Smart money backs this tech distributor's stock while others look away
A major electronics distributor sees its stock price drop due to market downturn‚ but top investors are quietly buying in. Twelve elite fund managers believe this company is ready for a comeback
The best time to buy cyclical stocks is when business looks bad - thats exactly whats happening with a tech giant right now
Arrow Electronics faces a tough year with earnings-per-share down 50% from its covid-era peak. However 12 top-rated fund managers (ranked in top 3% globally by Citywire) are betting on its comeback; giving the company a triple-A smart-money rating
It strikes us as a very well-run distributor thats a very important part of the ecosystem it operates in
The companyʼs strength comes from its wide-reaching operations - it runs 180 locations across 85 countries with tech-smart staff (many of them engineers) helping clients design new products. The business splits into two main parts: components distribution which makes up 77% of sales; and IT systems setup. Semiconductors are key here making up 4/5ths of component sales
Post-covid inventory problems hit hard: customers had too much stock and Arrowʼs own warehouse was full - this led to debt going up from $1.8B to $3.6B between late-20 and late-22. But things are getting better now with debt expected to drop to $2.1B by years end
The company has some good points that make it look cheap:
- Strong cash-flow history
- Share count down 60% since 07 due to buybacks
- Trading at just 6.7x projected 2026 earnings
- New China stimulus could help Asian sales
- Signs of semiconductor market recovery
The inventory mess should clear up by december and CEO Sean Kerins says theyʼre “bumping along the bottom“. With smart money betting on recovery its time to take notice of this overlooked tech stock
