30 years of compound growth and an engine called data centers
The best long-term investments are often the most boring and least conspicuous. While the market's attention is fixed on companies that make chips for artificial intelligence, there is a giant that profits from the same boom without everyone writing about it. It makes unobtrusive but indispensable components, connectors, cables and interconnects that hold the entire complex world of electronics together. Without them, not a single data center, satellite, or electric car would work.
Key points
Over the past 20 years it has earned shareholders 22.9% annually, more than double the S&P 500 index. Quietly, without a single big bang.
It makes unobtrusive connectors and interconnects that no AI data center can do without. This segment jumped by 89%.
It grows in a unique way: it bought over 50 companies in ten years and lets them run independently as entrepreneurs.
A price-to-earnings ratio of 37 looks expensive, but relative to its growth rate the stock is actually cheap according to one key metric.
Orders reached a record $10.7 billion. For every dollar of revenue it has $1.23 of new orders booked.
The company in question is a world leader in this boring but indispensable field and ranks among the most successful stocks of recent decades overall. Over the past twenty years it has earned its shareholders over 22% annually, more than double the broad US market. And remarkably, it has done so without a single spectacular discovery, without a charismatic founder, and without a single ground-breaking bet. Instead, it has grown quietly and patiently for decades thanks to one brilliant and unusually modest recipe.
And right now this quiet compounding machine finds itself at the epicenter of the biggest technology boom of our time. Artificial intelligence requires enormous data centers, and those are literally threaded with hundreds of thousands of high-speed interconnects made by this company. Its revenue from this area has exploded and the company is reporting record numbers. The question for investors is whether this is a passing wave or the start of a long growth era, and whether a quality company is still worth buying after a sharp rise in its stock price.
So the question is not whether it is an exceptionally high-quality company. Its results over decades speak for themselves. The question is whether today's high growth rate will last, whether the price is still reasonable after the rocket-like rise, and how big the risk is that the AI boom will cool off. The answer, along with detailed valuation, target prices and scenarios, is discussed in the paid section.