Flex Ltd: Looking for an Explosive 5G stock? Read This

flex stockA 5G Stock You Likely Haven’t Considered

Investors’ quest for the best 5G stocks has been going on for a few years now. However, given the wide range of upcoming 5G applications, there could be hundreds of companies that stand to benefit from 5G deployment.

And because the deployment of 5G networks is going to be a multi-year process—not to mention that the COVID-19 pandemic has caused some delays—the title of “best 5G stock” will likely remain up for grabs for a while.

Still, the difficulty of determining long-term winners of the 5G industry does not mean investors can’t profit from the secular tailwind in the short term.

Flex Ltd (NASDAQ:FLEX), for instance, is not a particularly well-known name for 5G stock investors, but those who were informed enough to load up on its shares have recently enjoyed some serious returns.

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Flex is an electronics manufacturing services company based in Singapore. The company’s administrative headquarters are in San Jose, CA, and it has more than 100 manufacturing and services sites in 30 countries around the world.

Flex Ltd is not a pure-play 5G stock. The company does, however, have the design and manufacturing expertise to help customers bring their 5G infrastructure and other wireless products to market.

Flex’s 5G capabilities range from mobile, Internet of Things (IoT), and wireless LAN (WLAN) to short-range, microwave, and satellite communications. It’s currently one of the world’s leading manufacturers of macro- and small-cell radios.

In the second quarter of the company’s fiscal year 2021, which ended September 25, 2020, revenue from its Flex Agility Solutions division grew 14% quarter-over-quarter to $3.3 billion. The company saw “steady demand for 5G products and critical infrastructure supporting work and learn from home applications in [communications, enterprise, and cloud].” (Source: “Results for Q2 Fiscal 2021,” Flex Ltd, October 29, 2020.)

At the time of this writing, Flex is yet to report its December-quarter results. But in October’s earnings conference call, the company’s chief financial officer, Paul Lundstorm, said, “We expect to see sustained demand for products that support remote work and school, and critical infrastructure demand should persist along with positioning ahead of 5G ramps.” (Source: “Flex Ltd. (FLEX) CEO Revathi Advaithi on Q2 2021 Results – Earnings Call Transcript,” Seeking Alpha, October 29, 2020.)

As I mentioned earlier, Flex stock has performed quite well recently. Over the past six months, it has surged by more than 75%.

But the best could be yet to come.

Flex Ltd (NASDAQ:FLEX) Stock Chart

Take a look at the chart below; it shows where Flex stock has been for the past five years.

Chart courtesy of StockCharts.com

From 2017 to early 2018, Flex stock formed a rounding top, which in technical analysis is often an indication of a reversal of an upward trend. Indeed, the company’s shares tumbled afterward.

After bottoming in late 2018, the stock started climbing again, and despite the choppy ride, it had a decent rally in 2019. But of course, that rally was disrupted in early 2020 as the market entered a major sell-off.

Still, Flex stock was able to make a comeback after that sell-off, and strong upward momentum has been building since October 2020.

Most recently, the stock has been consolidating around the resistance level defined by the previous rounding top. If shares of Flex Ltd manage to break above that resistance, we could see some fireworks.

Analyst Take

I should point out that, in this day and age, false breakouts are more common than real breakouts. So trading based purely on a chart pattern could be risky.

That said, there’s no denying that Flex stock is at a very critical level. And with 5G as tailwind, it just might become the next profit maker.