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Himax Technologies: A Pure-Play In The Augmented Reality Boom

|Includes: Himax Technologies, Inc. (HIMX)

Opportunity is missed by most people because it is dressed in overalls and looks like work."  Unfortunately, those very words of Thomas Edison are often lost on investors.

Instead, investors miss opportunity because a stock appears to be boring, or because the “herd” has convinced them not to buy.

But oftentimes, such a decision can be costly.

For example, in May 2011, The Cheap Investor recommended that subscribers buy shares of Himax Technologies (HIMX) at just $2.36 a share. Himax is a worldwide market leader in display driver ICs and timing controllers used in TVs, laptops, monitors, mobile phones, tablets, digital cameras, car navigation, virtual reality devices and many other consumer electronics devices.  A couple years later, in March 2014, the stock hit a high of $14.69 for a potential return of 522%.

It has since fallen back, but recently shares of Himax are higher on rumors that the company’s 3D sensing components will be in the next iPhone.  Investors are hoping that the stock could race higher as we near Apple’s new product unveil on September 12, 2017.  Better yet, Himax just inked a deal with Qualcomm to make a 3D camera.

Plus, there’s anticipation that the augmented reality boom is just getting started.  Apple CEO Tim Cook is excited about augmented reality, telling Bloomberg:

“I think it is profound. I am so excited about it, I just want to yell out and scream. The first step in making it a mainstream kind of experience is to put it in the operating system. We’re building it into iOS 11, opening it to ­developers—and unleashing the creativity of millions of people. Even we can’t predict what’s going to come out.  There's some things that you can already get a vision of. We've talked to IKEA, and they have 3D images of their furniture line. You’re talking about changing the whole experience of how you shop for, in this case, furniture and other objects that you can place around the home. You can take that idea and begin to think this is something that stretches from enterprise to consumer. There’s not a lot of things that do that. 

You'll see things happening in enterprises where AR is ­fundamental to what they’re doing. You're going to see some consumer things that are unbelievably cool. Can we do everything we want to do now? No. The technology's not complete yet. But that’s the beauty to a certain degree. This has a runway. And it's an incredible runway. It's time to put the seat belt on and go. When people begin to see what's possible, it’s going to get them very excited -- like we are, like we've been.”

The International Data Corporation forecasts "worldwide revenues for the augmented reality and virtual reality (AR/VR) market to reach $13.9 billion in 2017, an increase of 130.5% over the $6.1 billion spent in 2016. AR/VR spending is expected to accelerate over the next several years…totaling $143.3 billion in 2020."

Isn’t it amazing that Wall Street wasn’t interested in Himax at $2.36, when we recommended it? However, yesterday they were buying the stock for $11.97.  While Cheap Investor subscribers have a potential profit of 407%, Wall Street is just getting into the stock.

Recommending quality stocks at a low price is what separates The Cheap Investor from Wall Street.