Could dirt cheap Volex be one of the best UK stocks to buy today?

If
I
had
to
put
together
a
list
of
top
UK
stocks
for
investors
to
consider
buying
for
the

long
term,
AIM-listed

Volex
(LSE:
VLX)
would
most
certainly
be
on
it.

It’s
an
under-the-radar
company
that
specialises
in
the
manufacturing
of
products
for
the
electric
vehicle
(EV),
data
centre,
and
healthcare
markets.

Here,
I’m
going
to
discuss
why
I’m
excited
about
this
UK
growth
stock.
Let’s
plug
in.

Excellent
trading
update

There
are
three
main
reasons
I’m
bullish
on
Volex
shares
today.
The
first
is
that
the
company’s
performing
well
at
the
moment.

In
a
trading
update
posted
this
morning
(18
April),
the
company
said
revenue
for
the
year
ended
31
March
is
expected
to
be
around
$900m,
up
25%
year
on
year.

Now
I’ll
point
out
that
this
increase
in
the
top
line
was
the
result
of
both
organic
growth
and
acquisitions.

However,
the
company
did
note
that
in
the
second
half
of
the
financial
year,
it
saw
continuing
increases
in
organic
revenue,
thanks
to
its
leading
positions
in
industries
with
structural
growth
characteristics
(eg
data
centres
and
medical
technology).

As
for
operating
profit,
Volex
said
this
is
likely
to
be

“slightly
ahead”
of
analyst
expectations.
It
also
noted
that
operating
profit
margins
improved
in
the
second
half
of
the
year.

Overall,
it
was
a
very
good
update.
And
this
is
reflected
in
the
company’s
share
price.
As
I
write,
the
shares
are
up
about
7%
on
the
day.

Long-term
growth
story

The
second
reason
I’m
bullish
is
that
the
company
has
positioned
itself
well
for
long-term
growth.
Thanks
to
its
exposure
to
fast-growing
markets
like
data
centres
(forecast
to
grow
by
around
10%
a
year
between
now
and
2030)
and
EVs,
revenues
should
continue
to
rise
in
the
years
ahead.

The
Group’s
presence
in
attractive
markets
and
its
well-invested
global
manufacturing
base
offer
significant
growth
opportunities.

Volex
full-year
trading
update

The
potential
for
long-term
revenue
growth
is
one
of
the
first
things
I
look
for
in
a
stock.
That’s
because
revenue
growth
drives
earnings
growth
which,
in
turn,
drives
share
price
growth.

It’s
worth
noting
here
that
Volex
is
targeting
revenue
of
$1.2bn
by
the
end
of
FY2027.
That
would
represent
top-line
growth
of
33%
in
three
years,
which
is
decent.

Very
low
valuation

Finally,
the
company
has
a
really
attractive
valuation
right
now.
Currently,
analysts
expect
it
to
generate
earnings
per
share
of
36.5
cents
for
the
year
ending
31
March
2025.
At
today’s
share
price
and
exchange
rate,
that
equates
to
a
forward-looking

P/E
ratio
of
just
10.5.

At
that
valuation,
I
see
room
for
substantial
share
price
gains
when
conditions
in
the
UK
stock
market
pick
up.
I
think
the
stock
could
be
more
than
50%
undervalued
at
present.

An
exciting
opportunity

Now
of
course,
there
are
risks
here.
One
is
that
the
industries
the
group
operates
in
can
have
their
ups
and
downs.
EVs
are
a
good
example.

While
the
long-term
growth
story
associated
with
EVs
is
very
attractive,
the
market’s
been
quite
weak
over
the
last
12
months,
or
so.
This
has
led
to
lower
EV-related
sales
for
Volex.

Overall
though,
I
think
this
stock
has
bags
of
potential.
Given
the
potential,
I’ve
made
Volex
one
of
my
larger
UK
stock
holdings.