Investors focusing too much attention on large technology stocks like Apple, Google, and Microsoft have perhaps missed a tiny technology company ready to explode on the upside, Universal Display, as Qualcomm’s stock did back in the 1990s and the early 2000s.
Universal Display is up 582% over the last five years. And that may be just the beginning.
Universal Display and Qualcomm are in different segments of the technology industry. Universal is a developer and manufacturer of organic light-emitting diode technologies and materials. It also provides services to the display and lighting industries. Qualcomm is the world’s leader in 3G, 4G and next-generation wireless technologies.
But they have something in common. They both hold dozens of patents, which provides them a steady flow of royalties from fast growing industries that use these patents.
That’s what makes them highly profitable companies, as evidenced by their hefty operating margins—see tables.
But the fortunes of the two companies may be changing soon. Qualcomm’s revenues, operating margins and earnings have been under pressure from regulatory scrutiny around the globe, competition, and difficulty collecting royalties in China, its largest market.
Universal Display’s revenues and earnings, on the other hand, continue to grow at brisk rates.
Qualcomm’s and Universal Display’s Key Financial Metrics