Looking for a Good Display Stock? Here Are Some Ideas: SGOC, GLW & OLED

Small cap display stock SGOCO Group Ltd (NASDAQ: SGOC) just sank 27.89% after reporting earnings, meaning its worth taking a closer look at it along with some other innovative display stocks like Corning Incorporated (NYSE: GLW) and Universal Display Corporation (NASDAQ: OLED). After all, just about every new consumer gadget along with cars and even appliances are incorporating display technology. I should also mention that we have had Corning Incorporated in our SmallCap Network Elite Opportunity (SCN EO) portfolio since early December (we are up around 29.20%) as we believe the company is in the sweet spot for next generation flexible screens and mobile wearables.

SGOCO Group Ltd. Established in 2005 and based in China, the SGOCO Group offers innovative display products and solutions to consumers and businesses in various industry verticals. On Wednesday after US markets were closed, the SGOCO Group reported that fourth quarter revenues decreased 30.3% to US$44.2 million with the company explaining that they had experienced a "ramp-up in revenue in the fourth quarter of 2012 due to positive publicity associated with the resumption of trading of the Company's stock on NASDAQ" (Apparently, 4Q2013 returned to "normal") while net income decreased 62.7% to US$1.2 million. For the entire year, the SGOCO Group reported that revenue increased 20.6% to US$201.0 million mainly due to increase in sales volume ("despite a slowdown in global and China TV growth in 2013") and additional revenue contribution from new products launched while net income increased 100.4% to US$8.4 million. The CEO also pointed out that:

"We took several steps to position SGOCO for future success in the past year. We expanded the scale of our business by adding a sales office in Shenzhen. We strengthened our R&D capability by adding top new talents in late 2013. We increased the speed of product launches, optimization and upgrades to respond to consumer market trends. And more significantly, we differentiated our display products and solution from the competitive low-end display market and gain new market share by developing products featuring designer style, high performance and affordability such as AIO and PIO."

However and on Thursday, SGOCO Group sank 27.89% to $2.87 (SGOC has a 52 week trading range of $0.87 to $8.33 a share) for a market cap of $50.69 million plus the stock is down 15.8% since the start of the year, up 165.7% over the past year and down 43.2% since December 2010.

Corning Incorporated. A world leader in specialty glass and ceramics with a track record of more than 160 years, large cap Corning Incorporated invents, makes, and sells keystone components that enable high-technology systems for consumer electronics, mobile emissions control, telecommunications and life sciences. Right now, Corning Incorporated is probably most well known for its Gorilla Glass, an alkali-aluminosilicate sheet toughened glass cover for portable electronic devices including mobile phones, portable media players, laptop computer displays, and some television screens. However and at the recent Morgan Stanley Technology, Media & Telecom Conference (whose transcript is available on Seeking Alpha here), Corning Incorporated executive blasted sapphire crystal as an alternative protective material for displays by saying: 

When we look at it, we see a lot of disadvantages of Sapphire versus Gorilla Glass. It's about 10 times more expensive. It's about 1.6 times heavier. It's environmentally unfriendly. It takes about 100 times more energy to generate a Sapphire crystal than it does glass. It transmits less light which it means either dimmer devices or shorter battery life. It continues to break. I think while it's scratch resistant product it still breaks and our testing says that Gorilla Glass, about 2.5 times more pressure that it can take than Sapphire on. So when we look at it, we think from an overall industry and trend that is not attractive in consumer electronics.

By consumer electronics, he meant Apple (NASDAQ: AAPL) – the big gorilla in the room for display makers which announced in November 2013 a $578 million deal with GT Advanced Technologies Inc (NASDAQ: GTAT) wherein GTAT would supply sapphire glass to AAPL. It should be mentioned that a recent Forbes article has pointed out that Corning Incorporated's specialty materials segment posted sales of $1.17 billion in 2013 and that three customers accounted for 47% of segment sales for the year. On Thursday, Corning Incorporated rose 1.08% to $21.59 (GLW has a 52 week trading range of $12.64 to $21.76 a share) for a market cap of $30.03 billion plus the stock is up 21.4% since the start of the year, up 62% over the past year and up 35.3% over the past five years.

Universal Display Corporation. A leader in the research, development and commercialization of organic light emitting diode, or OLED, technologies and materials, Universal Display Corporation has one of the largest patent portfolios in the OLED field with licensing rights to over 3000 issued and pending patents worldwide in a broad array of OLED technologies, materials and processes. In late February, Universal Display Corporation reported fourth quarter revenues of $49.5 million verses revenues of $28.1 million for the same quarter of 2012 thanks to a 153% increase in material sales which rose to $25.5 million from $10.1 million thanks to strong volume growth in green emitter and host material sales. For the full year, Universal Display Corporation reported a 76% revenue increase to $146.6 million while fourth quarter net income came in at $57.9 million verses $5.4 million (due to a total deferred income tax benefit of $41.4 million) and full year net income of $74.1 million verses $9.7 million (adjusted net income was $32.6 million excluding the special items). The CFO also gave this optimistic comment:

"Across the Company, we have been building momentum for profitable growth. A significant milestone was reached in 2013 with the commercial adoption of our green emissive dopants and green hosts. We continue to expand our IP and materials portfolio, while also pursuing new avenues of opportunity including single layer barrier encapsulation and organic vapor jet printing (OVJP) technologies. These long-term projects are in their early stages, but we believe they hold promise. We are also optimistic about the prospects for growing our business and enabling energy efficient OLED products as we continue to improve our materials, broaden our product portfolio, deepen our customer relationships, and foster developmental activity."

On Thursday, Universal Display Corporation fell 3.71% to $30.92 (OLED has a 52 week trading range of $25.70 to $39.74 a share) for a market cap of $1.44 billion plus the stock is down 8.3% since the start of the year, up 5.1% over the past year and up 210.1% over the past five years.

Finally, here is a look at the share performance for all three small cap display stocks:

As you can see from the above chart, these small cap display stocks have been a bit of a mixed picture over the long term. Nevertheless, investors may still want to keep their eyes on their future potential rather than past performance.

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