9 Opportunities in Electronic Technology, The Future ofEverything: Part 7

February 25, 2019by Chuck Carnevaleof F.A.S.T. Graphs

Introduction

I feel compelled to reiterate the purpose of this series of articles. Although I am attempting to identify attractively valuedstocks in each sector presented by FactSet Research Systems Inc., I am not simultaneously recommending them asattractive or proper investment choices. Therefore, just because I am featuring them in the article, it doesn’t necessarilyfollow that I think they are good choices. Instead, I leave it up to the reader to evaluate each selection and then decide ifthese research candidates are worthy of their further scrutiny or not. Moreover, my primary objective is to illustrate howdifferent individual companies are from each other, and even how different companies operating in the same sector can be.It is a market of stocks not a stock market.

Although some may feel that this is a superfluous undertaking, I must respectfully disagree. I am only a couple years shortof 5 decades in this industry, and one of my biggest frustrations is constantly seeing how people tend to overgeneralizeabout the stock market. To put this into context, one of the most common questions I am frequently asked is “what do youthink the stock market’s going to do?” This question frustrates me, because it’s not something that matters to me. Instead,what matters to me is what I believe the businesses I am invested in can generate on an operating basis, and whether themarket is valuing those fundamentals correctly or not. As I once stated in article, “I believe in minding my own businesses.”

With that said, the Electronic Technology Sector presented by FactSet Research Systems Inc. is comprised of some of themost interesting companies in the US and Canadian stock research universe. Furthermore, as I will be elaborating on later,it is also a sector comprised of very interesting and diverse subsectors. From Broadcom (semiconductors) to Apple Inc.(smart phones) to General Dynamics (aerospace and defense), some of the most interesting and prominent names intechnology are found in this sector.

Furthermore, the Electronic Technology Sector also contains constituents that would be considered pure growth as well asmany intriguing dividend growth stocks. Additionally, you will find growth stocks that are now morphing into dividend growthstocks. Furthermore, this particular sector and it subsectors offer many important and vivid examples of the importance ofvaluation, a subject near and dear to my heart.

A Sector By Sector Review

This is part 7 of a series where I have conducted a simple screening looking for value over the overall market based onindustry classifications and subindustry classifications reported by FactSet Research Systems, Inc. In part 1 found here Icovered the Consumer Services Sector. In part 2 found here I covered the Communication Sector. In part 3 found here Icovered the Consumer Durables Sector and its many diverse subsectors. In part 4 found here I covered ConsumerNondurables. In part 5 found here I covered companies in the Consumer Services Sector. In part 6 found here I covered theDistribution Services Sector.

In each article in this series, I will be providing a listing of screened research candidates from each of the following industrysectors, the sector I’m covering in this article is marked in green:

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A Simple Valuation and Quality Screening Process

With this series of articles, I will be presenting a screening of companies that have become attractively valued primarily asa result of the bearish market activities experienced in 2018 from each of the above sectors. I will be applying a rathersimple valuation and quality-oriented screen across each of the sectors. First, I have screened for investment-grade S&Pcredit ratings of BBB- or above. Next, I have screened for low valuations based on P/E ratios between 2 and 17. Finally, Ihave screened for long-term debt to capital no greater than 70%.

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By keeping my screen simple, and at the same time rather broad, I will be able to identify attractively valued researchcandidates that I might have overlooked through a more rigorous screening process. In other words, I’m looking for freshideas that I might have previously been overlooking. Furthermore, I want to be clear that I do not consider every candidatethat I have discovered as suitable for every investor. However, I do consider them all to be attractively valued. Additionally,I also believe that every investor will be able to find companies to research that meet their own goals, objectives and risktolerances as this series unfolds.

Sector 7: Electronic Technology

Semiconductors

Electronic Components

Electronic Equipment/Instruments

Telecommunications Equipment

Aerospace & Defense

Computer Processing Hardware

Computer Peripherals

Computer Communications

Electronic Production Equipment

Portfolio Review: Electronic Technology Sector: 19 Research Candidates

FAST Graphs Screenshots of the 19 Research Candidates

The following screenshots provide a quick look at each of the 19 candidates screened out of over 19,000 possibilities.However, there are only 668 companies categorized as Electronic Technology, and these 19 were the only ones I wascomfortable presenting in this article. The company descriptions are provided courtesy of the Wall Street Journal. In theFAST Graphs analyze out loud video that follows the screenshots, I will provide additional details and thoughts on thepossible attractiveness as well as the potential negatives of my 10 favorite research candidates in this sector.

Apple Inc (AAPL)

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Apple, Inc. engages in the design, manufacture, and marketing of mobile communication, media devices, personalcomputers, and portable digital music players. It operates through the following geographical segments: Americas, Europe,Greater China, Japan, and Rest of Asia Pacific.

The Americas segment includes North and South America. The Europe segment consists of European countries, as wellas India, the Middle East, and Africa. The Greater China segment comprises of China, Hong Kong, and Taiwan. The Restof Asia Pacific segment includes Australia and Asian countries.

The company was founded by Steven Paul Jobs, Ronald Gerald Wayne, and Stephen G. Wozniak on April 1, 1976 and isheadquartered in Cupertino, CA.

Applied Materials Inc (AMAT)

Applied Materials, Inc. engages in the provision of materials engineering solutions used to produce new chip and advanceddisplay. It operates through the following segments: Semiconductor Systems, Applied Global Services, and Display andAdjacent Markets.

The Semiconductor Systems segment includes semiconductor capital equipment for deposition, etch, ion implantation,rapid thermal processing, chemical mechanical planarization, metrology and inspection, and wafer level packaging.

The Applied Global Services segment provides solutions to optimize equipment, performance, and productivity.

The Display and Adjacent Markets segment offers products for manufacturing liquid crystal displays, organic light-emittingdiodes; coating systems and display technologies for television; personal computers, tablets, smart phones, and consumer-oriented devices.

The company was founded on November 10, 1967 and is headquartered in Santa Clara, CA.

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Broadcom Inc (AVGO)

Broadcom, Inc., is a holding company, which engages in the design, development and supply of analog and digitalsemiconductor connectivity solutions. It serves four primary end markets: wired infrastructure, wireless communications,enterprise storage and industrial & other.

Its products include data center networking, home connectivity, broadband access, telecommunications equipment,smartphones and base stations, data center servers and storage, factory automation, power generation and alternativeenergy systems, and displays. In April, 2018, Broadcom redomiciled from Singapore to the United States.

The company was founded in 1961 and is headquartered in San Jose, CA.

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Flex LTD (FLEX)

Flex Ltd. provides innovative design, engineering, manufacturing, real-time supply chain insight and logistics services tocompanies of all sizes in various industries and end-markets. It operates through the following segments: Communications& Enterprise Compute, Consumer Technology Group, Industrial and Emerging Industries, and High Reliability Solutions.

The Communications & Enterprise Compute segment includes telecom business of radio access base stations, remoteradio heads, and small cells for wireless infrastructure; networking business, which includes optical communications,routing, broadcasting, and switching products for the data and video networks; server and storage platforms for bothenterprise and cloud-based deployments; next generation storage and security appliance products; and rack levelsolutions, converged infrastructure and software-defined product solutions.

The Consumer Technology Group segment includes consumer-related businesses in connected living, wearable, gaming,augmented and virtual reality, fashion and mobile devices; various supply chain solutions for notebook personalcomputers, tablets, and printers; and expanding business relationships to include supply chain optimization for non-electronics products such as footwear and clothing. The Industrial and Emerging Industries segment offers energy andmetering, semiconductor tools and capital equipment, office solutions, household industrial and lifestyle, industrialautomation and kiosks and lighting.

The High Reliability Solutions segment caters to medical business, including consumer health, digital health, disposables,precision plastics, drug delivery, diagnostics, life sciences and imaging equipment; automotive business, including vehicleelectrification, connectivity, autonomous vehicles and clean technologies; and defense, and aerospace businesses, isfocused on commercial aviation, defense and military.

The company was founded in May 1990 and is headquartered in Singapore.

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General Dynamics Corp (GD)

General Dynamics Corp. is an aerospace and defense company, which engages in the provision of tanks, rockets,missiles, submarines, warships, fighters and electronics to all of the military services. It is organized into four businesssegments: Aerospace, Combat Systems, Information Technology, Mission Systems and Marine Systems.

The Aerospace segment delivers a family of Gulfstream aircraft and provides a range of services for Gulfstream aircraftand aircraft produced by other original equipment manufacturers. The Combat Systems segment offers combat vehicles,weapons systems and munitions for the U.S. government and its allies around the world. The Information Technologysegment provides technologies, products and services in support of thousands of programs for a wide range of military,federal civilian, state and local customers.

The Mission Systems segment provides mission-critical C4ISR products and systems. The Marine Systems segmentdesigns, builds and supports submarines and surface ships.

The company was founded on February 21, 1952 and is headquartered in Falls Church, VA.

Huntington Ingalls (HII)

Huntington Ingalls Industries, Inc. engages in the shipbuilding business. It operates through the following segments:Ingalls, Newport News, and Technical Solutions. The Ingalls segment develops and constructs non-nuclear ships, assaultships, and surface combatants.

The Newport News segment designs, builds, and maintains nuclear-powered ships which include aircraft carriers andsubmarines. The Technical Solutions segment provides professional services, including fleet support, integrated missionssolutions, nuclear and environmental, and oil and gas services.

The company was founded on August 4, 2010 and is headquartered in Newport News, VA.

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Hewlett Packard (HPE)

Hewlett Packard Enterprise Co. engages in the provision of information technology, technology and enterprise products,solutions, and services. It operates through the following segments: Hybrid IT, Intelligent Edge, Financial Services, andCorporate Investments. The Hybrid IT segment provides a broad portfolio of services-led and software-enabledinfrastructure and solutions.

The Intelligent Edge segment comprises of enterprise networking and security solutions for businesses of any size, offeringsecure connectivity for campus and branch environments, operating under the Aruba brand. The Financial Servicessegment offers investment solutions, such as leasing, financing, information technology consumption, utility programs, andasset management services. The Corporate Investments segment includes Hewlett Packard Labs and certain businessincubation projects.

The company was founded in 1939 and is headquartered in Palo Alto, CA.

Intel Corp (INTC)

Intel Corp. engages in the design, manufacture, and sale of computer products and technologies. It delivers computer,networking, data storage and communications platforms. It operates its business through the following segments: ClientComputing Group, Data Center Group, Internet of Things Group, Non-Volatile Memory Solutions Group, ProgrammableSolutions and All Other. The Client Computing Group segment consists of platforms designed for notebooks, 2 in 1systems, desktops, tablets, phones, wireless and wired connectivity products, and mobile communication components.

The Data Center Group segment includes workload-optimized platforms and related products designed for enterprise,cloud, and communication infrastructure market. The Internet of Things Group segment comprises of platforms such asretail, transportation, industrial, video, buildings and smart cities, along with a broad range of other market segments.

The Non-Volatile Memory Solutions Group segment constitutes of NAND flash memory products primarily used in solid-state drives. The Programmable Solutions Group segment contains programmable semiconductors and related productsfor a broad range of markets, including communications, data center, industrial, military, and automotive. The All Othersegment consists of results from other non-reportable segment and corporate-related charges.

The company was founded by Robert Norton Noyce and Gordon Earle Moore on July 18, 1968 and is headquartered inSanta Clara, CA.

Jabil Inc (JBL)

Jabil, Inc. engages in the provision of electronic manufacturing services and solutions. It offers electronics design,production, product management, and repair services to companies in the automotive and transportation, capitalequipment, consumer lifestyles and wearable technologies, computing and storage, defense and aerospace, digital home,healthcare, industrial and energy, mobility, networking and telecommunications, packaging, point of sale, and printingindustries.

The firm operates through the Electronics Manufacturing Services and Diversified Manufacturing Services segments. TheElectronics Manufacturing Services segment focuses around leveraging IT; supply chain design and engineering; andtechnologies largely centered on core electronics. The Diversified Manufacturing Services segment provides engineeringsolutions, with an emphasis on material sciences and technologies.

The company was founded by William E. Morean and James Golden in 1966 and is headquartered in St. Petersburg, FL.

Juniper Networks Inc (JNPR)

Juniper Networks, Inc. engages in the design, development, and sale of products and services for high-performancenetworks. Its products address network requirements for global service provides, cloud providers, national governments,research and public sector organizations, and other enterprises.

The company was founded by Pradeep S. Sindhu on February 6, 1996 and is headquartered in Sunnyvale, CA.

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KLA Tencor Corp (KLAC)

KLA-Tencor Corp. engages in the supply of process control and yield management solutions for the semiconductor andrelated nano-electronics industries. Its products include manufactured chips, reticle, packaging, surface profilers,nanochemical testers, KT pro equipment, and compound semiconductors.

The company was founded in April 1997 and is headquartered in Milpitas, CA.

Lam Research Corp (LRCX)

Lam Research Corp. engages in manufacturing and servicing of wafer processing semiconductor manufacturingequipment. It operates through the following geographical segments: the United States, China, Europe, Japan, Korea,Southeast Asia, and Taiwan. It offers thin film deposition, plasma etch, photoresist strip, and wafer cleaning.

The company was founded by David Lam on January 21, 1980 and is headquartered in Fremont, CA.

Marvell Technology Group (MRVL)

Marvell Technology Group Ltd. engages in the business of providing semiconductors to high-performance application-specific standard products. It focuses on the development of complex System-on-a-Chip devices leveraging extensivetechnology portfolio of intellectual property in the areas of analog, mixed-signal, digital signal processing, and embeddedand stand alone integrated circuits.

The company’s product portfolio includes devices for data storage, enterprise-class Ethernet data switching, Ethernetphysical-layer transceivers, mobile handsets, connectivity and other consumer electronics.

Marvell Technology Group was founded by Sehat Sutardja, Weili Dai, and Pantas Sutardja in January 1995 and isheadquartered in Hamilton, Bermuda.

Northrop Grumman Corp (NOC)

Northrop Grumman Corp. engages in the provision of security businesses. It includes products, systems, and solutions inautonomous systems, cyber, command, control, communications and computers, intelligence, surveillance andreconnaissance, strike, and logistics and modernization. It operates through the following business segments: AerospaceSystems, Mission Systems, and Technology Services.

The Aerospace Systems segment includes the design, development, integration, and production of manned aircraft,autonomous systems, spacecraft, high-energy laser systems, microelectronics, and other systems and subsystems. TheMission Systems consists of sensors and processing; cyber and intelligence, surveillance and reconnaissance; andadvanced capabilities. The Technology Services focuses on global logistics and modernization; advanced defenseservices; and system modernization and services.

The company was founded by John K. Northrop, Thomas V. Jones, and Kent Kresa in 1939 and is headquartered in FallsChurch, VA.

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NetApp Inc (NTAP)

NetApp, Inc. engages in the design, manufacture, marketing, and technical support of storage and data managementsolutions. It offers cloud data services, data storage software, data backup and recovery, all-flash storage, convergedsystems, data infrastructure management, ONTAP data security, and hybrid flash storage.

The company was founded by David Hitz, James K. Lau and Michael Malcolm in April 1992 and is headquartered inSunnyvale, CA.

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nVent Electric (NVT)

nVent Electric Plc engages in the provision of electrical connection and protection solutions. It operates through thefollowing segments: Enclosures, Thermal Management, and Electrical & Fastening Solutions. The Enclosures segmentoffers solutions that protect, connect, and manage heat in critical electronics, communication, control, and powerequipment.

The Thermal Management segment includes electric thermal solutions that connect and protect critical buildings,infrastructure, industrial processes, and people. The Electrical & Fastening Solution segment consists of fasteningsolutions that connect and protect electrical and mechanical systems and civil structures.

The company was founded on May 30, 2017 and is headquartered in London, the United Kingdom.

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NXP Semiconductors (NXPI)

NXP Semiconductors NV is a holding company, which engages in the development, manufacture, and provision of mixed-signal semiconductor solutions. It operates through the following segments: High Performance Mixed Signal, StandardProducts, and Corporate and Other.

The High Performance Mixed Signal segment designs and markets analog, power management, interface, securitytechnologies, and digital processing systems. The Standard Products segment develops and supplies small signal andpower discretes. The Corporate and Other segment manages and operates manufacturing facilities.

The company was founded on August 2, 2006 and is headquartered in Eindhovezn, the Netherlands.

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Qualcomm Inc (QCOM)

QUALCOMM, Inc. engages in the development, design, and provision of digital telecommunications products and services.It operates through the following segments: Qualcomm CDMA Technologies (QCT), Qualcomm Technology Licensing(QTL), and Qualcomm Strategic Initiatives (QSI). The QCT segment develops and supplies integrated circuits and systemsoftware based on technologies for the use in voice and data communications, networking, application processing,multimedia, and global positioning system products.

The QTL segment grants licenses and provides rights to use portions of the firm’s intellectual property portfolio. The QSIsegment focuses on opening new or expanding opportunities for its technologies and supporting the design andintroduction of new products and services for voice and data communications.

The company was founded by Franklin P. Antonio, Adelia A. Coffman, Andrew Cohen, Klein Gilhousen, Irwin Mark Jacobs,Andrew J. Viterbi, and Harvey P. White in July 1985 and is headquartered in San Diego, CA.

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TE Connectivity (TEL)

TE Connectivity Ltd. engages in the design and manufacture of connectivity and sensors solutions. It operates through thefollowing segments: Transportation, Industrial, and Communications Solutions. The Transportation Solutions segmentoffers products that are used in the automotive, commercial transportation, and sensors markets.

The Industrial Solutions segment provides products that connect and distribute power, data, and signal. TheCommunications Solutions segment supplies electronic components for the data and devices and appliances markets.

The company was founded in 2000 and is headquartered in Schaffhausen, Switzerland.

FAST Graphs Analyze Out Loud Video My 10 Favorite Attractively Valued Electronic Technology ResearchCandidates

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FAST Graphs Analyze Out Loud Video on the Other 9 Electronic Technology Research Candidates

Summary and Conclusions

I think it’s very important that investors have a clear and learned perspective of what an investment in a given commonstock might be capable of generating for them. To me, this has always been above and beyond simple statistics.Personally, I feel it’s important to have a long-term perspective and understanding of how the business has performed overtime. Because, I believe this perspective -although not guaranteed – will provide an edge in determining what the businessmight be capable of going forward. In other words, is not just about P/E ratios or dividend yields, etc. The astute investoralso wants to understand the nature of the business behind the stock.

In this article I have presented 19 research candidates in the Electronic Technology Sector. Hopefully, readers have abetter perspective of the nature of some of the more recognized and renowned companies such as Apple Inc. and GeneralDynamics. Additionally, I am hopeful that I have possibly introduced companies previously overlooked that investors mightwant to consider. But at the end of the day, I hope I illustrated that it is clearly a market of stocks and not a stock market.Just like people, every individual company possesses their own unique qualities, attributes and flaws regardless of thesector they operate in.

Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construedas a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients. Past performance of thecompanies discussed may not continue and the companies may not achieve the earnings growth as predicted. Theinformation in this document is believed to be accurate, but under no circumstances should a person act upon theinformation contained within. We do not recommend that anyone act upon any investment information without firstconsulting an investment advisor as to the suitability of such investments for his specific situation.

Disclosure: Long AAPL, AVGO, GD, INTC, JBL, QCOM.

Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construedas a recommendation to buy or sell the stocks mentioned or to solicit transactions or clients. Past performance of thecompanies discussed may not continue and the companies may not achieve the earnings growth as predicted. Theinformation in this document is believed to be accurate, but under no circumstances should a person act upon theinformation contained within. We do not recommend that anyone act upon any investment information without firstconsulting an investment advisor as to the suitability of such investments for his specific situation.

© F.A.S.T. Graphs

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