Switches, sensors, components and controllers are the guts of electronic devices and we largely take them for granted. It is nevertheless a sizable business opportunity for Japan's Alps Electric (OTCPK:APELY) and the company has generated high single-digit growth in recent years by supplying electronic components to the auto OEM and consumer electronics markets (smartphones in particular).
While providing camera actuators for smartphone companies like Apple (NASDAQ:AAPL) has been a good business for Alps, it has also been volatile and management at Alps believes that it will be harder and harder for phone developers to stand out in the market. With that, Alps is looking to new products in autos and consumer products to drive the next leg of revenue growth and margin leverage.
The next few quarters should see Alps report stronger financials, and that can re-ignite investor enthusiasm for these shares. While I believe the shares are somewhat undervalued today, I'd note that a low single-digit revenue growth rate may end up being conservative if the company's efforts in advanced auto electronics and haptics pay off.
Alps Electric Looks To Drive Back Up The Mountain