Occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics will be unpredictable. But there are plenty of opportunities these days for those with a strong stomach and a long-term time horizon. One stock to consider is Jabil Inc. (JBL), counsels John Buckingham, editor of The Prudent Speculator.

Shares of Jabil pulled back more than 3% recently, even as fiscal Q2 2023 results exceeded expectations. The electronics concern reported EPS that beat the consensus estimate ($1.88 vs. $1.85). Revenue also came in higher than the Street target, rising 8% year-over-year to $8.13 billion, driven by 5% growth in the firm’s Electronic Manufacturing segment and 8% growth in the Diversified Manufacturing segment.

JBL’s operating margin was 5.1%, which was a 0.2% improvement from the first half of 2022. Chief Financial Officer Michael Dastoor commented:

“Growth year-to-date, has been headlined by areas of our businesses experiencing long-term secular growth trends, offset slightly by some of our more consumer-centric markets, and semi-cap. The team’s impressive performance to the first half of our fiscal year, despite what continues to be an extremely dynamic macroeconomic environment underscores the strength of our diversified portfolio and the improved resiliency of our business.”

For 2023, Jabil expects revenue around $34.5 billion, driven by an improved business mix and favorable operating leverage. Core EPS is expected to come in around $8.40 for the year and the free cash flow target is $900 million.

JBL bought back 1.7 million shares for $127 million in Q2, leaving $975 million on the existing share repurchase program.

JBL shares were recently up 16% this year amid a broadly unfavorable equity market. We think the inexpensive P/E multiple (9 times the NTM estimate) can expand as can the bottom line itself. We like the exposure JBL brings to multi-year tailwinds that we still see in Cloud, 5G and the electrification of automobiles. Our Target Price has been raised to $99.

Recommended Action: Buy JBL.

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