Riding the LCD Wave
01/09/2004 12:00 am EST
From areas as diverse as genetic drugs to natural gas,ChangeWave Investing focuses on major trends that are changing the face of both business and society. Says Toby Smith, "The LCD wave is just starting to swell, and we want to own key components that all the manufacturers have to buy."
"ChipMOS Technology (IMOS NASDAQ) is the first company we'll jump on here. We see a very strong recovery in semiconductors in 2004, and their chip-testing business will do very well with great positioning in Asia. But it is the testing and assembly services for liquid crystal display (LCD) driver semiconductors and other flat-panel display driver semiconductors that brings us to IMOS. They provide key chip sets for LCD flat panel TVs, one of the biggest growth waves in the world.
"The company is also a great play on
China, which is another feather in its hat. China,
Taiwan, and South Korea are where the action is in LCDs—the
hottest consumer electronics product in 2004. ChipMOS is hot in all these
regions. In addition, ChipMOS has successfully developed chip-on-film assembly
technology, and they just signed an exclusive deal with Sharp—the top consumer brand for
"Add it all together and ChipMOS will become the leading company in the next generation in providing LCD driver IC assembly and testing services, and we want to ride the LCD wave with them. IMOS is growing top line and bottom line at over 40% and accelerating—especially gross margins. This reflects the supply/demand imbalance that we look for in ChangeWave stocks, and it's an imbalance that is NOT going to end for the foreseeable future. As LCD prices drop and sizes get bigger, this wave should run for two to three years before peaking. Buy under $8 with a $16 price target in six to 12 months."