Zacks Investment Ideas feature highlights: Corning, Atmel, Texas Instruments and Universal Display - Press Releases
April 16 2012 - 4:30AM
Zacks
For Immediate Release
Chicago, IL – April 16, 2012 – Today, Zacks Investment Ideas
feature highlights Features: Corning ( GLW),
Atmel ( ATML), Texas
Instruments ( TXN) and Universal Display
Co. ( PANL).
Don’t Judge a Book Solely by its
Cover
In all probability, at least one of your parents offered this
idiom during your formative years. What’s most
interesting about the metaphor is that most of us still don’t
always listen. When you think about it, the reason most of us
buy many of the products we do (including stocks) is based upon
their exterior. More accurately, we may get past the cover
but seldom read the whole book.
Rarely do we truly dig deep beneath the surface more than a page
or two. With products, we may read some reviews online, ask a
friend and maybe examine the product for true quality before
purchasing. With investments, we usually check a couple of
key fundamental metrics and maybe look at a chart to identify
trends, support, resistance, etc. and then click the “buy”
button. If you follow us here at Zacks, you may buy a stock
solely on its Zacks Rank.
There is nothing wrong with this investing approach if you
are finding success; but can more value be unlocked if we look
deeper?
The Derivative Trades
Derivative trades are investments that lie beneath the
surface. They are opportunities that derive value from the
success of a product and might just give you more returns than the
original stock itself. The analogy would be if you found that
accountants who went to Harvard were getting the best and quickest
refunds for their clients at tax time. Sure you could hire
one of those Harvard accounts to do your taxes; but what if you
looked deeper and found they all were using a particular type of
software? Maybe the better investment would be the software
itself.
Because of its immense popularity, I’ll use Apple as an
example. The iPhone as a product is sleek, well constructed
and functions as it’s supposed to (I just bought the 4S). The
millions that have been sold are a testament to its exterior
quality and the genius of its manufacturer.
But what about its construction? What of the chips, radios and
even metals used to construct those components and even the
carriers that allow it to function?
I can’t tell you that I am the first to talk about derivative
trades; but hopefully I can offer some unique insight and maybe
help your thought process when it comes to derivative
trades.
Deconstructing the Smartphone
Finding the most effective derivative trades shouldn’t be
limited to one product. Find a common thread woven through
multiple products in a sector; that way you can build a stronger
thesis for your trade.
For the smartphone it’s not just about Apple, Google’s Android
(Motorola), HTC, Microsoft, Nokia, Samsung, Blackberry, LG, Kyocera
and more are all producing phones to gain customer
popularity. If we were to disassemble all the phones, what
would we find that could be potential investments?
More to the Touch Screen
Gorilla Glass, which is produced and sold
by Corning ( GLW), is the popular choice
for touch screen mobile devices of all sizes and shapes.
Beneath the protective gorilla glass (which is coated in a
conductive material so you can interact with it) is a touch screen
controller that senses where your fingers are swiping, it might be
made by Atmel ( ATML) or Texas
Instruments ( TXN).
One layer down is the display itself, which is the heart and
soul of the phone. Displays are manufactured by LG, Samsung,
Densitron (which trades in London) among many others. If your
phone uses OLED technology, Universal Display
Co. ( PANL) may be getting a royalty. Universal
Display Corp. is the brains (and holds many patents) behind a good
part of OLED technology. I was the first to talk
about PANL on CNBC back in 2009.
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ATMEL CORP (ATML): Free Stock Analysis Report
CORNING INC (GLW): Free Stock Analysis Report
UNIVL DISPLAY (PANL): Free Stock Analysis Report
TEXAS INSTRS (TXN): Free Stock Analysis Report
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