Hook & thesis
TTM Technologies (TTMI) has been one of the standout small/mid-cap stories over the last year — the stock is up roughly 250% year-over-year and has re-rated as AI and data-center spending lifted demand for complex printed circuit boards and RF components. The rally looks extended on short-term momentum indicators, but the underlying drivers are real: the company reported accelerating revenue growth, expanding margins and management is guiding 15-20% organic sales growth for 2026. That combination makes a controlled long exposure attractive for investors willing to accept a higher multiple in exchange for continued execution.
My trade thesis is simple: buy a disciplined entry after the recent pullback toward the low $90s, use a tight but sensible stop under structural support, and target a level that prices further multiple expansion plus continued revenue leverage. The plan balances reward and risk while acknowledging that valuation is no longer dirt cheap.
What the company does and why it matters
TTM Technologies manufactures printed circuit boards (PCBs), backplanes and RF components used in data centers, networking, aerospace & defense, industrial and medical markets. The business is split into a large Printed Circuit Board segment and an RF & Components segment. Their footprint includes multiple domestic PCB plants, several facilities in China and one in Canada, giving them both scale and geographic reach.
Why the market should care: high-performance PCBs and backplanes are a critical, high-value part of the supply chain for servers and AI accelerators. As hyperscalers and enterprise customers refresh and expand their compute and networking fleets, demand for advanced PCBs — particularly for high-density, multilayer boards and RF components — rises faster than average semiconductor demand. According to recent reporting, about 36% of TTMI's sales are now linked to data-center computing and AI workloads, a sizable concentration that has materially improved growth and margin dynamics.
Fundamentals and valuation snapshot
Key numbers paint a picture of a company moving from cyclical recovery into secular tailwinds:
- Current price near $91.90, market capitalization about $9.39B.
- Trailing earnings per share roughly $1.72, implying a trailing P/E around 52-54x.
- Price-to-sales sits near 3.23x and price-to-book around 5.33x.
- Return on equity near 10.07% and return on assets near 4.62%.
- Net leverage moderate: debt-to-equity approximately 0.52 and current ratio ~1.93.
- Free cash flow in the last reported period was negative in the snapshot (-$683k), but reported margin expansion and growing revenue should improve cash conversion if trends continue.
Yes, the valuation is premium for a company that was a mid-cycle PCB player a year ago. But the premium is partly justified by two facts: (1) revenue growth accelerated ~19% year-over-year and management expects 15-20% growth for 2026, and (2) a larger, durable share of sales are now coming from high-value AI/data-center customers which carry higher ASPs and better margins. If TTMI can sustain double-digit top-line growth and continue margin expansion, the market can rationalize a mid-teen multiple expansion from here.
Technical & market context
From a technical perspective, the stock has been volatile but constructive. The 50-day simple moving average is around $83.69 and the 10-day SMA near $95.36. Short-term momentum indicators are mixed: the 9-day EMA sits around $93.79 while RSI is neutral near 49. MACD shows some short-term bearish momentum, suggesting pullbacks are possible, which is why a disciplined entry near the low-$90s is attractive. Institutional interest appears real — recent filings show funds adding exposure — and the stock was promoted to the S&P MidCap 400, which tends to help liquidity and demand around index rebalances (changes effective 01/30/2026 and 02/02/2026).
Catalysts to drive the next leg higher
- Continued strength in AI and data-center spending - if AI compute demand sustains, TTMI should continue to outgrow the broader market.
- Quarterly results showing sequential margin improvement and beating revenue guidance will likely re-rate the multiple.
- Further institutional buying and inclusion flows tied to index adjustments (MidCap footprint) can add technical support to price.
- New product ramps in RF components and backplane assemblies for enterprise and telecom customers can expand total addressable market and ASPs.
- Potential share gains vs. smaller competitors if TTMI invests successfully in capacity and advanced engineering services.
Trade plan (actionable)
Entry: Buy at $92.00.
Target: $115.00.
Stop loss: $80.00.
Horizon: long term (180 trading days) - allow time for revenue ramps, margin expansion, and multiple re-rating to play out. This timeframe covers multiple quarterly reports and should capture both fundamental improvements and continued institutional flows.
Rationale: the $92 entry sits near the current market price and below short-term resistance from the 9-day and 10-day EMAs; the $80 stop sits below structural support (including the 50-day SMA near $83.69) and limits downside if demand weakens or results disappoint. The $115 target prices in reasonable multiple expansion from today's ~53x trailing P/E to a still-premium but justifiable level if TTMI delivers on 15-20% sales growth and margin progress.
Risks and counterarguments
Any trade in a stock that has already rallied meaningfully needs a sober risk assessment. Key risks include:
- Execution risk: if TTMI fails to convert revenue growth into sustainable gross and operating margin expansion, the high multiple can quickly compress. The company reported negative free cash flow in the snapshot; improving cash conversion is critical.
- Concentration risk: with roughly 36% of sales tied to data-center and AI computing, a slowdown in hyperscaler spending would disproportionately hit TTMI.
- Valuation sensitivity: the stock trades at >50x trailing earnings; even small misses in earnings or guidance can trigger outsized downside.
- Macro/industry risk: broader capex slowdowns in networking, telecom or defense could reduce backlog visibility and utilization across fabs.
- Geopolitical/supply-chain risk: the company has plants in China and elsewhere; tariffs, export controls or supply disruptions could raise costs or limit shipments.
Counterargument: One could argue the rally already prices in the AI/data-center opportunity and that the market has front-run future results. Points supporting that view: the stock's 52-week run, premium multiples and neutral short-term momentum indicators suggest limited near-term upside and higher downside risk. A disciplined investor who agrees with that view could wait for an earnings beat with explicit margin improvement before entering or choose to buy on a deeper pullback toward the 50-day SMA near $83.69.
What would change my mind
I would reconsider the long thesis if any of the following occur:
- Management cuts guidance or significantly narrows their 15-20% 2026 sales growth projection.
- Sequential deterioration in gross margins or a failure to improve free cash flow over the next two quarters.
- Material geopolitical or trade actions that restrict TTMI's ability to serve key global customers.
Conclusion
TTM Technologies is not a cheap stock by traditional multiples, but it is one where the fundamental picture has meaningfully changed: a larger share of revenue tied to AI and data-center customers plus management's upbeat guidance make a strong case for continued growth. This trade recommends a measured long exposure at $92.00 with a stop at $80.00 and a target of $115.00 over a long-term (180 trading days) horizon. The plan balances the potential for further multiple expansion and revenue leverage against the clear execution and valuation risks. Use position sizing that matches your risk tolerance and be ready to tighten the stop or take profits if the next two quarterly prints disappoint.
Trade idea snapshot: Buy TTMI at $92.00, stop $80.00, target $115.00, horizon long term (180 trading days). Risk level: medium.