Advanced Energy supplies precision-power products that transform raw electrical power from utilities into highly controlled and usable power for the semiconductor equipment, data-center, networking, industrial, and medical markets.
Both 5G networks and artificial intelligence are driving growth across the company’s markets. Advanced Energy aims to grow earnings at more than twice the pace of revenue. By 2023, management sees earnings per share reaching $7.50 (implying annualized growth of 14%) on revenue of $1.65 billion (5%).
For 2021, the consensus projects relatively conservative profit growth of 9%, leaving room for upside. The shares trade at 17 times estimated 2021 earnings, below the median of 20 for S&P 1500 Index technology stocks.
MoneyShow’s Top 100 Stocks for 2021
The top performing newsletter advisors and analyst are back, and they just released their best stock ideas for 2021. Get your FREE copy of MoneyShow’s 2021 Top Picks report here and see why the nation's leading investment experts believe these stocks will significantly outperform the market in 2021.
Backing up management’s confidence, the company in December initiated a quarterly dividend of $0.10 per share, starting in the March quarter. The dividend will consume just 10% of free cash flow and 9% of earnings, and Advanced Energy suggested there’s ample room for growth in coming years.
Advanced Energy has earmarked 15% of free cash flow for share repurchases, with the remainder going toward acquisitions, debt repayment, and reinvestment in the business. Advanced Energy is a Best Buy.