Universal Display Is Sizzling Hot
A company that I have been bullish on since 2014 is Universal Display Corporation (NASDAQ:OLED), which vaulted by 20% to a record high of $82.50 on February 24, 2017 after reporting a strong fourth quarter and receiving multiple upgrades.
In 2014, Universal Display stock was trading at $33.00. My bull thesis was that the company had a great advanced display technology, which was craved by makers of televisions, computers, tablets, and smartphones. As the demand for advanced screens rose, my thinking was that OLED stock could ride the momentum higher.
So, while there have been some bumps along the road for this mid-cap technology play, I surmised that it was only a matter of time when OLED shares would ratchet higher.
Universal Display stock is up a sizzling 42% this year and has easily outperformed the S&P 500. The chart of OLED stock shows the upward push that started in October 2016, highlighted by the multi-year breakout at $55.00. That breakout was followed by subsequent breaks at $62.00 and $72.50, powered by an ascending triangle.
The price appreciation was supported by strong relative strength and an upward-trending moving average convergence/divergence (MACD).
Chart courtesy of StockCharts.com
The buzz in OLED stock has always been driven by its relationships with the world’s biggest television and smartphone makers, which require advanced screen technologies such as the company’s advanced organic light emitting diode (OLED) technology.
The birth of flat screen TVs helped provide the initial catalyst for Universal Display, but now premium smartphone makers are looking at—or are already using—advanced screen technologies like those developed by Universal Display.
My Bull Case for OLED Stock
There are rumors that the next-generation iPhone 8 may incorporate OLED technology, which would be massive win for Universal Display.
A deal with Apple Inc (NASDAQ:AAPL) would make sense, as Universal Display screens are widely known for their brightness, thinness, and energy efficiency. The OLED technology is already used on the Samsung Electronics Co Ltd (NASDAQ: SSNLF)”Galaxy” superphones.
The stock bulls are jumping on the bandwagon following the company’s fourth-quarter numbers. Susquehanna Susquehanna International Group, LLP analyst Mehdi Hosseini increased his price target on OLED shares to $105.00, another 31% price potential from the current level. (Source: “Universal Display Jumps 20%: iPhone X Just the Beginning, Say Bulls,” Barrons, February 24, 2017.)
What I like is the revenue growth. After a flat 2015, revenues picked up in 2016 and things are looking better.
Revenues are expected to rise 22.60% to $243.88 million in 2017 and 34.70% to $328.44 million in 2018. (Source: “Universal Display Corporation (OLED),” Yahoo! Finance, last accessed February 24, 2017.)
As we move forward, the demand for advanced screen technologies across a broad medium of devices will provide the tailwind for driving Universal Display stock higher. There is amble momentum in OLED stock that could drive a much higher share price in the years ahead.