

The Form 144 filing, which discloses Jenkins' plan to sell shares via Morgan Stanley, could pressure TEL's stock in the short term. Such filings often raise investor concerns about insiders cashing out, even when the sales align with routine wealth management. The 30,000 shares represent a negligible portion of TEL's 298 million outstanding shares, minimizing dilution risk. However, market psychology may amplify the noise, creating a buying opportunity for those focused on fundamentals.

The Long-Term Case: EV Growth, Cash Generation, and Valuation

1. Structural Growth in EVs:
TE Connectivity is a critical supplier of sensors, connectors, and high-voltage systems to automakers like Tesla, Volkswagen, and General Motors. As EV adoption accelerates—global sales are projected to hit 40 million units by 2030—TEL's position in this $200 billion market becomes increasingly defensible. Its backlog of EV-related orders remains strong, with 60% of revenue now tied to electrification and connectivity.

2. Stable Cash Flows and Conservative Balance Sheet:
TEL's recurring revenue streams from industrial and automotive clients have delivered consistent free cash flow (FCF) margins above 15% over the past five years. With net debt/EBITDA at just 0.5x and ample liquidity, the company is well-positioned to navigate macroeconomic headwinds while investing in R&D for next-gen technologies.

3. Undervalued Multiples:
At current prices, TEL trades at 14.5x forward earnings—a 20% discount to its five-year average and below peers like Amphenol (AMP: 18.2x) and Littelfuse (LFUS: 16.8x). The stock's price-to-sales ratio of 1.8x also lags its historical average of 2.2x.

Risks to Consider

• Near-Term Volatility: The Form 144 filing may amplify existing concerns about slowing EV production in China or semiconductor shortages.
• Geopolitical Risks: Supply chain disruptions or trade tensions could impact TEL's global operations.
• Competition: New entrants in EV connectivity may erode margins, though TEL's scale and intellectual property offer significant barriers.

Why the Long-Term Opportunity Outweighs Near-Term Noise

• Catalysts Ahead: TEL's pipeline includes $1.5 billion in new EV programs through 2027, with visibility extending into the late 2030s.
• Dividend Resilience: A 2.5% yield, supported by a 40% payout ratio, provides a buffer against price fluctuations.
• Valuation Floor: At $140, TEL's stock offers a 30% upside to its 2024 EPS of $5.85, assuming a reasonable 24x P/E multiple.

Conclusion: Accumulate Below $140

The Form 144 filing is a transient event in TEL's multi-decade story of leadership in EV infrastructure. While short-term traders may overreact, investors with a 3–5 year horizon should view dips below $140 as a rare chance to buy a cash-generative industrial tech leader at a discount. TEL's moat in connectivity solutions, coupled with its undervalued shares, positions it as a standout name in the EV supply chain—a sector primed for exponential growth.

Action Item: Aggressively accumulate TEL shares below $140, with a price target of $180–$200 by 2026.