Editor’s Note: What is the final phase of Elon Musk’s master plan – and why could it mean a massive payday for anyone taking advantage of this ONE ticker? Our friend Larry Benedict, a hedge fund legend who made over $274 million for his clients, says he has the answer. Click here to see the details.
Dear Reader,
After PayPal. After Tesla. After SpaceX.
Elon Musk is now preparing to execute the final phase of one of the most ambitious plans in history.
Click here to discover exactly what he’s planning – and the ONE ticker that could benefit the most.
According to Larry Benedict – the man who delivered a 279% return on cash in 2025 while the S&P returned just 15% – when the “Final Phase of Elon’s Master Plan” is triggered, it could move more money than anything Elon has ever done before.
We’re talking billions – potentially trillions – of dollars flowing into a single ticker.
It’s not Tesla. It’s not SpaceX. It’s not crypto, or AI, or anything Wall Street is currently talking about.
But when the “Final Phase” kicks in, Larry believes it’s positioned to capture the surge.
He’s revealing the name and ticker today – completely free.
Regards,
Lauren Wingfield
Managing Editor, The Opportunistic Trader
Avnet’s Earnings Are Growing 4x Faster Than Its Revenue
Market Snapshot
Electronics distribution is not where most traders hunt for outsized earnings leverage. That assumption needs updating. Avnet posted record Q4 fiscal 2026 sales of $8.3 billion, up 48% year over year and 17% sequentially. The top-line number is striking, but the profit mechanics beneath it are what traders should be tracking heading into fiscal 2027.
Stocks in Focus: AVT
Avnet capped fiscal 2026 with sales accelerating 48% year over year to a record $8.3 billion, and adjusted EPS surged 182% to $2.28, growing nearly four times faster than top-line revenue. That gap between revenue growth and earnings growth is the core thesis. The company delivered record sales while growing adjusted EPS at roughly 3.8 times the rate of sales growth, demonstrating the operating leverage in its business model.
The leverage comes from fixed cost absorption. SG&A expenses as a percentage of gross profit fell to 63% in Q4, down from 76% a year ago, and even lower for the Electronic Components business at 56%, compared to 68% a year earlier. As volume grows against a relatively stable cost base, each incremental dollar of revenue converts at a meaningfully higher rate.
Two business lines are doing the work. Electronic Components delivered $7.8 billion in sales at a 4.1% operating margin, while Farnell generated $500 million in sales at a 9.0% margin. Farnell’s 9% result is a multi-year high for that division. The AI angle runs through both: management has said direct exposure to AI and data center customers has increased from roughly 5-7% previously to nearly 10-15%.
The demand signal extends beyond AI. What initially appeared to be demand concentrated around AI and data center deployments has broadened considerably, with extended lead times now evident across a wider range of applications and end markets.
Sector Watch
Book-to-bill ratios are solidly above 1.0 in all regions, with the backlog healthy and extending, providing better visibility into fiscal 2027. Inventory days improved to 71, the lowest level in nearly four years, and return on working capital exceeded the near-term target at 19%. That inventory efficiency matters. Distributors caught holding excess stock in a downturn face painful markdowns. Avnet enters fiscal 2027 lean.
Catalyst Calendar
Management guided Q1 fiscal 2027 sales to $9.00-$9.30 billion and adjusted EPS of $2.80-$2.90, both well above the quarter just reported. That sequential step-up of roughly 10% in sales, paired with an even steeper EPS jump, is the number traders need to keep visible. Executives have said lead time extensions increased across more than 50% of the product categories the company tracks, with customers increasingly leaning on Avnet’s supply chain support.
Risk Radar
- Valuation gap: AVT shares have risen sharply in 2026, yet the stock still trades at about a 0.27x price-to-sales multiple.
- Working capital drag: Lead time extensions and Q1 guidance pointing to another sequential sales jump mean working capital requirements are heavily consuming cash. Free cash flow can lag earnings growth at this stage of the upcycle.
- Memory pricing concentration: Avnet has said memory price increases accounted for roughly one-third of sequential and year-over-year sales growth. A reversal in DRAM pricing would pressure both revenue and margin in the same quarter.
The Cheat Sheet
Top Theme: Electronics distribution upcycles reward the disciplined operators, and Avnet’s operating leverage shows it prepared correctly during the downturn.
Stock to Watch: AVT. Q1 guidance implies adjusted EPS of roughly $2.85 at the midpoint versus $2.28 just reported.
Biggest Risk: Memory pricing reversal compresses both lines simultaneously.
Biggest Opportunity: The valuation gap. A roughly 0.27x price-to-sales multiple on a company coming off 48% revenue growth and 182% adjusted EPS growth is a mismatch that does not typically persist.
One Thing to Remember: The revenue number makes the headline. The SG&A-to-gross-profit ratio, falling from 68% to 56% in one year, is where the margin of safety actually lives.
