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TMFSymington (99.07)



Ouch! Why I still believe in Universal Display Corporation (PANL)

May 09, 2012 – Comments (3) | RELATED TICKERS: OLED

OUCH!  PANL just announced earnings with a surprise $1.8 million loss and is going to get shmucked tomorrow just like MAKO did yesterday (maybe not to the tune of 30%, but it's not going to be pretty).

Before you panic, though, after picking through the much I don't see this as a sign of a deteriorating business and still don't plan on selling my shares.  Why?  They noted their newly-signed revenue agreement with their largest customer, Samsung, stipulates that materials payments are made in Q2 and Q4.  In this case, the royalty payment from SMD in Q2 will amount to an extra $15 million in revenue. So, then, it came down to how they're able to recognize revenue (making this quarter look a lot uglier than it actually was).

When the Samsung Royalty/License payment arrives, Universal Display will incur a license fee of 3% payable to its university partners, and 16.5% payable as tax on sales to South Korea.
Let's do a quick breakdown, then, to see what kind of shape PANL is really in:

For reference, PANL has two revenue streams: 1.) Licensing and royalties (money they receive to license the right to use their technology) and 2.) material sales (sale of the actual physical materials needed to implement their technology).

2012 Q1 licensing and royalty revenues were $455,000, compared to 2011 Q1 licensing and royalty revenues of $2.7 million.  If we take into account the Samsung royalty payment next quarter, however, were they to recognize the royalties on a pro rata basis divided evenly among quarters, their licensing and royalty revenue would have been $7,955,000 (or a three fold increase over last year).  If we look ahead to next quarter, though, when you account for the 3% license fee for university partners and the 16.5% tax on sales to South Korea, in Q2 they will be left with $13,075,000 in royalty/licensing revenues from the Samsung payment alone.
Interestingly, even when you don't account for the money they'll get from Samsung in next quarter's royalty rate, overall revenues for the first quarter of 2012 were STILL $12.6 million, up 31% compared to the first quarter 2011 revenues of $9.6 million.  The increase in revenue was primarily due to a 126% increase in material sales (i.e. they sold more than twice as much product than the same period last year as OLED is being integrated into more new technology every day).

One final note: Their expenses didn't change substantially, and they still have a healthy $339.5 million in cash on their balance sheet with no debt.

My humble opinion?  Nothing about this quarter leads me to believe Universal Display Corporation is deteriorating.  Their growth story remains intact, and once they can reach sustained profitability without relying so heavily on their Samsung payments (LG contract, anyone?) the price trajectory will be a beautiful thing to watch.

I stand by my time frame for holding PANL for at least the next 3 to 5 years.  I'm going to watch the mayhem unfold tomorrow morning and plan on using this as yet another fantastic buying opportunity.  [more]



My first four-bagger (and other stocks I love)

April 02, 2012 – Comments (4) | RELATED TICKERS: UAA , OLED , MAKO.DL

On February 9, 2010, I took a small chunk of money and bought shares of Under Armour (UA) at $24.01 per share.  When the markets closed today, UA settled at $96.19 per share, off from its 52 week high set last week at $99.35.  Still, at least on paper, UA has saflely secured its spot as my first four-bagger.  

However, while I admit the valuation is looking a little rich (and I'd be surprised if UA didn't correct itself in the near future), I'm holding onto my shares with an iron grip.  Why?  I simply love Under Armour.  I love UA's products, their brand, their Founder and CEO Kevin Plank (and his pay structure), their culture, and their focus on international growth.  When might be a good time to sell my shares?  Well, the shares are in my 401K, which I can't touch for another few decades, so my current time frame for this position is...well, FOREVER.  I'll do my homework along the way, of course, and I'll read every quarterly filing they produce, but I have no problem dreaming about collecting fat quarterly UA dividend checks in my retirement.  [more]



Two stocks I like right now...

March 31, 2011 – Comments (0) | RELATED TICKERS: F , NTGR

Here are two stocks I have my eye on right now:   [more]



Update on my favorite picks, circa September 2010 (Week 25)

March 31, 2011 – Comments (2) | RELATED TICKERS: OLED , NVDA , SIRI

It's about that time's another update to my original blog post regarding my best ideas in September:  [more]



Update on my favorite picks from September, 2010 (Week 24)

March 01, 2011 – Comments (0) | RELATED TICKERS: OLED , NVDA , SIRI

It's about that time again...I had hoped to post an update a couple weeks ago, but got stuck, though overdue, here's another update to my original blog post regarding my best ideas in September:  [more]

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