Volex PLC (VLX.L) manufactures and supplies power products and cable assemblies in North America, Europe, and Asia. The company designs, manufactures, and sells power cords, duck heads, and related products to manufacturers of a range of electrical and electronic devices and appliances for use in laptops, PCs, tablets, printers, TVs, games consoles, power tools, kitchen appliances, and electric and autonomous vehicles. It also designs, manufactures, and sells a range of assemblies and connectors comprising high-speed copper cables, and multi-branch high reliability systems that transfer electronic, radiofrequency, and optical data for use in various applications, such as medical equipment, data networking equipment, data centers, wireless base stations, mobile computing devices, factory automation, and vehicle telematics.
The chart of VLX.L is shown above with the price data in candlestick format. The green line study above the price shows the VectorVest valuation of the company which is significantly higher than the current share price.
In the window below the price, the blue study shows that forecast Earnings per share (EPS) is rising strongly and this is the engine that’s been driving the share price upwards. Over the past year EPS has risen from 12p to 19p. Although not shown the increase in EPS over the last 5 years from 2p to 19p is equally impressive.
On VectorVest, the earnings safety (known as RS) is ranked as good. The metric measuring long-term share price appreciation potential in relation to a AAA rated corporate bond (known as RV) is showing an excellent value. VLX.L has a forecast Earnings Growth Rate (GRT) of 25% which VectorVest considers to be excellent.
Technically, VLX.L has been trading in a range since February 2021 after a strong upward move in the latter part of 2020. The share is presently attempting to break out of this range at the fourth attempt. A trader of yesteryear called W D Gann always insisted that markets break out on the fourth attempt.
In summary, VLX.L has an excellent combination of both earnings growth and earnings safety. The share is markedly undervalued and technically is on a Buy recommendation on VectorVest with a stoploss upon a close below 350p. The stoploss is shown on the above chart by the blue line study just below the price data and is calculated each day by the VectorVest program.