Should You Buy It? Arrow Electronics for Your Quiver

Arrow ElectronicsARW has outperformed the broader market over the past year, but do its shares still hold value at current levels? Should you buy it?

The company, one of the world's largest distributors of electronic components and computer products, raised its earnings forecast last month to reflect higher demand. Arrow said it now sees fourth-quarter earnings of 92 to 97 cents a share, up from previous guidance of 90 to 95 cents.

Similarly, management now expects quarterly sales of $4.25 billion to $4.45 billion, as demand in the core components business was stronger than expected. The company, which generates about 50% of its total revenue overseas, usually posts its full fourth-quarter results in mid-to-late February.

The stock gained about 25% in 2007, but at Wednesday's closing price of $38.80, Arrow is 14% off its October highs. At current levels, the shares are also valued at just 10.5 times expected 2008 earnings of $3.68 a share. That compares favorably with the 11.4% earnings growth the company is expected to post next year, on top of 12.5% in 2007.

And Arrow's growth is coming both organically and from acquisitions. For one thing, the company's computer products division, which is benefiting from rising server demand and carries higher margins, has grown to 29% of total revenue in the third quarter, compared with 20% in 2006.