Avnet (NYSE: AVT) distributes
electronic components, computer products, software and embedded subsystems to more than 100,000 manufacturers and resellers in the Americas, the Middle East, Asia, Africa and Europe. The Electronics Marketing division provides such products as semiconductors, electronic connectors, electronic wires and cables, electromechanical products and interconnect assemblies. The Technology Solutions division sells mid- to high-end servers, enterprise computing systems, data storage products and software. The firm also provides financial and technical services. Suppliers include Cisco Systems (NASDAQ: CSCO), Hewlett-Packard (NYSE: HPQ) and Oracle (NASDAQ: ORCL).
The firm pleased investors last week, when it announced fiscal Q2 EPS of 89 cents and revenues of $4.75 billion. Analysts had been expecting 85 cents and $4.56 billion. Management also guided Q3 EPS to 85-89 cents (85 cent consensus) and Q3 revenues to $4.37-$4.57 billion ($4.35B consensus).
The news
boosted the shares through 30-day and 50-day moving average resistance into a bullish "pennant" consolidation pattern. Stocks frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.
Brokers recommend the shares with two "strong buys," two "buys" and three "holds." Analysts see an 18% average annual growth rate through the next five years. The AVT P/E ratio (10.81), PEG ratio (0.60), Price to Sales ratio (0.30), Price to Book ratio (1.35), Price to Cash Flow ratio (9.53), Price to Free Cash Flow ratio (10.37), Sales Growth rate (22.10%) and Revenue per Employee ($1.45M) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past 52 weeks, it has traded between $28.87 and $44.68. A stop-loss of $30.50 looks good here.
Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.
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