Daktronics, Inc. (NASDAQ:DAKT)
This electronic display maker is interesting in the way it has expanded into higher-growth markets. While sales of its commercial-related billboards are on the decline, it is generating growth in revenues from Live Events customers, and making strides quickly in the Schools & Theatres, Transportation, and International sectors. All told, sales are increasing at a double-digit percentage rate, and margins are widening enormously.
The demand pipeline looks solid, based on ongoing projects and the potential for further such deals. For example, travelers may see Daktronics’ products on the New Jersey Turnpike and at the Los Angeles Airport, while sports fans would get a taste at Tampa Bay Lightning games or the Barclays Center in Brooklyn, NY. Internationally, Daktronics has recently sold to soccer stadiums in Brazil.
Given what I view as a favorable environment at present, along with efforts to enhance margins, the bottom line upturn is likely to persist. Accordingly, DAKT stock has additional upside at its current quotation. Being that it is a growth stock, the higher P/E valuation than other electronics firms should not cause investors to shy away.
Rockwell Automation (NYSE:ROK)
After an unimpressive December quarter, this company might well be poised to gain steam. Management is forecasting a strong six-month span ending June 30 in light of conducive economic trends and its higher backlog. The geographic markets where it has seen slowdowns, particularly Asia, are apt to bounce back. An acceleration of bottom-line advances appears on tap.
The company has two operating segments: Architecture & Software and Control Products & Solutions. The solutions business is specifically from where the backlog turnaround has occurred. Nevertheless, Rockwell has consistently posted earnings gains, rendering the last two quarters as anomalies. It also uses its cash to reward shareholders with a 2.1% dividend and share repurchases, as well as making small acquisitions.
ROK shares are therefore appealing at this juncture as an addition to almost any portfolio.
Summary
These are just a handful of the many companies that comprise the electrical products industry. Possibly I have saved some of the time of sifting through the various entities. End market trends are crucial to studying the residing firms. They all are now pursuing growth overseas and many are riding the acquisition wave.
The article Growing Electrical Component Firms originally appeared on Fool.com and is written by Damon Churchwell.
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