Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Universal Display Corporation jumped more than 12% early Thursday after the OLED technologist announced a new $50 million share repurchase program.
So what: This authorization is seen as a significant vote of confidence in Universal Display's long-term story, and allows the company to reabsorb shares of common stock at its discretion during the next 12 months. It also comes on the heels of Universal Display's blowout first-quarter earnings report, which initially resulted in a 16% single-day pop early last month. Going into yesterday's close, however, investors' patience had worn thin as the stock gave up nearly all of its post-earnings gains to trade within reach of multi-year lows.
Now what: Universal Display has made clear it doesn't have any significant cash needs right now, and much of its current $267 million cash hoard is the result of raising more than $250 million from a secondary offering back in 2011 in anticipation of acquiring a large OLED-centric patent portfolio from Fuji in 2012. But those patents only came with a purchase price of $105 million, and much of Universal Display's cash largely remained unutilized since then. With Universal Display now solidly profitable and with shares currently trading at just 17 times next year's estimated earnings, I think increasing shareholders' slice of the pie now is a great idea.
Leaked: Apple's next smart device (warning, it may shock you)
Universal Display's technology is also rumored to be used in a yet-to-be announced smart device from Apple. In fact, Apple recently recruited a secret-development "dream team" to guarantee this device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But Universal Display isn't the only way to play it, and another small company's technology is crucial to its success. Its stock price has nearly unlimited room to run for early in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!
The article Why Universal Display Corporation Shares Lit Up Today originally appeared on Fool.com.Steve Symington owns shares of Apple and Universal Display. The Motley Fool recommends Apple and Universal Display. The Motley Fool owns shares of Apple and Universal Display. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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