OmniVision Technologies, Inc. (OVTI), Maxwell Technologies Inc. (MXWL), & FormFactor, Inc. (FORM): 3 Promising Stocks in the Electronic Components Industry

With a strong balance sheet and low long-term debt in relation to its capitalization, this stock looks like a buy. Trading around industry average valuations while offering better growth prospects (of 25% per year over the next five, compared to the 12% industry average), I would advocate adding this stock to your portfolio.

High performance (not only in the probe card segment)

FormFactor, Inc. (NASDAQ:FORM)  designs, develops, manufactures, sells, and supports precision, high performance advanced semiconductor wafer probe cards based on proprietary technology. Its stock had been beat down over the past few years, but started recuperating a couple of months ago, after a year of consecutive positive earnings surprises. Currently trading at under $7, at about 1.1 times its book-values and 1.8 times its sales, both considerably below industry average valuations, while offering compelling, attainable, and sustainable growth prospects, I´d recommend buying this stock for the long-term.

As the company swings its focus away from the PC DRAM market and into the mobile segment, growth opportunities are many. The recent agreement to purchase MicroProbe increases the firm’s exposure to these non-DRAM sectors, making FormFactor, Inc. (NASDAQ:FORM) the largest probe card manufacturer and supplier of probe cards to the SoC (System-on-Chips) market.

This (the SoC) segment, in particular, should contribute with high growth over the next few years. In addition, MicroProbe is more profitable than FormFactor, Inc. (NASDAQ:FORM), and will therefore contribute to the company’s margins and generate positive cash flow.

Moreover, “in the price-sensitive economic world we now live in, FormFactor, Inc. (NASDAQ:FORM) is positioned nicely to benefit from the strong demand for copper pillar packaging, which should be a significant growth driver for the company” as well (Seeking Alpha).

Bottom line

In all, these three not-so-well-known companies offer compelling growth prospects at reasonable valuations. Exploiting diverse niches that will benefit from the increasing demand for technology globally, OmniVision Technologies, Inc. (NASDAQ:OVTI), Maxwell Technologies Inc. (NASDAQ:MXWL), and FormFactor, Inc. (NASDAQ:FORM) seem poised to grow. Consider adding them to your portfolio.

Damian Illia has no position in any stocks mentioned. The Motley Fool recommends FormFactor. The Motley Fool owns shares of FormFactor, Inc. (NASDAQ:FORM).

The article 3 Promising Stocks in the Electronic Components Industry originally appeared on Fool.com.

Damian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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