Flex Stock: The $16 Stock Riding High on the Rise of Machines

flex stock
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FLEX Stock Set to Gain from Evolving Intelligent Systems

Today’s stock represents one of my favorite strategies for investing. To gain superior returns, it could pay to look out for “picks-and-shovels” stocks. These are the stocks of companies that stand to gain the most from rising technology trends, because they supply the essential tools to companies in that space.

By considering such stocks in their portfolios, investors could increase their returns substantially.

A case in point is Flex Ltd (NASDAQ:FLEX), which offers a variety of technologically driven solutions for areas like manufacturing and logistics. The company is a contract electronics manufacturer and is known for its “Sketch-to-Scale” model aimed at designing and building intelligent products for a connected world.

As companies in the technology sector start deploying intelligent systems in specific markets like industrial automation and automotive systems, demand for the solutions provided by Flex will continue to rise. And the best part is that the tech market will continue to expand, thereby providing Flex stock a lot of room to grow.

Take the example of mobile phones. Remember what these phones were like in 2007 and compare them to what Apple Inc. (NASDAQ:AAPL) announced at its event on September 12, 2017. The “iPhone 8” and “iPhone X” are a class apart, and have developed into much more than just simple phones. Not only consumer electronics, but household appliances and automobiles are undergoing changes that could not have been imagined a few years back. They are evolving into intelligent systems, not just simple products.

The world is getting more connected, thereby resulting in the creation of more intelligent products. The solutions offered by Flex enable companies to rapidly develop their connected and intelligent products. Flex helps its customers in this changing environment by providing core technology building blocks for designing, engineering, and developing innovative ideas into successful products.

Amid the rapid pace of these transformations, Flex looks beyond the traditional electronics manufacturing services (EMS) space, although the majority of its customers are original equipment manufacturers (OEMs). The industry has a lot of opportunities at present and, with the rise in demand for smart electronic devices, Flex stock is likely to soar higher.

Given the demand for EMS services, a research report by Research and Markets says that the contract manufacturing industry will grow to $580.0 billion in 2020. This represents a compound annual growth rate (CAGR) of 6.2% for 2015–2020. (Source: “The Worldwide Electronics Manufacturing Services Market 2016 Edition,” Research and Markets, last accessed September 13, 2017.)

As companies race toward building intelligent systems, Flex will help facilitate them by providing cross-industry capabilities, as well as smart and connected features. The company’s expertise is positioned to provide value to the world’s leading supply chains, both within and outside the electronics industry.

Flex is focused on strategic goals, such as making products that are smart and connected, reinventing global supply chains, and generating new revenue streams. This will help unlock opportunities across new industries.

There has been a drop in the company’s revenue, however, as the company tries to execute its strategy and plans more investments. But Flex is likely to yield results in the coming years.

In its Q1 FY 2018 results announcement, Flex management made it clear that 2018 will be an investment year. But the huge potential can be gauged from the interest in FLEX stock, which has returned almost 34% in the last year and has gone up by a little more than 150% over the last five years.

flex stock chart

Chart courtesy of StockCharts.com

Analyst Take

Flex has unmatched scale and visibility across 12 industries, in which the company generates $1.0 billion or more of revenue. It has a unique ability to help its customers navigate the convergence of technologies as those customers try to dominate in the age of intelligent systems. FLEX stock has been gaining on the increasing potential of its business.

The company is focused on designing and building intelligent products for a connected world, and it serves companies of all sizes in various industries and end-markets. With many of the world’s leading technology companies as its customers, Flex not only has good exposure, but also a market with huge growth potential.