I love to buy new gadgets.
The fact that I don’t need a new pair of headphones or gaming console doesn’t stop me.
It drives my wife crazy.
But I’m no different than millions of Americans willing to spend hundreds on new electronic goodness.
With the holiday shopping season in full swing, consumer electronics companies rush to get their latest products into people’s hands.
In most cases, those items fly off the shelves faster than they can be restocked.
Using Adam O’Dell’s six-factor Green Zone Ratings system, I found a company that dominates the consumer electronics market. Its stock rates in the green across five of the six factors we use to analyze stocks.
The company raised its total revenue by 11% from 2020 to 2021 … and I think it will continue reaching higher.
We’re “Strong Bullish” on this electronics stock, which means it’s poised to beat the broader market by at least three times over the next 12 months.
Let’s see why investors should buy this electronics stock now.
Consumer Electronics Spending on the Rise
Americans love to buy consumer electronics.
From televisions to headphones, we’ll throw down hundreds, even thousands, of dollars.
In 2021, the consumer electronics industry should grow 4.3% year-over-year — marking the third-highest growth rate for the industry since 2012.
In 2017, Americans spent $48.4 billion on consumer electronics purchases online. That grew to almost $70 billion in 2020.
According to the latest Statista Digital Market Outlook, consumer electronic spending online will reach more than $88 billion by 2025 — a 26% jump from 2020. And that doesn’t count in-store purchases.
Investors can find big profits in this trend.
Consumer Electronics Market Dominance: Sony Group Corp.
Sony Group Corp. (NYSE: SONY) is a Japanese company that designs, develops, produces and sells electronic equipment, including:
- Televisions.
- Video and sound products.
- Mobile phones.
- Cameras.
- Tablets.
- Headphones.
- Semiconductors.
In addition to electronics, the company also:
- Produces, markets and distributes music.
- Produces, acquires and distributes live-action and animated movies.
Sony is diversified across the electronics and entertainment sectors. But one of its most popular products is its PlayStation line of video game consoles. The PlayStation 5 makes headlines every day as Sony has dealt with supply issues since its release last year.
In 2019, Sony’s total annual revenue was $78 billion. That revenue dropped to around $76 billion in 2020 as the COVID-19 pandemic curbed consumer discretionary spending.
Sony has rebounded out of the pandemic. Its total revenue has increased by 11% from 2020 to 2021.
The company expects its top-line revenue to continue growing in a big way … reaching $97 billion by 2024.
That’s a 24.4% increase from 2019.
Sony’s stock hit a low of around $92 per share just before Christmas 2020. Holiday sales across the board struggled due to the COVID-19 pandemic.
The electronics stock bounced up to $116 by February 2021 before some volatile trading months. It powered higher from May to just before the recent market sell-off.
However, the Black Friday market drop of more than 2% pushed Sony stock down less than 1%. It’s proof that SONY’s “maximum momentum” before the drop is sustainable.
Sony Group Corp.’s Stock Rating
Using Adam’s six-factor Green Zone Ratings system, Sony Group Corp. scores an 86 overall. That means we are “Strong Bullish” on the electronics stock and expect it to outperform the broader market by three times in the next 12 months.
Sony Group Corp.’s Green Zone Rating on Nov. 29, 2021.
Sony’s stock rates in the green in five of the six factors we use to rate stocks:
- Volatility — Despite up and down stock movement to start 2021, SONY has been on a tear since May … meeting little price resistance along the way to a new 52-week high. The company scores a 95 on volatility.
- Growth — Sony has a 1-year sales growth rate of 13.3% and a 1-year earnings per share growth rate of 106.99%. SONY earns a 79 on growth.
- Momentum — Since May 2021, Sony’s stock price has jumped from $93 to a high of $125 per share prior to the Black Friday market sell-off — indicating it is in line for what Adam calls “maximum momentum.” The company scores a 78 on momentum.
- Quality — Sony boasts double-digit returns on equity and investment — both beating or in line with the computer hardware sector. The company operates with a gross margin of 41% compared to the industry average of just 34%. SONY earns a 75 on quality.
- Value — All of Sony’s price-to ratios (earnings, sales, cash flow and book) are at or below industry averages — including a price-to-book ratio of 2.39 compared to the industry average of 3.66. Sony scores a 72 on value
Sony scores a 10 on size because of its $153 billion market cap (shares outstanding times current share price).
Bottom line: Our thirst for the latest and greatest electronics isn’t going away.
And Sony is a consumer electronics specialist. From televisions and headphones to the hot PlayStation 5 gaming console — which is virtually nonexistent in stores today — Sony is a go-to for hot new gadgets.
As we get deeper into the holiday shopping season, that hunger for new electronics will grow.
That’s why Sony Group Corp. is a stock worth considering for your portfolio.
Safe trading,
Matt Clark, CMSA®
Research Analyst, Money & Markets
Matt Clark is the research analyst for Money & Markets. He is a certified Capital Markets & Securities Analyst with the Corporate Finance Institute and a contributor to Seeking Alpha. Prior to joining Money & Markets, he was a journalist and editor for 25 years, covering college sports, business and politics.
