Key Tronic Corporation (KTCC)

[Emerging Growth]

Key Tronic Corporation (NASDAQ: KTCC) is a good company to park money with. It is one of the leading firms in electronic manufacturing devices. It provides engineering services, materials management, in-house testing and worldwide distribution from its facilities in the United States, Mexico and China.

Its key strengths include engineering expertise in electronics, mechanical engineering and precision plastics coupled with high-quality, low-cost production and assembly on a global scale. Its customers include major original equipment manufacturers (OEM).

For the first quarter of the fiscal year 2013, it reported good financial results. Revenues were up 40% to $69.8 million. Net income came in at $3.7 million, or diluted per share earnings of $0.35. This is up 200% compared to the same period last year. For the last 5 years, sales have grown by 11%. This yields to per share earnings growth of 16.73%. It recently issued a second quarter 2013 guidance saying that earnings per share will be in the range of $0.32 to $0.38 per share. If its estimated earnings per share will be achieved, run-rate earnings will be at $1.46 per share. This translates to a growth of 32% compared to the prior year.

Management’s Plan to Yield Better Shareholder Returns

For the last year, the stock price has grown by 88% as the company generated significantly increased cash flows for the year. One of the key factors why the company is poised for growth is their strategy to pursue and expand their product portfolio to the EMS market.

KTCC plans to aggressively pursue the EMS business in a wide range of industries. Its key programs include consumer plastic products and electronics, medical devices, specialty printers, gaming, telecommunications, automotive, educational equipment, computer accessories, industrial tools and controls and power management products.

According to the research firm IDC, the EMS market is expected to grow by 6.5% per year for the coming years. Even other companies in the space are forecasted to post better than expected financial results. Rogers Corp. (NYSE: ROG) has witnessed increased earnings estimates amid improved third quarter 2012 results and strong outlook for the quarter ahead. Sparton (NYSE: SPA) is also on its way to full recovery after a period of operating losses and near bankruptcy experience during the financial crisis of 2008. For fiscal 2012, its results have been impressive with sales increasing by 10%.

At present, Key Tronic trades at depressed levels of 8.29 times earnings. The market has yet to discount its future prospects given that the computer peripherals industry has yet to gain traction. Early investors on this stock could be rewarded as the company is expected to posts better than expected results for the coming quarters.

Get the whole story here:
http://emerginggrowth.com/emerging_growth_stock_picks/key-tronic-corp-nasdaq-ktcc-a-value-stock-in-a-growing-industry/01/23/2013