The global electronics manufacturing services industry is expected to grow at a CAGR of 4% between 2020 to 2024. The industry is poised to gain from an increase in global economic activity, electronic innovations, and growth in the e-commerce sector. As people around the globe adopt more remote and digitized lifestyles, the demand for electronics is growing.

While difficult Sino-U.S. relationship could slightly hamper the industry’s growth in the United States because China dominates electronics manufacturing globally, investors can still expect solid returns from fundamentally sound stocks in the space.

Companies such as Dolby Laboratories (DLB), Arrow Electronics, Inc. (ARW), CTS Corporation (CTS), and Kimball Electronics, Inc. (KE) are innovating quickly and their new product releases are expected to deliver high growth. The shares of these companies have recorded double-digit gains over the past year, and a favorable industry backdrop, together with their fundamental strength, could help them keep advancing  in the coming months.

Dolby Laboratories (DLB)

DLB is involved in the development, manufacture, and marketing of audio, imaging, and communication products. The company has global operations. DLB has gained 38.1% over the past year to close Thursday’s trading session at $96.62.

DLB  recently launched the Dolby.io interactive platform meant for developers. The company has also signed a five-year agreement with Megabox, a Korean theatre company, to equip its  theatres with Dolby’s Auditorium Packages.

For the quarter ended December 25, 2020, the company’s revenues increased 33.6% versus  the same period last year. DLB’s net income grew 87.8% during the same period.

DLB is expected to see a revenue growth of 8.6% in 2021 and 8.2% in 2022. The company’s EPS is estimated to grow 13.5% in 2021 and at a rate of 16% per annum over the next five years.

DLB’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to Strong Buy in our proprietary ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

DLB  has an A grade o for  Sentiment and Quality, and B for  Value and Momentum. In the A-rated Technology – Electronics industry, it is ranked #8 of 43 stocks.

In total, we rate DLB on eight different levels. Beyond what we stated above we also have given DLB grades for Stability and Growth. Get all the DLB ratings here.

Arrow Electronics, Inc. (ARW)

ARW focuses on providing value-added services for electronic components and computer products. ARW has returned 41.9% over the past year to close yesterday’s trading session at $98.75.

ARW has recently appointed Sean J. Kerins as the chief operating officer. The new appointment is expected to drive innovation at the company. ARW has also recently partnered with the Semiconductor Industry Association to encourage policies that will foster global competitiveness in the industry.

For the quarter ended December 31, 2020, the company saw an increase in sales of 15% year-over-year. Its  net income grew 110.7% during the same period.

ARW’s revenue is estimated to increase 24.9% for the quarter ended March 31, 2021 and 14.4% in 2021. Its  EPS is expected to rise 32.8% in 2021 and 0.5% per annum over the next five years.

The POWR Ratings are also high on ARW as it has an Overall Rating of A which translates to a Strong Buy. ARW also has an A  grade for Growth, and B for both Value and Quality. In the same industry, it is ranked #3 of 43 stocks.

Click here to see the additional POWR Ratings for ARW (Sentiment, Stability, and Momentum).

CTS Corporation (CTS)

CTS designs, manufactures, and markets a wide selection of sensors and electronic components for use in the IT, aerospace, defense, communications, and other industries. The company has international operations. CTS’s stock has returned 17% over the past year. Its last closing price was $32.02.

CTS  recently acquired Sensor Scientific, Inc., which is involved in the manufacture of temperature sensors, to expand the company’s temperature sensing product portfolio. The company has also recently released its 18VRG Guitar Potentiometer to be used with electric guitars.

For the quarter ended December 31, 2020, CTS’ sales climbed 7% versus  the same period last year. The company’s free cash flow grew 28% during the same period.

CTS is expected to see  revenue growth of 17.3% for the quarter ended March 31, 2021 and 11.6% in 2021. Its  EPS is estimated to grow 30.4% in 2021 and 11% per annum over the next five years.

CTS’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to Strong Buy in our proprietary ratings system. CTS has an A grade for Quality, and B for Growth, Momentum, Stability, and Sentiment. In the same industry, it is ranked #4 out of 43 stocks.

Beyond what we stated above we also have given CTS a grade for Value. Get all the CTS ratings here.

Kimball Electronics, Inc. (KE)

KE delivers electronics engineering and supply chain services to enterprises in the medical, automotive, and public safety industries. The company has operations in the United States, Poland, and internationally. KE’s stock has gained 75.5% over the past year to close the last trading session at $24.2.

The company  recently appointed Jana Croom to a newly created  VP, Finance position. The appointment could  drive the growth of shareholder value in the future. The company has also been involved in providing support to the medical industry in Europe. For the quarter ended December 31, 2020, the company’s net sales have grown 4% year-over-year. The company’s sales in the automotive vertical increased 13% during the same period.

KE is expected to see a revenue growth of 8.2% for the quarter ended March 31, 2021 and 8% in 2021. Its EPS is estimated to grow 56% for the quarter ended March 31, 2021 and 86.4% in 2021.

It’s no surprise that KE has an overall rating of A, which equates to Strong Buy in our POWR Ratings system. KE has a grade of B for Quality, Value, Stability, and Sentiment. In the same industry, it is ranked #2 out of 43 stocks.

Click here to see the additional POWR Ratings for KE (Growth and Momentum).

The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

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DLB shares were trading at $96.02 per share on Friday afternoon, down $0.60 (-0.62%). Year-to-date, DLB has declined -0.90%, versus a 1.08% rise in the benchmark S&P 500 index during the same period.

About the Author: Aaryaman Aashind

Aaryaman is an accomplished journalist that’s passionate about providing in-depth insights about investing and personal finance. Recently he has been focused on the stock market and he specializes in evaluating high-growth stocks. More...

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