Name any revolutionary technology - the Internet of Things, self-driving vehicles, smart homes, cloud computing, immunotherapy - and you can be certain today's tech stock pick has a hand in it.
Its clients run the gamut from young tech start-ups to giant conglomerates like Alphabet Inc. (Nasdaq: GOOGL), Nike Inc. (NYSE: NKE), and everything in between.
In fact, this company has quietly established itself as the third-largest electronics manufacturing services firm in the world. Not bad, for a company most investors have never heard of.
A quick look at some of the industries it targets gives you an idea of the massive profit potential of this backdoor play...
- The Internet of Things market, according to research firm MarketsandMarkets, is projected to grow from $170.57 billion in 2017 to $561.04 billion by 2022, at a compound annual growth rate of 26.9%.
- According to Allied Market Research, the market for autonomous vehicles will hit $54.23 billion by 2019 and then grow at a 40% annual clip over the next seven years.
- Statista projects the smart home market in the United States will roughly double from $27.5 billion in 2017 to $53.5 billion in 2022.
This company has become a go-to supplier for all these technologies. It's a one-stop shop that can take virtually any electronics project from conception to distribution - or, as it says, from "sketch to scale."
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That includes prototype creation, intellectual property protection, supply chain, and global distribution. Entrepreneurs and tech giants can rest assured this company is guiding the project every step of the way.
That's why it's been named one of the world's most admired companies by Fortune.
Plus, it has a top score from the Money Morning Stock VQScore™ system, which suggests that it's due for a rise.
And those are just several of the reasons this stock could jump 100% in short order...
From NASA to Nike, This Company Enables Innovators of All Kinds
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Flex Ltd. (Nasdaq: FLEX) was founded in 1969 in Silicon Valley as Flectronics Inc. With its operations now centered in Singapore - and its new, shorter name adopted in 2016 - its 200,000 employees are spread out among 100 locations in 40 countries.
Flex's list of projects over the years is impressive, and it runs the gamut of high-tech electronics...
Alphabet, then known as Google, turned to Flex a few years ago when it wanted to get into the streaming-video market. Flex's unparalleled experience in developing "smart home" devices enabled it to deliver the prototype for the Chromecast in just four weeks.
Within 24 hours of the product launch in 2013, Google had to cancel its sales promotion for the Chromecast. The demand was so overwhelming it was becoming tough to keep up with.
A few years earlier, NASA partnered with Flex to provide mobility functions for the Curiosity rover that was sent to Mars in 2011. Flex outfitted the rover with assemblies including movable joints and sensors to provide feedback. That way operators on Earth could adjust the rover's performance based on the drastically changing martian conditions.
In late 2012, NASA extended Curiosity's mission indefinitely. It has now been on Mars collecting valuable information for more than 2,200 earth days.
And when Nike needed to speed up its turnaround time for custom-made sneakers, Flex assembled a team that quickly identified and solved the company's biggest inefficiency.
Previously, laser cutting had proved ineffective for Nike because of burnt edges on fabric caused by oxygen mixing with the laser beam. Along with several other productivity-boosting measures, Flex's team of engineers and chemists introduced a custom laser-cutting process that allowed quick, fully-automated cutting with no burns. As a result, Nike was able to trim its wait time for customers down from weeks to just days.
When it comes to electronic solutions, Flex can do just about any job its clients need. But it also takes a more proactive role in innovation with its Lab IX startup incubator, which helps young tech companies bring new, disruptive ideas to the marketplace.
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One of the more impactful Lab IX collaborations was Grabit, an automated arm for factories and warehouses that uses electroadhesion (rather than suction or simple mechanical gripping) to handle fragile items like solar panels and flat-screen TVs.
Through the Lab IX program, Flex helped Grabit's designers perfect the process across a wide variety of conditions and temperatures. As a result, this piece of machinery will dramatically expand and simplify the automation process for companies across the globe.
Despite all of these innovations, the market hasn't caught on to this stock yet. That makes it an even better buy.
Here's a look at the numbers and what others are missing...
Flex's Past Performance Is Impressive; Its Future Projections Are Even Better
According to FactSet, eight out of 11 analysts consider FLEX a "Buy," with price targets as much as 40% above its current price.
But that's almost certainly selling it short.
Looking at FLEX's value metrics, we see that based on its performance over the last year, the stock is already severely undervalued.
But looking forward to the next year, it's even more undervalued.
The stock's price/earnings (P/E) ratio for the last 12 months is just 63% of the industry average, suggesting a 59% rise.
For the next 12 months, Flex's P/E is just 56% of the average, suggesting a 79% rise.
Its price/earnings to growth (PEG) ratio over the last 12 months puts the stock at a 28% discount.
Looking ahead 12 months, Flex's PEG suggests a 50% discount.
Combine that with a host of technologies that are ready to take off and earnings per growth that are projected to climb 63% by 2021, and you have a stock that is likely to be one of the standout tech winners of the next few years.
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About the Author
Stephen Mack has been writing about economics and finance since 2011. He contributed material for the best-selling books Aftershock and The Aftershock Investor. He lives in Baltimore, Maryland.