1. Flex Ltd. (NASDAQ:FLEX)
Forward P/E Ratio: 13.55
Earnings Growth This Year: 12.60%
Analyst Upside Potential: 21.31%
Flex Ltd. (NASDAQ:FLEX) is a multinational technology company that provides a wide range of services for various industries. For instance, its Flex Agility Solutions (FAS) helps organizations build infrastructure for data and communication. On the other hand, Flex Reliability Solutions (FRS) develops components for high-end industries such as automotive, health, and industrial products.
The products and solutions provided by Flex Ltd. (NASDAQ:FLEX) help businesses integrate artificial intelligence and machine learning capabilities into their technology. Thereby making it a hidden AI company that is prospected for growth soon. As soon as the management shifted its focus towards high-end value products the company entered an era of growth. At the moment, these industries account for more than 60% of the company’s total revenue and management is at work to grow its footprint further.
Another differentiating factor is its engagement within the data center and AI market. The most recent quarter results further highlighted its growth prospects. While the fiscal first quarter revenue for 2025, was down 13.93% year-over-year, it was up from the previous quarter by 2%. More notably, 25% of this revenue came from the growth in the data center and power segments.
Despite the revenue decline, gross profits were up by 50 basis points led by a strong demand for medical devices. Moreover, the company also benefited from its effective cost management.
The fact that Flex Ltd. (NASDAQ:FLEX) is involved with high-end industries which are forecasted to grow in the future, automatically makes the business landscape lucrative for the company. Furthermore, it is also undervalued at current levels. Flex is trading at 13.55 times its forward earnings while the market average sits close to 24. Moreover, analysts expect its earnings to grow by 12.6% during the year, thereby making it one of the cheapest growth stocks to buy according to analysts.
Artisan Small Cap Fund stated the following regarding Flex Ltd. (NASDAQ:FLEX) in its first quarter 2024 investor letter:
“We initiated new GardenSM positions in Flex Ltd. (NASDAQ:FLEX), On Holding and Onto Innovation during the quarter. Flex provides outsourced electronic manufacturing services to a diverse set of end markets. The company hired a new CEO in 2020, who has been driving a strategic pivot toward manufacturing high-value products in areas such as health care, industrial, automotive and cloud infrastructure. Today, these higher value items account for ~60% of revenues, and we believe they will continue to tick higher. We also believe an improving business mix, along with the reshoring of supply chains, will lead to faster growth and higher margins.”
While we acknowledge the potential of Flex Ltd. (NASDAQ:FLEX) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for a promising AI stock that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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