Updated from 5:20 p.m. EDT to include information about Google's Explorer program in the third paragraph.
NEW YORK (TheStreet) -- Himax Technologies (HIMX), a leading supplier micro-display technology used in Google (GOOG) Glass, rose as much as 4.3% a share in Monday trading before paring gains to close 1% higher at $9.64. The micro-display developer was boosted by a story in the Financial Times that Google is expanding its production of the optical head-mounted display product.
The Financial Times reported that Google is planning plans to boost production of its Google Glass during the holiday period, though a full commercial launch isn't slated until mid-2014 at the earliest. Currently, only 10,000 Glass models have been distributed to developers and reviewers.
Google confirmed to TheStreet that the company is increasing production of Glass to facilitate an expansion of its 'Explorer' program. Those who received one of the original 10,000 models will have the ability to refer three friends to purchase Glass.
"Our goal is to continue to expand the Explorer program ahead of a wider consumer launch in 2014," explained a Google spokesperson.
TheStreet's fundamental analysis expert Bryan Ashenberg had this to say about Himax:
"Himax is an exciting play on what is sure to become the market's next technological infatuation, wearable computers. We have heard rumors for months now that the next generation Xbox may come equipped with two wearable displays per console. Himax believes it controls greater than 75% of the LCoS market share, making it the likely supplier to Microsoft.That is why we have the stock as a pick within our Trifecta Stocks portfolio which only contains stocks we consider to be the best of the best. At Trifecta Stocks we strive to find only the top 1% of all the stocks available on the U.S. stock exchanges and have deemed Himax one of those. You can read more about this stock pick and our other picks by taking a 14-day free trial to the service here: Try Trifecta Stocks."
TheStreet Ratings team rates Himax Technologies Inc as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate Himax Technologies Inc (HIMX) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, solid stock price performance and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 9.0%. Since the same quarter one year prior, revenues slightly increased by 9.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- HIMX's debt-to-equity ratio is very low at 0.17 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.41, which illustrates the ability to avoid short-term cash problems.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Semiconductors & Semiconductor Equipment industry and the overall market, Himax Technologies Inc's return on equity exceeds that of both the industry average and the S&P 500.
- Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 398.71% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, HIMX should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- Himax Technologies Inc has improved earnings per share by 22.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, Himax Technologies Inc increased its bottom line by earning 30 cents a share vs. 6 cents a share in the prior year. This year, the market expects an improvement in earnings (37 cents vs. 30 cents).
- You can view the full analysis from the report here: HIMX Ratings Report