Himax Technologies, Inc. (ADR) (HIMX): This Is a Buy-at-Your-Earliest-Convenience Kind of Stock

It’s irrationally undervalued

A month or two ago, Himax filed for a shelf offering, which granted the ability to sell a large number of shares at any time. It was an advanced warning for what just occurred when Himax’s largest shareholder, Innolux Corporation, sold it’s full stake in the company. The sale is over now, and 25 million shares were priced at $5.25. Combine that with a recent market correction that pulled the S&P 500 back 3%-5%, and Himax has depreciated significantly from its recent 52-week high of a little over $8 per share.

This provides an excellent opportunity to buy in for those who missed the last run up. Sitting at a P/E of 17, the company has room to grow, especially considering the upside that this company shows for increasing revenue. As a designer, developer, and marketer of semiconductor flat panel displays, Himax Technologies, Inc. (ADR) (NASDAQ:HIMX) has the ability to share the success of an increasingly tablet and smartphone-driven world.

Short-term risk

There have been reports that Google Inc (NASDAQ:GOOG) chose Samsung and its OLED technology to replace Himax’s LCOS Microdisplays in the Google Glass. However, I’m inclined to question the validity of these reports based upon the expert views of Mr. Guttag, whose article I linked earlier. However, if the reports are true and Samsung is now the supplier for the glasses, I would expect a considerable sell-off of Himax stock. In my opinion, this would simply provide further buying opportunities for investors with a longer time horizon.

To me, Himax Technologies, Inc. (ADR) (NASDAQ:HIMX)’s great upside potential, combined with the consistent dividend, current valuation, and a shareholder friendly management team means that the rewards outweigh the risks on this investment.

The article This Is a Buy-at-Your-Earliest-Convenience Kind of Stock originally appeared on Fool.com and is written by Michael Gregg.

Michael Gregg has no position in any stocks mentioned. The Motley Fool recommends Google. The Motley Fool owns shares of Google. Michael is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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