I guess I should have gotten the organic light emitting diodes (OLED) big screen TV after all.
See, I watched every single episode of Game Of Thrones over the last several years on a plasma HD set. And yes I know, it’s old technology by today’s standards.
Here’s the thing. Though it’s an energy hog, plasma is great at rendering black and other dark colors realistically so that you get a great image with lots of depth.
But I have to say, it literally left me in the dark for the Game of Thrones episode the “Battle of Winterfell,” most of which was shot at night. People who own OLED sets say they didn’t have nearly the problem I did.
No wonder this technology is at an inflection point and set to see sales of $48.8 billion in just four years.
Then again, you’ll find OLED tech embedded in flexible electronics, lighting, computer and TV monitors, as well as smart phones.
And today I’m going to reveal the clear leader in this breakout tech field. And I’ll show you five reasons why it will continue to double the market’s returns…
Now then, when I say that plasma is “old technology” that’s actually a bit of an understatement.
See, it’s all but discontinued. Yes, plasma gave an incredible performance for large screens in a dark room.
But rising competition from OLED sets helped kill them off. Which is why, when I go to an electronics store these days, I always check out the big-screen OLEDs.
I have to say I’m very impressed. The colors are rich and saturated and the details very sharp, especially with 4K sets. This is now the state-of-the art for big screens.
Also, OLED goes way beyond home theater. You’ll find them in leading handsets from most of the major phone makers. And they are the technology of choice for the coming era of bendable or foldable electronics.
That’s because the system relies on a series of thin, light emitting films, making it far more compact than even the smallest of bulbs. This allows the OLED array to produce brighter light while using less energy than even today’s LEDs.
And for savvy tech investors, there is one fact that is vital. Universal Display Corp. (Nasdaq:OLED) is the clear leader in the field, and has been for many years.
Indeed, the ticker symbol says it all. No other publicly traded firm has the breadth of products and the depth of the firm’s OLED intellectual property.
With that in mind, let’s run it through my five rules for finding market-crushing tech leaders. Take a look:
Tech Wealth Rule No. 1: Great Companies Have Great Operations. These are well-run firms with top-notch leaders.
As a CEO, Steven V. Abramson ranks as a tech pioneer. Before joining the firm in 1996, he pushed the boundaries of environmental and digital cellular technologies.
Under the CEO’s leadership, Universal Display has gone form a 3-person startup to a commercial lighting and display tech giant with a wide moat around its operations – it boasts more than 5,000 current or pending patents.
This is a lean, well-run company. With $247 million in 2018 sales, OLED has just 267 employees. It has operating margins of 29.7%, in no small measure because it outsources much of its production.
Tech Wealth Rule No. 2: Separate the Signal From the Noise. To create real wealth, you have to ignore the hype and find companies that have rock-solid fundamentals.
This is one of those growth stocks that got hammered last fall when the market started selling off. At the time, Wall Street feared that job growth would suffer and keep a lid on consumer electronics and related spending.
Talk about a false alarm – the stock fell just shy of 39% between Nov. 1 and Jan. 3, when Wall Street once again woke up to the great story here.
Since that time, the S&P 500 has jumped by 17.5%.
While that’s a great return for the broad market, it just can’t compare with OLED. Over the same period, the stock is up roughly 102%, beating the overall market by 482%.
But don’t worry, I’m about to show you why there’s still so much upside ahead.
Tech Wealth Rule No. 3: Ride the Unstoppable Trends. Look for stocks in red-hot sectors because they offer the best chance for life-changing gains.
Turns out, Universal Display scores high here as well. Then again, OLED screens are finding their way throughout the tech landscape, from smart phones and tablets to HDTV’s and laptops.
This technology has been around for decades. But with manufacturing and other issues, didn’t really start gaining ground until the second half of 2013, when OLED TV screens began hitting the U.S. market.
MarketsandMarkets forecasts that by 2023, the OLED market will be worth $48.8 billion. That’s a roughly 15.2% compound annual growth rate from the base year of 2017.
It’s an impressive growth rate to be sure – like what’s in store for 5G wireless cellular technology. That industry is projected to generate $12.4 trillion over the next decade.
Part of the reason is the massive infrastructure buildout that’s needed to create 5G-enabled networks around the country and the globe.
The wireless industry trade organization CTIA, for instance, estimates the U.S. will need an additional 769,000 “small cell” boxes needed to power 5G by 2026. In 2018, the country had 323,448 such cell sites.
Now, the folks who take advantage early on the sorts of infrastructure plays that will power this buildout – before the 5G liftoff – could stand to gain the most.
Don’t miss out on this opportunity.
Tech Wealth Rule No. 4: Focus on Growth. Companies that have the strongest growth rates almost always offer the highest stock returns.
OLED grew sales in its most recent quarter by 101%. That means it’s moving at a rate that is nearly 31 times faster than the overall U.S. economy.
To be sure, this was a big leap forward for the firm. Over the past three years, it has grown its sales an average of 18%.
But that first quarter result made it one of the nation’s more elite stocks. On May 23, Investor’s Business Daily ranked the top 14 stocks with triple-digit earnings gains. OLED had the second best sales increase.
Tech Wealth Rule No. 5: Target Stocks That Can Double Your Money
This is where we look at the firm’s earnings growth and see how long it will take to double profits. By doing that we can figure out how long on average it should take for the stock to roughly double.
We have a real winner on our hands with this metric. After pouring through the financials in details, I’m projecting that earnings per share will grow at an average 30% a year.
I believe this is a very conservative forecast. See, over the past three years, the firm has grown per-share profits by 26%. But last quarter, they jumped a stunning 408%, and are expected to nearly double in the current quarter. So, I’m just bumping up its track record here by a mere 10%.
Now we use what I call my doubling calculator. Mathematicians call it the Rule of 72. Let’s divide the compound profit growth rate of 30% into the number 72.
We find that it should double in just shy of 2.5 years. With a $9 billion market cap, the stock trades at roughly $184.
But it won’t be there for long. This is one of those stocks that can really help you improve the value of your portfolio.
It doesn’t take many stocks like OLED to double in value to help you get closer to achieving financial freedom.
Cheers and good investing,
Michael A. Robinson
The post Why This Firm’s Leading the $48.8 Billion OLED TV Market appeared first on Strategic Tech Investor | Michael A. Robinson.
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