Jabil Circuit, Inc. (JBL): A Less Obvious Play on the Big Boys Of Tech

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Jabil Circuit, Inc. (NYSE:JBL) is a leading provider of electronic manufacturing services around the world. With a plethora of A-list customers (more on that later), the company has done an outstanding job of increasing its revenues.  However, shares have not quite kept pace with this.  In fact, at around $18.50, shares are actually lower than they were 10 years ago.  With the stock trading at the low end of its historical P/E range, is there more growth to be had, or should investors look elsewhere for lucrative tech investments?

Jabil Circuit, Inc. (NYSE:JBL)Jabil Circuit, Inc. operates in three segments.  Diversified Manufacturing Services (DMS), which focuses on complex products and regulated industries; Enterprise and Infrastructure (E&I), which provides cost-effective solutions for the computer and telecommunication industries; and High Velocity Systems (HVS), which focuses on consumer products such as printers and displays.

Jabil Circuit has a lot of customers, however their five largest customers account for 47% of the company’s sales, so they are definitely worth talking about since the success of the company somewhat depends on its customers’ success.

The company’s largest customer is none other than BlackBerry, formerly Research In Motion, which accounts for 15% of the company’s sales.  As BlackBerry is currently deploying a full-scale effort to revamp its brand, this situation is certainly worth keeping an eye on.  If the upcoming sales numbers from the BlackBerry 10 are surprisingly positive, sure BlackBerry’s stock will skyrocket, however Jabil Circuit could be a sneaky way to play a BlackBerry turnaround.

As far as BlackBerry itself, I think the company will survive and that shares are undervalued right now at around $13.  The company’s net assets are in the $6-7 range, meaning that if they called it quits right now and sold what they owned, the shareholders would theoretically get $6, meaning the market is valuing their business alone at under $7 per share, which is ludicrous!  Having said that, BlackBerry’s turnaround is far from certain and this stock is a gamble.  Hey, more risk means more potential reward, right?

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