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What makes a company’s stock price go up? Well, unless you’re addicted to Reddit and Wallstreetbets or whatever those dopes are doing in there, it’s only three things. Earnings, earnings, earnings. Given this fact, would you like a company that has posted 134 consecutive profitable quarters? I would.
How do they do it? Their ability to quickly anticipate and adapt to changes in the marketplace by executing and managing resources, maximizes optimal business outcomes. Their focus on value enables them to apply their resources only on those activities important to their associates, customers, vendors and – yes - shareholders. Consistent forecasted free cash flow enables increase in share repurchases, which pumps up the stock price. Okay….I won’t keep you in suspense.
Today I bought stock in SNX at 102.96. I will sell it in 4-6 weeks at 118.92. Here’s why I like SNX.
Here’s a quick look at a delicious chart:
You’ll quickly note that SNX is up over 224% over the last 12 months. Meanwhile its PE ratio is only 9.8. That is incredibly cheap for this growth stock…...a high tech growth stock!
SYNNEX Corporation (NYSE: SNX), is a leading provider of distribution, systems design and integration services for the technology industry. They will be reporting earnings next week, but I am boldly coming in before earnings. Why? Because last quarter was awesome and the earnings momentum has not had any headwinds at all.
Here are their Fiscal 2020 Highlights:
Revenue was $20.0 billion, up 4.8% from the prior fiscal year. Operating income was $521 million, or 2.6% of segment revenue, compared to $519 million, or 2.7% of segment revenue, in the prior fiscal year. They grew their revenue and earnings during the pandemic! How did they do it? Remote work. Remote learning. Of course when COVID disappears a lot of people are going to go back into the office and the classroom, but some of the remote activity is here to stay. There are going to be lots of companies that are going to have employees come in only 3 days a week. The 4 day work week will likely be a staple. SNX stands to benefit from all of this!
Synnex successfully spun off their Concentrix business and now they can stay focused on their high margin IT distribution business. Synnex over the last decade has asked itself whether it makes sense to separate its Synnex and Concentrix business into two given the distinct nature of the two. Well, they did it.
Founded in 1980, SYNNEX Corporation is an industry leader in IT distribution, providing comprehensive logistics, integration services, and technology solutions to help their customers and business partners grow and enhance their customer-engagement strategies. SNX distributes more than 30,000 technology products from more than 500 of the world’s leading and emerging manufacturers and provide complete solutions to more than 20,000 resellers and retail customers in the U.S., Canada, and Japan. As part of their value-added services, SYNNEX provides a variety of professional and marketing services, including demand generation, education and training, pre- and post-sales support, end-user enablement, server assessment, design and integration, product lifecycle support; contract design and assembly, and IT resource planning. In addition, SYNNEX provides a wide range of financial options to ensure that their partners always have the means to close deals. Never mind all that. Ask yourself one question. Are consumers using MORE or LESS electronics? Do you expect them to use MORE or LESS in 2021? If your answer to the question is MORE, then there is no reason not to own SNX stock.
The company's profitability is robust, driven by an expanding operating margin, returns that outperform over half of its competitors in a very stable business condition environment. Synnex is not a Mickey Mouse company. They collaborate with Microsoft, Cisco, Intel, you name it. The diversity of their customer base provides protection against any one downturn in any particular sector. That’s why they have been profitable for a bazillion quarters in a row.
When you look at this company’s PE of less than 10, you can’t help but agree with management’s strategy to continue to buy back stock. This is a screaming signal to Wall Street that SNX is an incredible value. They have noted that they intend to invest at least 30% of their free cash flow to dividends and share buybacks. Since I mentioned the dividend, they do pay a yield of 0.8%. That’s not spectacular, but it’s a heck of a lot better than what you’d get in a CD these days. The cash reserve is plentiful as their balance sheet is very solid - debt to earnings ratio is only 2.3.
If you follow the school that a rising tide lifts all boats, the whole tech sector is going to be flooded! Over the long term, the Tech sector is going to benefit from unlimited digitization across the economy, and greater acceptance of transformative technologies. Data demand is exploding because of mobile internet, video on the web, social networking and other factors. Prevailing trends in the global information society - including collaboration, virtualization, cloud, social networking, and exponential growth in "big" file-based data - are driving the need for more network "intelligence," meaning security, efficiency, extensibility, personalization, and sophisticated data management. Everyone under the age of 30 does everything on their smartphones now. The PE ratio for the Tech sector in 2021 looks to be about 28, compared to the market multiple of 23. Looking at SNX, with it’s PE under 10, they have a lot of runway and a giant safety net.
You know they always say, don’t poke the bear. Well when it comes to Synnex CEO, Dennis Polk, there is no poking going on. No joking either. Here’s what he has to say:
“I’m very proud of the accomplishments of the SYNNEX team in 2020, especially so against the backdrop of a very challenging environment. I would also like to thank both the SYNNEX and Concentrix teams for their diligence in completing the spin-off on December 1. For the SYNNEX TS business, our record top line performance in the fourth quarter was driven by broad-based demand across all our platforms as the remote work, learn and consume trends continued. Our revenue growth, along with seasonally high Q4 leverage benefits drove solid profit and returns as well. Consistent with Q2 and Q3, demand remained strong in products such as notebooks, Chromebooks, cloud, collaboration and security. This was evident in both our commercial and retail distribution businesses.
Turning to our outlook, our priority remains on the health and safety of our associates. Overall, we are optimistic about fiscal ’21 given the start of vaccine rollouts and we are hopeful our world returns to a closer sense of normalcy over the next year. With this occurring, we expect that business investment will increase, especially in IT. For our Q1, with continued execution we anticipate our business will grow slightly better than the market for the quarter. Continued demand for our products and services related to remote work, learn and consume, combined with the remaining backlog we have provides us a base level of confidence in our forecasts. For fiscal ’21, using our Q1 forecast as a base, we expect the rest of fiscal ’21 to progress in-line to the seasonal patterns of 2018 and 2019. In closing, our strategy of optimizing our core business, investing in organic opportunities and targeting strategic M&A to enhance our portfolio will continue to provide us with opportunities to grow moving forward. This strategy, along with the drive, determination of the SYNNEX team, coupled with the excellent partnerships with our customers, vendors and the communities we operate in support my confidence about the future for SYNNEX.”
I am on board. Let’s do this! Go SYNNEX!!
$$$MR. MARKET$$$
How do they do it? Their ability to quickly anticipate and adapt to changes in the marketplace by executing and managing resources, maximizes optimal business outcomes. Their focus on value enables them to apply their resources only on those activities important to their associates, customers, vendors and – yes - shareholders. Consistent forecasted free cash flow enables increase in share repurchases, which pumps up the stock price. Okay….I won’t keep you in suspense.
Today I bought stock in SNX at 102.96. I will sell it in 4-6 weeks at 118.92. Here’s why I like SNX.
Here’s a quick look at a delicious chart:
You’ll quickly note that SNX is up over 224% over the last 12 months. Meanwhile its PE ratio is only 9.8. That is incredibly cheap for this growth stock…...a high tech growth stock!
SYNNEX Corporation (NYSE: SNX), is a leading provider of distribution, systems design and integration services for the technology industry. They will be reporting earnings next week, but I am boldly coming in before earnings. Why? Because last quarter was awesome and the earnings momentum has not had any headwinds at all.
Here are their Fiscal 2020 Highlights:
Revenue was $20.0 billion, up 4.8% from the prior fiscal year. Operating income was $521 million, or 2.6% of segment revenue, compared to $519 million, or 2.7% of segment revenue, in the prior fiscal year. They grew their revenue and earnings during the pandemic! How did they do it? Remote work. Remote learning. Of course when COVID disappears a lot of people are going to go back into the office and the classroom, but some of the remote activity is here to stay. There are going to be lots of companies that are going to have employees come in only 3 days a week. The 4 day work week will likely be a staple. SNX stands to benefit from all of this!
Synnex successfully spun off their Concentrix business and now they can stay focused on their high margin IT distribution business. Synnex over the last decade has asked itself whether it makes sense to separate its Synnex and Concentrix business into two given the distinct nature of the two. Well, they did it.
Founded in 1980, SYNNEX Corporation is an industry leader in IT distribution, providing comprehensive logistics, integration services, and technology solutions to help their customers and business partners grow and enhance their customer-engagement strategies. SNX distributes more than 30,000 technology products from more than 500 of the world’s leading and emerging manufacturers and provide complete solutions to more than 20,000 resellers and retail customers in the U.S., Canada, and Japan. As part of their value-added services, SYNNEX provides a variety of professional and marketing services, including demand generation, education and training, pre- and post-sales support, end-user enablement, server assessment, design and integration, product lifecycle support; contract design and assembly, and IT resource planning. In addition, SYNNEX provides a wide range of financial options to ensure that their partners always have the means to close deals. Never mind all that. Ask yourself one question. Are consumers using MORE or LESS electronics? Do you expect them to use MORE or LESS in 2021? If your answer to the question is MORE, then there is no reason not to own SNX stock.
The company's profitability is robust, driven by an expanding operating margin, returns that outperform over half of its competitors in a very stable business condition environment. Synnex is not a Mickey Mouse company. They collaborate with Microsoft, Cisco, Intel, you name it. The diversity of their customer base provides protection against any one downturn in any particular sector. That’s why they have been profitable for a bazillion quarters in a row.
When you look at this company’s PE of less than 10, you can’t help but agree with management’s strategy to continue to buy back stock. This is a screaming signal to Wall Street that SNX is an incredible value. They have noted that they intend to invest at least 30% of their free cash flow to dividends and share buybacks. Since I mentioned the dividend, they do pay a yield of 0.8%. That’s not spectacular, but it’s a heck of a lot better than what you’d get in a CD these days. The cash reserve is plentiful as their balance sheet is very solid - debt to earnings ratio is only 2.3.
If you follow the school that a rising tide lifts all boats, the whole tech sector is going to be flooded! Over the long term, the Tech sector is going to benefit from unlimited digitization across the economy, and greater acceptance of transformative technologies. Data demand is exploding because of mobile internet, video on the web, social networking and other factors. Prevailing trends in the global information society - including collaboration, virtualization, cloud, social networking, and exponential growth in "big" file-based data - are driving the need for more network "intelligence," meaning security, efficiency, extensibility, personalization, and sophisticated data management. Everyone under the age of 30 does everything on their smartphones now. The PE ratio for the Tech sector in 2021 looks to be about 28, compared to the market multiple of 23. Looking at SNX, with it’s PE under 10, they have a lot of runway and a giant safety net.
You know they always say, don’t poke the bear. Well when it comes to Synnex CEO, Dennis Polk, there is no poking going on. No joking either. Here’s what he has to say:
“I’m very proud of the accomplishments of the SYNNEX team in 2020, especially so against the backdrop of a very challenging environment. I would also like to thank both the SYNNEX and Concentrix teams for their diligence in completing the spin-off on December 1. For the SYNNEX TS business, our record top line performance in the fourth quarter was driven by broad-based demand across all our platforms as the remote work, learn and consume trends continued. Our revenue growth, along with seasonally high Q4 leverage benefits drove solid profit and returns as well. Consistent with Q2 and Q3, demand remained strong in products such as notebooks, Chromebooks, cloud, collaboration and security. This was evident in both our commercial and retail distribution businesses.
Turning to our outlook, our priority remains on the health and safety of our associates. Overall, we are optimistic about fiscal ’21 given the start of vaccine rollouts and we are hopeful our world returns to a closer sense of normalcy over the next year. With this occurring, we expect that business investment will increase, especially in IT. For our Q1, with continued execution we anticipate our business will grow slightly better than the market for the quarter. Continued demand for our products and services related to remote work, learn and consume, combined with the remaining backlog we have provides us a base level of confidence in our forecasts. For fiscal ’21, using our Q1 forecast as a base, we expect the rest of fiscal ’21 to progress in-line to the seasonal patterns of 2018 and 2019. In closing, our strategy of optimizing our core business, investing in organic opportunities and targeting strategic M&A to enhance our portfolio will continue to provide us with opportunities to grow moving forward. This strategy, along with the drive, determination of the SYNNEX team, coupled with the excellent partnerships with our customers, vendors and the communities we operate in support my confidence about the future for SYNNEX.”
I am on board. Let’s do this! Go SYNNEX!!
$$$MR. MARKET$$$
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