A prudent investment decision involves buying well-performing stocks at the right time while selling those that are at risk. A rise in share price and strong fundamentals signal a stock's bullish run.
Delphi Technologies PLC DLPH is a technology service stock that has performed well in the past three months and has the potential to sustain the momentum in the near term. Consequently, if you haven't taken advantage of its share price appreciation yet, it's time you add the stock to your portfolio.
What Makes it an Attractive Pick?
An Outperformer: A glimpse of the company's price trend reveals that the stock has had an impressive run on the bourse in the past three months. Shares of Delphi Technologies have returned 9.7%, which compares favorably with the S&P 500 Composite's gain of 0.4%.
Solid Rank & VGM Score: Delphi Technologies currently carries a Zacks Rank #2 (Buy) and has a Value Growth Momentum Score ( VGM Score ) of A. Our research shows that stocks with a VGM Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best investment opportunities for investors. Thus, the company appears to be a compelling investment proposition at the moment.
You can see the complete list of today's Zacks #1 Rank stocks here .
Northward Estimate Revisions: The direction of estimate revisions serves as an important pointer when it comes to the price of a stock. Over the last 30 days, the Zacks Consensus Estimate for current quarter earnings increased 1.6%. Estimates for 2018 and 2019 moved up 1.6% and 5.8%, respectively, over the same time frame.
Positive Earnings Surprise History: Delphi Technologies has a decent earning surprise history. The company's earnings surpassed the Zacks Consensus Estimate in two of the previous four quarters, delivering an average positive earnings surprise of 11.9%.
Strong Growth Prospects: The stock has long-term expected earnings per share growth rate of 10%. Moreover, earnings are expected to grow 10.4% in 2019.
Growth Factors: Delphi Technologies looks strong on the back of its vast geographic presence. The company operates in 24 countries, managing technical centers, manufacturing sites and customer support services. In 2017, it generated 72% of its net revenues from sales outside the United States. Region-wise, it is highly optimistic about opportunities from the Asia Pacific. Notably, net sales from this region grew almost 28% to $1.34 billion from 2015-2017. Asia Pacific can be considered as a key growth market, driven by increasing levels of vehicle production.
Delphi Technologies' regional presence coupled with its diversified and innovative product portfolio with updated technologies should help it become a solid choice for original equipment manufacturers (OEMs). This is because OEMS are focused on increasing efficiency and expanding their global manufacturing footprint by choosing suppliers with global scale who can easily adapt to regional variations. In 2017, within Powertrain Systems, 62% of net sales came from light vehicle OEM customers and 19% from commercial vehicle OEM customers. Additionally, in 2017, global vehicle production (including light and commercial vehicles) increased 3% from the previous year, including increases of 4% in Europe, 3% in China and 21% in South America. Meanwhile, global vehicle production is also expected to rise further in the OEM market, thereby opening up more opportunities for Delphi Technologies.
Delphi Technologies' growing cash position implies management's efficient execution in recent times. In 2017, the company had cash and cash equivalents of $338 million, which compares favorably with $101 million and $108 million of cash and cash equivalents, respectively in 2016 and 2015. Further, the company generated $389 million of cash from operating activities in 2017 compared with $372 million in 2016. The significant amount of cash provides it the flexibility to pursue any growth strategy. The company's strong cash flow generating abilities make it a value buy for investors.
Other Stocks to Consider
Some other top-ranked stocks in the broader Business Services sector include Mastercard Incorporated MA , FLEETCOR Technologies, Inc. FLT and WEX Inc. WEX . While Mastercard sports a Zacks Rank #1, FLEETCOR Technologies and WEX carry a Zacks Rank #2.
The long-term expected earnings per share growth rate for Mastercard, FLEETCOR Technologies and WEX is 19%, 16.5% and 14.3%, respectively.
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