About: Amphenol is one of the world’s largest manufacturers of electronic interconnect products, also known as connectors. Connectors are relatively simple electro-mechanical devices used to join cables or to connect a wire or cable to an electrical terminal and are made for power, signal and control applications.

Why it’s in the portfolio: Amphenol’s end markets should continue to grow at attractive rates, albeit with their own cycles. The increasing array of electronics in passenger vehicles is currently driving strong growth in Amphenol’s Auto OEM business, which is about 20% of group revenue, while growth in data centres for large technology companies such as Google and Amazon has also been robust. We expect Amphenol to continue to grow profitably and add further value to shareholders through its acquisitions.

Fundamentals: Over the last 10 years it has grown its revenue on an underlying basis at around twice that of its end market, representing consistent market share gains. Amphenol’s EBIT margin has averaged 20% with the lowest margin in any one year being 18%; its return on invested capital has averaged 15%; and EPS growth has averaged 13% p.a.

What could go wrong?