Universal Display Corporation (PANL) is a lesser known, fairly-off radar but key player in the smart phone and other smart device gold rush. They are relatively small but growing fast and even recently got the attention, and financial award, of the US Department of Energy. But the stock activity doesn't look too exciting and hasn't done nearly as well as others in this space, for example Apple (AAPL).
OK, so you bought Apple at $100 per share in early 2009. You were a visionary. You saw the future. You saw the iPhone growing in popularity along with each generation after it. You saw the iPhone expanding internationally. Perhaps you even saw the iPad coming and its dominating popularity.
Fine. Congratulations. Now that you're up 400-500% should you take your profits and find something else, perhaps another company working feverishly to catch up with Apple and making inroads like Samsung (SSNLF.PK)? Or better yet maybe a key Samsung partner and supplier? Consider selling AAPL stock (if you own it) and going long PANL with the proceeds while it's still cheap. If you don't own AAPL but are wondering if you should buy some now - consider buying PANL instead.
PANL is a leader in developing and delivering state-of-the-art, organic light emitting diode (OLED) technologies, materials and services to the display and lighting industries. Founded in 1994, the company currently owns or has exclusive, co-exclusive or sole license rights with respect to more than 2,700 issued and pending patents worldwide, including those acquired from Fujifilm. PANL is committed to delivering state-of-the-art OLED technologies and UniversalPHOLED materials to support partner and customer development and commercialization of high-performance OLED products, including Samsung's power-efficient OLED displays for their Galaxy line of smart phones.
CONSIDERATION AS AN INVESTMENT BY THE NUMBERS
PANL's work includes "Samsung's power-efficient OLED displays for their Galaxy line of smart phones." During the last 5 years, sales have grown by 442%, and their market is forecasted to grow 650% from $4 billion in 2011 to $30 billion by 2017. In the past 5 years, AAPL has grown 536%. But PANL's fiscal 2012 results aren't in yet. If you believe analyst estimates, PANL will come in with a 5 year growth at 622% beating AAPL. Advantage PANL.
Looking forward, analysts forecasts sales growth of 63% for PANL and only 15% for AAPL. Next year's sales growth - advantage PANL.
Forward PE is less than 10 for AAPL and pays a dividend while you wait. PANL pays no dividend and forward PE is over 20. Earnings multiple - advantage AAPL.
Balance sheet of both companies shows them extremely healthy financially with PANL having a current ratio of 13, and while AAPL has a current ratio of only 4 (if you add back their cash aboard), I think it's fair to say that AAPL's numbers are so big a current ratio of 4 is comparable to 13 with the much smaller PANL. However, the price to book value of AAPL is still over 4 while for PANL it is around 3. So value wise - advantage PANL.
As mentioned above, PANL's market is forecasted to grow 650% by 2017. If PANL merely holds onto current market share, it can grow its sales by 650% which would put it at $460 million in sales. Certainly doesn't sound impossible. $61 million in 2011, $82 million for 2012 estimates, as much as $190 million for 2013 estimates (by one analyst), etc. The trend to $460 million is not hard to see. But AAPL? $108 billion in sales in fiscal 2011. It's hard to imagine it even has a remote chance of growing by 650% by 2017 to $810 billion. That would be nearly double the sales of Exxon Mobil (XOM). Not likely to say the least. Potential growth curve: advantage PANL.
Overall, if one desires another AAPL-like potential return, I believe one would be wise AAPL shareholders to sell AAPL and buy PANL. They both share similar technological and innovative risks about the future as both develop technology in secrecy. PANL appears cheaper in every basic valuation metric except the short-term forward PE and the lack of a dividend. Still, AAPL has the "feeling" of being safer. But is that emotional or logical? The numbers suggest otherwise. Go with PANL instead of AAPL for a better potential future return with less downside risk.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.