Have you heard about the battery shortage going on now? It’s not that companies don’t want to manufacture them – far from it. Electric cars, in particular, are selling like hotcakes; Europe alone is expected to move 540,000 units this year.
Yet miners are struggling to keep up with demand for the raw materials – lithium, cobalt, nickel – that are needed for their batteries. The Korean carmaker Kia is the latest to have to halt production of the new, long-range electric Kia Soul. Before that, Audi and Jaguar had to do the same.
At this point, so much of our lives is battery powered…from our smartphones to our tablets and laptops, “Internet of Things” devices like smart doorbells, any solar panels we may want to install on our roofs, and increasingly, our cars. So, anything that allows for more – and better – batteries is going to make life a lot easier.
Right now, a better battery often means a bulkier one. That’s no fun for the smart devices we carry around with us. So, it’s valuable to have technology that does its job while using less power. And that’s where Universal Display Corporation (OLED) comes in.
In such a volatile market, it’s remarkable when stocks can pull off an upgrade while so many others are suffering downgrades. Yet OLED became a B-rated “Buy” in my Portfolio Grader – during last week’s terrible market downturn! This isn’t surprising, as not only is it the leading manufacturer of organic light emitting diode (OLED) panels, but the company has top-notch sales growth and return on equity.
On top of that, OLED just achieved a strong Quantitative Grade. If you’re having trouble deciding whether to buy – and which stocks are most worthwhile…well, a high Quantitative Grade is probably the best buy signal I know. I took the rare step of sharing the philosophy behind this proprietary metric last Wednesday, at the Breakthrough Stocks Summit. The recording is free and available to anyone. Click here to watch, and consider joining us at Breakthrough Stocks , where I’m preparing a hot new pick for Friday’s Monthly Issue.
OLED, too, is a small-cap stock that qualified for my Breakthrough Stocks strategy. If small-caps seem too aggressive in this market, please consider that to earn my “Buy” rating, a stock actually has to be LESS risky than the broad market indexes.
And, in the big picture, OLED’s technology means it’s directly in line to profit from the shift to better energy efficiency.
In a nutshell, OLED displays are superior in that they don’t require backlighting (which would suck more power from the battery), while still being brighter than regular LEDs. Their layers are also plastic versus crystal, which means they can be lighter and more flexible, as well as thinner.
And Universal Display Corporation’s technologies are used in practically every commercial OLED product, including tablets, smartphones, televisions and smart watches. Big-name companies like Samsung and LG use Universal Display Corporation’s OLED in the Galaxy smartphone series and televisions, respectively. And at the end of February, the company had approximately 5,000 issued and pending patents around the world. It’s the giant in a relatively young industry.
Competitors like Cree (CREE), which makes regular LEDs, are not nearly as attractive: CREE has a weaker Quantitative Grade, as well as a D for its Fundamental Grade, dragged down by F-rated Sales Growth.
In contrast, OLED reported the results for its fiscal year in mid-February, and revenues were up 63.8% year-over-year. That’s impressive in itself. But earnings gained 135.2% year-over-year!
Now that the stock has also earned an upgrade to its Quantitative Score, it has everything it needs to make it a “Buy” now. Click here to see what other Breakthrough Stocks I have up my sleeve.
Note: It’s also nice to see a growth stock that can offer dividends. And OLED announced a $0.15 payout for March. While that doesn’t make for a substantial yield, OLED does have the big-picture things I look for in a dividend stock: reliability, forward dividend growth, and an overall strong dividend trend.
Several of my other Breakthrough Stocks do pay dividends as well. It’s an attractive bonus, especially at times like these, when bond yields are falling. Click here to learn more about Breakthrough Stocks and let’s get started. I’m about to release my latest buy recommendation, so your timing would be ideal.