Longtime Fools know all about Universal Display (NAS: PANL) . The OLED technologist has been a Rule Breaker since 2005. True to the Breaker mission of finding tomorrow's greatest stocks way before everyone else catches on, Universal Display muddled through many years of heavy losses and unimpressive sales. The stock traded mainly sideways, year in and year out, even as Fools pounded the table and told you to jump aboard. The bandwagon was being primed for liftoff.
And then this happened:
2010 wasn't half bad -- shares gained 129% as revenues nearly doubled. This was the year that OLED screens hit the mainstream in a big way, mainly on Samsung smartphones running Google's Android operating system. Samsung's need for high OLED volumes was bad news for others hoping to capitalize on the technology -- phones like the HTC Droid Incredible saw interminable shipping delays and then had to downshift to a top-of-the-line LCD screen instead.
But if 2010 was the year of OLEDs in the mainstream, 2011 is where Universal Display started making real money. The revenue line in the chart above does a fair impersonation of your average hockey stick. That's a direct result of the new licensing and materials deal that Samsung signed in August.
The only way share prices could continue to lag behind that growth curve would be if the fantastically higher sales came with depressed margins -- but that's exactly the opposite of what's happening. Rolling gross margins are exploding as economies of scale start to unfold, the company has this nice new habit of turning a profit, and operating cash flows are positive, too.
Smartphones and tablets are fueling some of the most exciting growth stories in this market. Universal Display is one surefire way to play that trend, with a side of big-screen and general lighting opportunity to boot. Read up on three other smartphone plays in a free report.
At the time thisarticle was published Fool contributor Anders Bylund owns shares of Google but holds no other position in any of the companies mentioned. The Motley Fool owns shares of Google and Cirrus Logic. Motley Fool newsletter services have recommended buying shares of Universal Display and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. We have a disclosure policy.
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