Plexus Stock: ‘90s Tech Star Offers Deep Value on Global Economic Reopening

Insiders & Institutions Love This Value Technology Play

The current shortage in microchips suggests there will be strong growth in the electronic components sector as global demand recovers from the COVID-19 pandemic.

An area that I feel will greatly benefit from the global economic recovery is the electronic manufacturing services (EMS) space. These are the companies that provide third-party expertise and manufacturing solutions, including leading EMS player Plexus Corp. (NASDAQ:PLXS).

In the 1990s, technology and electronic companies started to farm out their manufacturing to third-party EMS companies. One of the holdouts was Plexus, which remains a top player in the EMS space.

The mid-cap stock traded at a 52-week and 10-year high of $91.04 on March 12, up 73% over the past year.

Plexus stock still looks fairly cheap, and it will likely benefit from the global recovery in the electronic manufacturing sector.

On the chart, PLXS stock is bullish, above its 50-day and 200-day moving averages, supported by strong relative strength.

Along the way, Plexus stock broke above key resistance at $75.00–$80.00 and $85.00.

Chart courtesy of StockCharts.com

Steady Growth & Attractive Valuation for PLXS Stock

Plexus Corp. grew its revenues in the last three years, including by double-digits in 2019 and 2020.

(Source: “Plexus Corp.” MarketWatch, last accessed March 15, 2021.)

As the global economy recovers, I expect Plexus to ramp up its revenues.

The current estimate has the company reporting modest growth of three percent to $3.5 billion in 2021 and growth of 8.8% to $3.8 billion in 2022. (Source: “Plexus Corp. (PLXS),” Yahoo! Finance, last accessed March 15, 2021.)

Meanwhile, Plexus has been delivering positive earnings before interest, taxes, depreciation, and amortization (EBITDA). The company marked a five-year EBITDA high in 2020.

(Source: MarketWatch, op. cit.)

Plexus Corp. also reported positive generally accepted accounting principles (GAAP) earnings per share (EPS) in the last five consecutive years. It delivered a five-year GAAP diluted EPS high in 2020.

(Source: MarketWatch, op. cit.)

Adjusting for non-recurring expenses, Plexus reported earnings of $4.08 per share in 2020, with the EPS estimates rising. The company has beaten the consensus EPS estimates in five quarters straight.

Analysts estimate that Plexus Corp. will report an adjusted $4.89 per diluted share in 2021 and an adjusted $5.35 per diluted share in 2022. (Source: Yahoo! Finance, op. cit.)

Plexus has also produced positive free cash flow in five years straight, with 500% annual growth in 2019 and 2020.

(Source: MarketWatch, op. cit.)

Analyst Take

In my view, the outlook for Plexus Corp. as a play on the economic reopening is compelling, especially given its growth and expectations.

Plexus stock trades at a mere 0.58 times its consensus 2022 revenue estimate, which is incredibly low, relative to some valuations in the technology sector.

Institutions and insiders are on board with PLXS stock. About 315 institutions hold a 98% stake in outstanding Plexus shares. Moreover, insiders added a net 73,447 shares over the last six months. (Source: Yahoo! Finance, op. cit.)