Will Apple Light Up Universal Display?

06/02/2015 7:00 am EST


Michael Cintolo

Vice President of Investments and Chief Analyst, Cabot Heritage Corporation

Few things put a company on Wall Street’s radar faster than being linked to this tech powerhouse, observes Mike Cintolo, editor of Cabot Top Ten Trader.

It’s merely a rumor at this point, but there’s speculation that Apple (AAPL) will convert all of its devices to organic light-emitting diode (OLED) displays.

As the leader in the OLED market, Universal Display (OLED) seems the logical candidate to become Apple’s business partner should the rumors prove true.

OLEDs make for brighter, crisper displays on electronic devices and are more power-efficient than traditional LEDs and liquid crystal displays (LCDs).

Universal Display is already in business with Apple’s biggest competitors, Samsung and LG. Its OLED materials were used in Samsung’s newest smartphone, the Galaxy S6, and rave reviews for the GS6 have undoubtedly enhanced Apple’s budding interest in the OLED market.

Long a proponent of LCD screens, Apple’s new Watch may have marked a shift in philosophy; it was the first Apple product equipped with an OLED screen.
With Galaxy S6 sales expected to break records—Samsung reportedly sold ten million of them in their first month on the market—Universal Display is already well positioned for a nice turnaround after sales of the Galaxy S5, Samsung’s previous smartphone, disappointed.

If the company can also land Apple—thus giving it the two largest clients in the mobile world—that would be a complete game changer, making OLED shares today appear cheap even after the recent rumor-fueled rally.

A huge run-up from January to March took the stock from $26 to $47. For the ensuing six weeks, OLED shares moved sideways, dipping slightly to $44 in late April before the latest rally began in early May.

Now at $53—and gaining steam amid the swirling Apple rumors—OLED has left all technical barriers in the dust, rising higher with every passing day.

Buy on dips and hold unless the stock falls below support at $47, the current 50-day moving average. It hasn’t fallen below that line since late January.

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