DMG Research has initiated a "buy" call on Valuetronics, a manufacturer of both consumer and industrial electronic products.
Its target price is S$0.64.
The research house said that it expects Valuetronics' industrial and commercial electronics (ICE) segment with higher margins to continue to register strong growth.
"With its high above 8 per cent dividend yield, net cash representing 56 per cent of its market cap, strong cash generation and as it is trading at just 2.5 times FY2016 (March) ex-cash price earnings, this stock is a clear bargain."
DMG Research added that Phillips, which is suspected to be Valuetronics' largest customer, is now seeking to list and grow its lighting business. If successful, the listing will be a positive catalyst for Valuetronics, it said.
The counter traded down two Singapore cents at S$0.415 at 10.05am.