Panasonic: TVs to Teslas

06/21/2017 2:54 am EST


Glenn Rogers

Contributing Editor, Internet Wealth Builder and The Income Investor

Most of us know Japan-based Panasonic (PCRFY) from their consumer products, such as televisions, audio equipment, kitchen appliances, air conditioning systems, washers and dryers etc., notes Glenn Rogers, contributing editor to Internet Wealth Builder.

Investors may not think of it as a disruptive technology company. However, it has a division that manufactures computers, projectors, SD memory cards, in-flight entertainment systems, and other related consumer facing businesses.

The company has a partnership with Tesla (TSLA) and the huge giga battery factory that has recently been completed outside of Reno, Nevada.

This enormous facility will be producing batteries for not only the Model Three Teslas (which is the mass-market vehicle that will start shipping later this year) but also batteries for Tesla's Power Wall systems.

These are designed to provide backup and off grid capabilities for homeowners and businesses and are often used as backup when solar energy systems are the primary power source.

Speaking of solar energy, Panasonic also joined forces with Tesla to begin solar panel production in Buffalo, New York. Panasonic is providing the financing while Tesla, through its subsidiary Solar City Corp., will be the chief customer and distributor of the final product.

Even without Tesla, Panasonic is a major producer of batteries and solar panels, which are used in other automotive and consumer applications as well as large storage battery products for industrial and consumer users.

In addition to all this, Panasonic has a large division that focuses on semiconductors, advanced industrial sensors, lasers, polymer capacitors, and so on.

All that said is Panasonic a good investment? Here the picture is mixed. So far this year shares have gained 14% despite the fact that overall sales for the last four years have been flat to slightly down.

This coming year the company expects sales to increase by 6%, with a jump of 21% in operating profits as the forward-looking businesses they are investing in begin to make significant contributions to profits and revenue.

The stock pays semi-annual dividends, which totaled US$0.22 per share in the past 12 months.Panasonic has a history of gradually increasing the payout over time.

Recently, the research firm Nomura upgraded the stock and a predicted a 21% increase in the share price over the next year.

I like Japan these days and with Panasonic you get global exposure and broad participation in the technology and industrial systems that should do well over the next few years. Buy with a target of US$16.

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