Some tech companies seem well-positioned to benefit from the increasing demand for technology (especially mobile and “green” technologies) worldwide. OmniVision Technologies, Inc. (NASDAQ:OVTI), Maxwell Technologies Inc. (NASDAQ:MXWL), and FormFactor, Inc. (NASDAQ:FORM) manufacture and market specific electronic components that are used in many upcoming products, like hybrid vehicles and smartphones. Let´s take a closer look at them and see if they could be good investment opportunities.
OmniVision Technologies, Inc. (NASDAQ:OVTI) designs, develops, and markets integrated semiconductor image-sensor devices, and less than a month ago, delivered a third consecutive earnings surprise, surpassing consensus estimates by 47.6%. Guidance provided by management also exceeded expectations, portraying an encouraging outlook for investors.
Going forward, plenty of growth opportunities should emerge from its core smartphone segment, boosted by an increasing demand in emerging economies, a “growing position in the cheaper handset categories and increasing demand for higher resolution sensors” (Zacks). In addition, other segments like tablets, security, automotive, notebooks, and webcams should contribute with further revenue growth.
In some sectors, like automotive and security, the firm´s position is already strong and demand should drive expansion; in others, like PCs and notebooks, management projects market share increases over the next couple of years.
Moreover, management has pursued a diversification strategy in order to reduce its dependence on the highly competitive mobile phone market, having divested its risks successfully and having become less susceptible to the tech industry cycles.
Trading at 10 times consensus earnings, about half the industry average valuation, while offering compelling growth prospects (about a 20% increase in EPS expected over each of the next five years) and a strong balance sheet, I’d recommend buying and holding on to this stock.
Efficient energy, efficient investment
Maxwell Technologies Inc. (NASDAQ:MXWL) develops and manufactures cost-efficient energy storage and power delivery products for transportation, industrial telecommunications, and other applications and microelectronic products for space and satellite applications. Lately, the company has been growing on the back of an increased demand for hybrid electric buses. Going forward, the rising demand for the firm’s products in utility infrastructure, renewable energy, public transportation, and space programs should contribute substantially to top-line growth. Moreover, its main end-markets, the U.S. and the E.U., are likely to provide more upside on account of government stimulus plans for “green” technologies.
In addition, its leading market share in the ultracapacitor market puts Maxwell Technologies Inc. (NASDAQ:MXWL) in an advantageous position to tap the opportunities provided by rising hybrid bus production in China, and the increasing global preference for “eco-friendly” vehicles.