Gathering New Information about Stocks, Health, and Sports

         The technology sector has plenty of industries that are currently undervalued or that have strong growth potential. The printed circuits boards industry is one of these defined regions. Companies in this industry include market capitalization leader Flextronics and mid-cap equities: Solectron and Sanmina-SCI. However, another mid-cap company, Jabil Circuit (JBL) is really intriguing to look at. The five billion dollar company really stands out from its competitors when it comes to a business plan and fundamentals. Therefore, Jabil has the potential to produce vivid capital gains for any investor.

         Examining Jabil's strategic plan, the company, according to Reuters, "is a provider of worldwide electronic manufacturing services and solutions." Manufacturing is a huge component of any business. Most companies depend on the services of corporations like Jabil to produce goods in the supply-chain that will ultimately flow from manufacturer to distributor to retailer. Jabil's business coincides with this process, as it builds circuit boards from huge corporations such as, according to Reuters, Cisco, Hewlett-Packard, IBM, and Nokia among others. All these companies have performed marvelously over the past year. Demand has been high, causing prices to increase, creating higher revenues, profits, and EPS numbers. These high figures do not only mean stronger share price growth for the aforementioned distributors or manufacturers, but the potential for higher share price growth for Jabil as well. If the economy continues to stimulate and demand on both the buy and sell side are high, Jabil should be the beneficiary. To further support this claim, the purchasing manufacturing index (PMI) has been above 50 over the past three months and has grown each of those months to a current figure of 54.7 (April 2007). If the PMI is above 50, there is evident expansion in the manufacturing sector, and companies like Jabil will benefit. Along with this favorable number, since the company also has worldwide services, there is even stronger support for Jabil to outperform the domestic market. Countries in Europe, Asia, and South America are reporting multi-year and historical highs in their respective indices. Since Jabil has design and repair centers in each of the aforementioned areas, a worldwide presence combined with domestic growth and strong manufacturing numbers will make this company a star share price performer.

         While the given analysis may be true, there can be an argument made that all the companies in this industry will experience the manufacturing benefits. Fortunately for investors of these companies, this is a true assessment. However, what makes Jabil stick out from its rivals comes from its financial outlook. Looking at revenue, Jabil has reported year over year quarterly growth of near 33.7%, according to Capital IQ. This number is far above Sanmina-SCI's -2.1% respective number and Solectron's 16.1% figure. Jabil's strong revenue has transcended to a revenue per share statistic of 45.2, which not only beats out Sanmina and Solectron, but covers Flextronics's 31.6 revenue per share. Jabil has also outperformed its rivals relative to operating margins with 3.6% trailing twelve month number compared to Flextronics's 2.6%, Sanmina's 1.3%, and Solectron's 1.6%.

         These strong top-line numbers have also transcended to net income and earnings as well. Jabil has seen quarterly earnings growth peak at around 8.2% year over year. While Flextronics's same numbers have been higher, Sanmina's and Solectron's figures are both negative. This strong net earnings growth also translates to a strong P/E ratio. Currently, Jabil is looking at a forward multiple near 14.6. While there are certainly other companies in this industry with better ratios, Jabil's multiple does beat out the industry's average of 31.5 and its trailing figure of 18.1. In addition, there are other multiples which Jabil should take pride in. Looking at its price to sales, enterprise value to revenue and enterprise value to EBITDA figures of 0.55, 0.50, and 8.15, all of these numbers, while not staggeringly different from its competitors, does suggest that the price of the company is not that high. While the company has not seen linear share price growth, none of its competitors have either. However, what separates Jabil from these rivals is the fact that it is trading below its 200 day SMA, as the company is near its 52-week low. While it may not be just to claim that Jabil is strictly undervalued, its current low share price and growing fundamentals may soon lead to just this conclusion. When this happens, there should be plenty of reasons for this share price to escalate to new levels.

         One other way to tell that Jabil is growing can be attributed to its PEG ratio of 0.96, with growth taken to account over the next five years. Any number under one indicates strong potential for continued low fundamentals to price, and considering Sanmina's and Solectron's numbers are both above one, this may be good initiative to begin to consider Jabil as a long term investment. What may also contribute to this feeling is the strong management Jabil has, which is contributing to this growth. CEO and President Timothy Main and the over 40,000 employees of this company have done a wonderful job relative to other industry-management teams. Jabil's ROE of 12.3% is better than the industry's low 3.8% as well as Flextronics's 8.8%, Solectron's 4.3%, and Sanmina's -3.4%. In addition, the company's ROA (5 years) of 4.1% is above the industry's 3.3%, and its ROI of 10.5% is also above the industry's 9.7%. As the Jabil recently purchased Varian Electronics Manufacturing, investors should feel more confident about the management team making similar decisions in the future, because of its strong management figures.

         Jabil is a great growing company that all investors should heed. It has a strong current ratio of 1.6 and a below-industry total debt to equity ratio of 0.14�making it great for the long term. The company also is trading near its 52 week low and has received multiple downgrades earlier in the year�a technical sign of future share price growth. As the fundamentals illustrate that this company has pretty much reached its support level, only green is the color investors should see with this company in their portfolio.

-Dennis Biray
May 4th, 2007