This Technology Will Make Early Investors Rich!
No matter how the markets are doing I’m always looking for great stocks to buy. Every day I scour the news, research reports, and all manner of financial publications to come up with new money making ideas.
It’s kind of like panning for gold. You sift through all the news, data, and background noise in hopes of finding just one great idea. And every so often, you’re rewarded with what might turn out to be a gold nugget.
In fact, just last week I found a stock that could be 24 karat gold. I’ll tell you all about it in just a moment.
How did I find it?
One of my favorite sources of new ideas are 13F filings by hedge fund managers.
Schedule 13F is a document all institutional money managers with assets of at least $100 million must file with the SEC each quarter. This important document shows the names of securities managed by the fund, the number of shares, and the total market value of each security.
By keeping a close eye on these quarterly filings, an astute investor can gain valuable insight into the minds of top investors.
For example, if you compare current filings with older ones, you can discover which stocks are new to the portfolio. You can also see which positions the managers are adding to or lightening up on. And you can clearly see positions the fund exited during the quarter.
Last week, one particular 13F filing caught my eye…
It was filed by Coatue Management, a $3.5 billion hedge fund focused on technology stocks. The fund is managed by founder, Philippe Laffont, who is one of Julian Robertson’s Tiger Cubs.
Robertson founded the wildly successful Tiger Management investment firm in 1980 and ran it until the fund closed in 2000. Tiger was one of the earliest hedge funds. And Robertson is considered an investment titan for turning $8 million of start-up capital into more than $22 billion by the late 1990s.
What’s more, Robertson is credited for developing a whole generation of hedge fund managers (38 in all)… they’re familiarly called the Tiger Cubs.
So, what stock is Laffont buying now?
The company is none other than Universal Display (PANL). They’re a world leader in developing OLED technology… the next big thing in displays for smartphones, tablet computers, and flat panel TVs.
OLED’s (organic light emitting diodes) are thin, lightweight, power efficient solid-state devices that emit light. They offer advantages over competing display technologies in power efficiency, contrast ratio, viewing angle, video response time, and manufacturing cost. As a result, these next generation displays are capturing a growing share of the flat panel display market.
What I really like about PANL is their business model.
The company focuses on developing technology and obtaining patents to protect them. So far, PANL has over 1,000 issued and pending patents, making their patent portfolio one of the largest in the OLED field.
Here’s the really interesting part…
PANL generates revenue by licensing their OLED technology to manufacturing companies around the world.
The company has over 30 agreements with leading manufacturers in Japan, Korea, Taiwan, China, Europe, and the US. Their customers include such blue chip names as DuPont, Konica Minolta, LG Display, Samsung, Seiko Epson, Sony, Pioneer, and Toyota.
No doubt about it, PANL is on the way to becoming a major player in the huge, fast-growing flat panel display market.
But make no mistake, the company is still in the early stages of a lengthy growth cycle. PANL so far hasn’t earned a dime. Over the past 12 months, the company has lost over $21 million or $0.52 per share.
The good news is they’re making long strides toward profitability. Revenues surged 33% in the second quarter to $11.3 million. And analysts are forecasting revenues to grow 64% in 2011 and then 104% in 2012.
What’s more, PANL is expected to start turning a profit next year. The consensus estimate is for the company to earn $0.86 per share in 2012.
Should you buy PANL right now?
I wouldn’t recommend it. At a recent price of $47.14, PANL is trading at an extremely high valuation. That’s 55x the 2012 earnings estimate.
Your best bet is to put this stock on your watch list.
With the market falling and high valuation stocks getting hit hard, you should get an opportunity very soon to grab PANL at a much lower price. This is one stock you definitely want to pick up on a pullback. Given surging worldwide demand for smartphones, tablet computers, and flat-panel TVs, the future for PANL looks very bright.
Category: Stocks
