A Rich Small-Cap Ecosystem: Zacks Electronics Components Industry

Electronics-Miscellaneous Components is mostly a small-cap industry. It holds 35 companies. This large number of firms makes the niche a lively, diverse and complex environment.

To better understand products in it, electrical engineers classify components as active, passive or electromechanical.

  • Active components  rely on a source of energy and usually inject power into a circuit.A battery is a one example. Semiconductors are the largest group of active components. Displays are here (LED, LCD). This group also includes amplifying components like transistors.
  • Passive components can’t supply energy. Resistors and capacitors and antennas fall here.
  • Electromechanical components carry out electrical operations. They use moving parts. Think of power cords and switches.

There is plenty more to explore. Learn by clicking through a number of business descriptions on Zacks.com.

And it is a HOT stock space. The industry currently has 5 Zacks Rank #1 (STRONG BUY) stocks and 9 Zacks Rank #2 (BUY) stocks. Those 14 stocks are the place to focus your attention.

Rewards are materializing for shareholders, too. The YTD return of the S&P 500 stands at +12.4%. The Electronics Components industry has returned +26.3%.

Why that outperformance? As semiconductor chipmakers and downstream electronics businesses grow volume smartly, so do suppliers of components to them.

The current Zacks Industry Rank is #28 out of 265 (top 11%), having risen from #35 last week. A top industry score, particularly on an industry with this many firms, is a solid niche to mine for great stocks.

In recent weeks — a time leading into the coming third quarter earnings season — estimate revisions have been rising across the board. In this time, 10 covering analysts raised estimates on companies. Only 1 lowered them.

Also, there seems to be a nascent trading rotation into small-cap stocks. These indexes haven’t been the place to be for some time. That may be changing.

As this small-cap…

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