Portfolio: Zacks Deep Value

Arrow Electronics (NYSE: ARW) is one of the most compelling cyclical recovery stories in the market right now, with a setup that few investors have fully appreciated.

What They Do & The Bull Case: Arrow is the world’s second-largest electronic components and enterprise computing distributor — a $33B+ revenue business connecting 1,200+ semiconductor suppliers (Texas Instruments, Intel, Broadcom) with 220,000+ industrial and OEM customers across 85 countries. It is not a commodity distributor; its 2,000-person engineering team provides value-added design services that create stickiness far beyond simple fulfillment. After a brutal two-year semiconductor destocking cycle, Arrow has emerged into what may be a multi-year upcycle: Q1 2026 revenue grew 39% YoY and EPS expanded 201%, yet the stock still trades at just ~11x forward earnings — a ~30% discount to sector peers. Management has been aggressively repurchasing shares throughout the downcycle, retiring 21.8M+ shares and structurally improving per-share value at depressed prices. The secular tailwind from AI-driven data center buildout, electrification, and industrial automation is real and durable — exactly the end markets Arrow serves.