Universal Display Corporation (UDC) is a developer and manufacturer of OLED technologies and materials as well as provider of services to the display and lighting industries. Founded in 1994, the company currently owns or has exclusive, co-exclusive or sole license rights with respect to more than 3,000 issued and pending patents worldwide for the commercialization of phosphorescent based OLEDs and also flexible, transparent and stacked OLEDs – for both display and lighting applications. Its phosphorescent OLED technologies and materials are licensed and supplied to companies such as Samsung, LG, AU Optronics CMEL, Pioneer, Panasonic Idemitsu OLED lighting and Konica Minolta. In this article, Mr Berko tells us the stock value of Universal Display as one of the game-changing disruptive stocks and tells us other disruptive stocks.
Universal Display and other Disruptive Stocks
Dear Mr. Berko:
Back in the summer of 2009, you told me to buy a company called Universal Display for my individual retirement account. The company has thousands of patents for the development of organic light-emitting diode technology, which is used in various solid-state lighting applications. It sounded good, so I bought 300 shares at $6.50 and sold it at $14 a year later. Then, in an email, I asked for another recommendation. You told me to buy Universal Display back and that you would tell me when to sell it. Eight years has gone by, and the stock is now $185 a share and is 57 percent of my IRA value. I haven't heard a word from you, but I'm wondering whether I should keep the stock or sell it. — TR, Fort Walton Beach, Fla.
You're very welcome!
Wow — that was eons ago. However, in those eons, Universal Display Corp. (OLED-$185) — a company with zero debt, 200 employees and 47 million shares outstanding — watched its capitalization rocket from $175 million to $8.7 billion.
As you alluded to, Universal is a pioneer in the high-growth field of OLED technology. It owns 3,782 patents and has long-term contracts with some of the biggest users in the industry. Now the electronics industry is prepared to use OLED technology in smartphones, computers and numerous other products. This is a disruptive technology, meaning a product that takes root as a simple application in a new market and relentlessly moves up, eventually displacing competitors in an established market.
Think of OLED products as “constructive destruction,” in which all the old ways of building an electronic product become obsolete and are replaced by a new and superior technology. Few civilians know about Universal Display, and those who do are totally bonkers over a potential partnership with Apple, which may use OLED's materials in 200 million-plus iPhones. And if Apple uses OLED's materials in its iPad and other appliances (as Samsung and LG do), there could be another 100 points in Universal Display's stock.
It seems you are getting antsy and need a change of venue. There's an extraordinary stock that I recommended in February at $20.
It's called Accelerate Diagnostics (AXDX-$25), and the shares scampered to $30 after my column was published. Months later, it crumbled to the $17 level. AXDX is another disruptive technology company. (Imagine the steam engine versus sailing ships, telephones versus telegrams, locomotives versus wagon trains, electric lights versus oil lamps.) It will remarkably change the way medicine is practiced throughout the world.
AXDX uses a thimble of blood, a bit of fluid from your lungs, a body tissue sample or your saliva and performs its medical magic. AXDX has a proprietary, almost science fiction, in vitro diagnostic platform using genotypic technology (your personal gene schematic) to identify infectious pathogens. Then its “Star Trek”-like phenotypic platform with DNA microarrays will determine whether or not a specific antibiotic could be an effective treatment. The AXDX system can recommend a regimen of prescriptions that should interact favorably with your specific genetic makeup. There's no guessing, no costly or painful trial and error, no muss, fuss or bother. The analysis is completed in minutes, not days; the time of treatment is minimized; hospital stays are reduced; and the cure costs are hugely lower.
Since January, Jack Schuler, who was president of Abbott Laboratories and is a director of Stericycle, has purchased 1.6 million shares of AXDX, and he now owns 16 million of the 55 million shares outstanding. I wonder why Jack owns so many shares. Perhaps he thinks that AXDX shares will outperform OLED's shares and do so in less time.
Therefore, I recommend that you sell 100 shares of OLED tomorrow and use the proceeds to buy 700 shares of AXDX. Then be mindful not to sell those shares when they reach $40 — or $70 or $125.
Standard & Poor's, Market Edge, Zacks, Credit Suisse, Morgan Stanley and Argus Research don't give a hoot for AXDX. However, the sentiment among professionals I respect is very positive. And after talking with various doctors, I know I'm very confidently bullish.
Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at [email protected]. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.
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