Seeking out the lesser-known companies that are benefitting from the pandemic and performing well in the market makes a lot of sense at this time. These companies might not be the names that receive the most headlines, but they are still generating strong returns for investors that are savvy enough to recognize the opportunities that they present. We’ve seen a lot of software and technology companies rallying throughout the year thanks to more people working remotely and companies moving their operations into the digital age. While many investors are interested in the most popular names, another idea is to consider adding shares of a lesser-known company that is benefitting from the same trends.
Logitech (NASDAQ:LOGI) is a company that manufactures computer peripherals and has quietly made its way to all-time highs this year. After a strong earnings report that confirms the company has been a big beneficiary of work from home trends and the increasing popularity of video games, the stock might be worth adding. Let’s take a closer look at Logitech stock below and decide whether or not it’s a good addition to your portfolio.
Products for Remote Workers, Gamers, and Computer Users
Logitech is a company with products that are seeing a huge bump in demand thanks to the pandemic. It primarily designs, manufactures, and markets products that help people stay connected via computers, video games, music, and other digital platforms. Think of Logitech’s products as a way to instantly upgrade your computer and gaming equipment. Some of its best selling products include webcams, gaming controllers, Bluetooth headsets, keyboards, and mice. Each one of its products has something unique to offer people in an increasingly technology-centric world. The big selling point with Logitech’s products is that they offer added comfort, functionality, and flexibility to anyone with a digital device.
There’s a lot to like about Logitech’s business model. It focuses on directly appealing to consumers and businesses with add-on devices for their computers and digital gaming devices that improve the overall user experience. Its products are easy to install and typically feature integrated software that allows for seamless compatibility on multiple different devices. Logitech is also a company that understands the value of managing its supply chain. It uses a combination of in-house and outsourced manufacturing along with strong relationships with its network of sellers. Logitech sells its products directly to retailers and through distributors as well, which has allowed the company to develop a strong brand name amongst tech-savvy individuals.
Record Q2 Sales Confirm Logitech is Capitalizing on Market Trends
Logitech reported its Q2 earnings today and there were several noteworthy details. We know that more people than ever before are working remotely, gaming, and trying to stay connected digitally this year, so it makes sense that Logitech would see a bump in sales. However, not many were expecting Q2 sales growth of 75% year-over-year. The company reported Q2 sales of $1.26 billion, which was the first time that the company’s quarterly sales exceeded the billion-dollar mark.
If the Q2 sales number wasn’t impressive enough, Logitech also saw its GAAP operating income increase by 372% year-over-year in Q2. Q2 earnings per share also increased by 263% year-over-year. These staggering increases confirm the company’s growth story and led Logitech management to raise its annual outlook, another sign of strength for investors to keep in mind. The stock rose over 15% in the trading session following the earnings release and is up over 90% year-to-date.
Logitech a Buy?
The big story here is that the remote work culture that is becoming the new norm has increased the demand for high-quality computer products and accessories. You also have the rise of gaming as a spectator and participant sport that is driving demand for Logitech’s products upwards. With students taking virtual classes, corporate meetings taking place over video chats, and videogames keeping people entertained throughout the pandemic and beyond, it’s hard to imagine a better situation for continued growth with a company like Logitech.
While it can be difficult to buy a stock at all-time highs, as long as this stock holds its earnings gap and stays above $90, it’s reasonable to think that there’s more upside in store. Regardless of the short term price action, this stock can be a strong buy for investors that are interested in a lesser-known stock that is capitalizing on some of the most powerful secular growth trends at this time.