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
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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.
