Is Radiant Opto-Electronics An Undervalued Dividend Play? – ValueWalk Premium

Is Radiant Opto-Electronics An Undervalued Dividend Play?

The post was originally published here.

Highlights:

  • End markets mature, no opportunities to grow
  • Lack of investments translate into zero revenue growth
  • Massive dividend yield secured by strong cash generation

Download the full report as a PDF

Radiant Opto-Electronics Corporation’s revenue breakdown 2020

Sideward movement could last much longer

  • In July 2021, the stock price faced a sharp drop by more than 30%
    • Since then, the stock price only slowly recovered
    • However, it seems like the 50DMA could pass the 200 DMA soon, hence turning into a positive signal
  • Volume RSI has been strong recently and could provide support for a turn-around

End markets mature, no opportunities to grow

 

  • ROEC’s revenue is mainly dependent on the growth of the end markets such as computers, phones, and tablets
  • A mature market for smartphones translates into low demand for displays and ROEC’s backlights
    • The same goes for laptops and notebooks

Strong momentum for laptops keeps sales stable

  • The company’s number of sold blacklights panels fluctuated around 35m units per quarters, which is around 88% of its capacity
  • In 4Q21, blacklights for PC and laptops surpassed mobile devices for the first time
    • Recently, the company also focused on blacklights for displays used in vehicles, which could partly offset the declining trend of the other two segments

Article by Andrew Stotz, Become a Better Investor.


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