Key insights
- Sanmina Corp (SANM), a contract manufacturer specializing in printed circuit boards and outsourced manufacturing, has seen significant stock price appreciation (80% YTD, 200% TTM). This performance is attributed to strong earnings growth, favorable valuation, and stock price momentum, aligning with a broader swell of excitement in technology and increased capital expenditure (CAPEX) commitments. The company's strong performance and its inclusion in a mid-cap fund suggest positive momentum, though its low public profile indicates it may be an under-the-radar growth story.
Hennessy Funds Portfolio Manager Josh Wein joins Josh Lipton on Market Domination for "Good Buy or Goodbye," a segment that helps investors determine the best move for their portfolios. In this clip, the pair looks at Sanmina Corp (SANM), a contract manufacturer that is up 80% year to date.
been around for a while and and it never really gets much attention. So they're contract manufacturing. So companies are outsourcing the manufacturing of things like printed circuit boards. and it kind of stays behind the scenes.
Printed circuit boards, okay.
Yeah, so it's, you know, kind of anything that is outsourced, a lot of companies are designing the technology but not actually manufacturing it, and that's where Sanmina might come in.
Now, what are, walk me through the reasons of why you think, you know what, this is a smart name to commit capital to.
Yeah, so it's a holding in the Hennessy Cornerstone Midcap 30 fund and so it's a rules based rules based framework. So we're looking at earnings growth, uh valuation and stock price momentum. So, its inclusion in the fund as of several months ago was predicated on those three pillars. Um, and certainly, you know, since inclusion, the stock's continued its its climb higher and uh, you know, obviously it's been caught up in this in this swell of excitement around all things technology.
Yeah, caught up is right. I mean, this stock, it's been a monster, Josh. I mean, this it's up around 80% already this year. It's up around 200% over the past 12 months. What explains that exactly?
Why are so many folks piling into this one?
Yeah, I think that, you know, everything we hear about CAPEX is very real. I mean, it's actual cash that's being committed to buying equipment and
That is sharp.
And it's it's crazy. Yeah. Yeah, I mean it it I don't remember the last time I saw this mentioned on TV or anywhere or read about it. It's just they've been in the in the shadows for many years and and this is their time and and there are a lot of ways to play technology or AI. This might be not, you know, certainly not the most prominent way, but it's a way and uh
When When a stock is up though, 200% in 12 months, Josh, that would seem to be pricing in a lot of good news. Right? How should I be thinking about valuation on a name like this?
Yeah, I mean the valuation is still attractive. And I think it's it's the same with, you know, we don't cover Nvidia per se or or own much of it. But, you know, all these names, they've been up a lot, but I think it's the market catching up with this ever increasing reality of of spending and demand. Uh, it it
So the demand's there, the fundamentals
Yeah, the demand's there. Yeah, you look at all these companies free cash flow is is there. It's not just earnings without free cash flow. There's free cash flow, there's there's growth in that, you know, strong margins. And uh, yeah, it's it's incredible.