Is It Time to Consider Buying Universal Display Corporation (NASDAQ: OLED)?
Let’s talk about the popular Universal Display Corporation (NASDAQ: OLED). The company’s shares have seen decent growth in teen stock prices on the NASDAQGS over the past few months. With many analysts covering large cap stocks, we can expect all price sensitive announcements to have factored into the share price already. However, what if the stock is still a good deal? Let’s take a look at the outlook and value of Universal Display based on the most recent financial data to see if the opportunity still exists.
Check out our latest review for universal display
What is the opportunity in Universal Display?
Universal signage appears to be expensive under my multiple pricing model, making a comparison between the company’s price-to-earnings ratio and the industry average. In this case, I used the price-to-earnings (PE) ratio since there isn’t enough information to reliably forecast the stock’s cash flow. I find Universal Display’s 69.9x ratio to be above its 33.03x average, suggesting that the stock is trading at a higher price relative to the semiconductor industry. But is there another opportunity to buy cheaply in the future? Since Universal Display’s stock price is quite volatile, this could mean that it may fall (or rise even more) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator of how big the stock is moving relative to the rest of the market.
Can we expect universal signage growth?
Investors looking for growth in their portfolio may wish to examine a company’s prospects before purchasing its shares. Although value investors argue that intrinsic value versus price matters most, a more compelling investment thesis would be high growth potential at a cheap price. Universal Display’s profits over the next few years are expected to double, indicating a very optimistic future. This should lead to stronger cash flow, fueling a higher share value.
What this means for you:
Are you a shareholder? It appears the market has indeed taken into account the positive outlook for OLED, with stocks trading above industry price multiples. However, this raises another question: is it time to sell? If you think the OLED should trade below its current price, selling high and buying it back when its price drops to the industry’s PE ratio can pay off. But before you make that decision, see if its fundamentals have changed.
Are you a potential investor? If you’ve been keeping an eye on OLED for a while, it might not be the best time to enter stock. The price has topped its industry peers, which means there is likely to be no more benefit from poor pricing. However, the bullish outlook is encouraging for OLED, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.
So, if you want to dig deeper into this stock, it is essential to take into account the risks it faces. Every business has risks, and we have spotted 1 warning sign for universal display you should know.
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This Simply Wall St article is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take into account your goals or your financial situation. We aim to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative information. Simply Wall St has no position in any of the stocks mentioned.
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