We came across a bullish thesis on Flex Ltd. (FLEX) on Substack by Easy Trader. In this article, we will summarize the bulls’ thesis on FLEX. Flex Ltd. (FLEX)'s share was trading at $34.06 as of April 2^nd. FLEX’s trailing and forward P/E were 13.90 and 11.39 respectively according to Yahoo Finance.

A technician assembling complex device solutions in a factory setting, illustrating the company's manufacturing capabilities.

Flex Ltd. operates behind the scenes, helping companies across industries design and manufacture their products. Based in Austin, Texas, with operations in 30 countries, Flex is a supply chain powerhouse, serving sectors like technology, automotive, healthcare, and industrials. The company is structured into two main divisions: Flex Agility Solutions, which focuses on tech and consumer products, and Flex Reliability Solutions, which handles more complex industries like automotive and medical devices. For the fiscal year ending March 31, 2024, Flex generated $26.4 billion in revenue, a 7% decline from the previous year, but improved efficiency led to a 25% increase in net earnings. Despite the recent stock decline, which has placed it in oversold territory, Flex’s market value sits around $13 billion, with shares trading at approximately $35 as of March 2025.

One of Flex’s biggest strengths is its strong free cash flow (FCF), a key metric that signals financial flexibility. For the past fiscal year, the company generated $1.54 billion in operating cash flow while investing $583 million in capital expenditures, leaving it with $957 million in FCF. This cash surplus allows Flex to reinvest in growth, pay down debt, or return value to shareholders. Beyond the numbers, Flex’s competitive advantage lies in its scale, expertise, and deep customer relationships. Unlike simple contract manufacturers, Flex integrates design and engineering services, making it an indispensable partner for major clients like Ford, Xerox, Cisco, Abbott, and Johnson & Johnson. Its global presence allows it to manage complex supply chains efficiently, while its exposure to multiple industries provides resilience against sector-specific downturns. With a strong foothold in emerging fields like electric vehicle technology and cloud computing infrastructure, Flex is positioned for long-term stability and growth.

From an investment perspective, the internal rate of return (IRR) based on this cash flow and projected 6.5% annual growth suggests a return of about 10-11% per year—solid for a steady business like Flex. A discounted cash flow (DCF) analysis, factoring in an 8% discount rate and a conservative 5% five-year growth rate followed by a 2% terminal growth rate, estimates Flex’s intrinsic value at $19.2 billion. With its current market value at $13 billion, the stock appears undervalued, offering potential upside for investors. While the stock is unlikely to double in a year, it presents a compelling case as a stable, undervalued investment. The company’s financial strength, industry position, and growth trajectory suggest a strong foundation for steady returns, making it an attractive option for investors seeking a reliable play in the manufacturing and supply chain space.

Flex Ltd. (FLEX) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 52 hedge fund portfolios held FLEX at the end of the fourth quarter which was 45 in the previous quarter. While we acknowledge the risk and potential of FLEX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than FLEX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.