2 Unloved Stocks Outperforming the Market — And Their Customers
These under-the radar names are posting returns that blow away those of their better-known customers.
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It’s fascinating how some stocks seem to get all the attention, while others go completely unnoticed. Sometimes this happens because a stock simply isn’t part of a well-known or widely followed sector.
For example, there are companies that fall into the category of distribution and logistics. These companies help manage supply chains by finding and supplying parts that keep the wheels of business turning.
In the fast-moving world of business, the ability to acquire the right component at the right time is critical. Two companies that help provide these components to companies are putting up returns that blow away those of their better-known customers.
Arrow Electronics
Arrow Electronics (ARW) is having a fantastic year. The Colorado-based distributor of microchips, semiconductors, and electronic components and sensors has gained 105% year-to-date. Arrow counts Ford Motor Company (F) and Sanmina Corp. (SANM) among its largest customers.
Lately, the stock has been in consolidation mode, digesting its gains. Over the past four months, Arrow Electronics has formed a large saucer pattern (shaded yellow).
Arrow Electronics is on the verge of breaking out of that pattern. As of Thursday afternoon, the stock was trading just 1% below its all-time high.
Based on that formation, we’re placing a target price of $270 on Arrow Electronics.
Despite the stock’s outstanding gains, Arrow Electronics remains reasonably valued. The stock is currently priced at 14.5x 12-month trailing earnings, with a forward price-to-earnings ratio of about 10.
Arrow Electronics is scheduled to report earnings on October 29.
Avnet
The trailing 12-month valuation of Arrow Electronics compares favorably to competitor Avnet (AVT), which trades at nearly 25x trailing earnings. However, Avnet trades with a forward price-to-earnings ratio of just 9.
While Arrow Electronics has a market capitalization of $11.8 billion, Avnet is slightly smaller, with a market cap of just $8.4 billion.
Like Arrow Electronics, Avnet shares have more than doubled in 2026, gaining 107%. This Tempe, Arizona-based distributor connects component manufacturers with companies that need parts, supplying them with semiconductors, embedded computer systems, and electromechanical equipment.
Avnet is steadily rising along a six-month old bullish trendline (black dotted line) that closely matches the stock’s rising 50-day moving average (blue). The stock reached an all-time closing high of $103 last week, and trades less than 1% below that figure.
According to Fitch, Avnet services over 1 million customers around the world and ships over 200 billion units annually. The company’s next earnings report is scheduled for November 4.
Bottom Line
We’re opening long positions in both Arrow Electronics and Avnet. Arrow in particular seems attractive, as it’s on the verge of breaking out from a multi-month consolidation.
At the time of publication, Ponsi was long ARW and AVT.
