TTM Technologies, Inc.: Overlooked 5G Stock Could Deliver Big Returns

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TTM Technologies, Inc. (NASDAQ:TTMI) isn’t a well-known 5G stock. In fact, TTMI stock isn’t a well-known stock, period. With a market capitalization of about $1.5 billion, the company simply isn’t big enough to get mainstream attention.

For 5G stock investors who don’t like to go after the hottest tickers, though, this little-known company could be an opportunity.

Headquartered in Costa Mesa, CA, TTM Technologies, Inc. is a global printed circuit board (PCB) manufacturer. The company focuses on quickturn and volume production of technology advanced PCBs and backplane and sub-system assembly business.

Notably, the name “TTM” stands for time-to-market, which represents how the company’s time-critical manufacturing services enable customers to shorten the time required to develop new products and bring them to market.

The company serves five main end markets: Aerospace/Defense, Automotive, Data Center Computing, Medical/Industrial/Instrumentation, and Networking/Communications. Those markets accounted for 37%, 13%, 13%, 19%, and 17% of the company’s net sales in fiscal 2020, respectively. (Source: “TTM Technologies, Inc. Investor Presentation,” TTM Technologies, Inc., last accessed June 28, 2021.)

The Networking/Communications segment is why TTM Technologies stock deserves the attention of 5G stock investors. In particular, the 5G network densification and complexity significantly drive more PCB content, which is what the company specializes in.

However, while 5G infrastructure spending should be a catalyst for TTM Technologies’ business, the segment isn’t going at full speed just yet.

Commenting on the Networking/Communications end market in February, TTM Technologies, Inc.’s chief executive officer, Tom Edman, said, “We expect this market to grow, but be below the longer term forecast of 5% to 8% growth in 2021, due to the anticipated soft start in the early part of the year, followed by a ramp of 5G infrastructure needs in the back half of the year, complimented [sic] by growth in networking.” (Source: “TTM Technologies’ (TTMI) CEO Tom Edman on Q4 2020 Results – Earnings Call Transcript,” Seeking Alpha, February 3, 2021.)

Three months later, at the company’s first-quarter earnings conference call, Edman said that, within the Networking/Communications business, TTM Technologies saw relative strength in its networking segment compared to its telecom segment on a year-over-year basis. That was because “the 5G build out has been slower to ramp.” (Source: “TTM Technologies, Inc. (TTMI) CEO Tom Edman on Q1 2021 Results – Earnings Call Transcript,” Seeking Alpha, April 28, 2021.)

These comments may not seem that exciting for 5G stock investors, but here’s the neat part: the company is growing its business even when its 5G segment isn’t firing on all cylinders.

In the first quarter of the company’s fiscal 2021, which ended March 29, it generated $526.4 million in net sales, an increase of $28.8 million from the $497.6 million earned in the year-ago period. (Source: “TTM Technologies, Inc. Reports Fiscal First Quarter 2021 Results,” TTM Technologies, Inc., April 28, 2021.)

Its adjusted earnings came in at $25.3 million ($0.23 per diluted share) in the first fiscal quarter, representing a substantial improvement from the $16.7 million ($0.16 per diluted share) in the year-ago quarter. The company also generated $41.1 million in operating cash flow.

Keep in mind that these numbers were achieved without 5G being a major catalyst. Once the company capitalizes on the increasing 5G infrastructure spending, its financials should look even better.

Management expects TTM Technologies, Inc.’s top and bottom lines to continue improving. For the second quarter, their guidance range is $525.0 to $565.0 million in revenue and $0.27 to $0.33 per share in adjusted net income.

It’s worth noting that the company’s board of directors approved a share repurchase program earlier this year. Under the program, the company is allowed to buy back up to $100.0 million of TTMI stock through February 3, 2023. (Source: “TTM Technologies, Inc. Board of Directors Approves $100 Million Share Repurchase Program,” TTM Technologies, Inc., February 3, 2021.)

By repurchasing its own shares, the company will be reducing the number of its outstanding shares, thus allowing the remaining TTM Technologies stock investors to own a larger portion of the company. Essentially, this 5G stock is returning cash to investors.

TTM Technologies, Inc. (NASDAQ:TTMI) Stock Chart

Chart courtesy of StockCharts.com

Analyst Take

Trading at $14.40 per share, TTM Technologies stock is up by about 30% over the past year. That’s not exactly a stellar performance by tech-sector standards, but then again, we’re talking about an under-the-radar name.

As the 5G revolution takes place, TTM Technologies, Inc. could churn out much better growth rates. Based on where TTMI stock is now, I’d say the bulk of its potential is yet to be realized.