As our homes become “smarter” than us, companies like this tech business should continue their double-digit growth. This company beat analysts’ estimates by six cents in the last quarter, and the mean price target on the stock is currently $64.25.
Universal Electronics (UEIC)
From Smart Investing in Turbulent Times
Universal Electronics (UEIC) is a manufacturer and cutting-edge world leader of wireless remote control products, software and audio-video accessories for the smart home. Based in California, the company sells its products and services throughout the globe. Customers include retailers and a wide variety of technology companies including television service providers, OEMs, software companies and computer companies.
Product demand is being driven by technological innovations and improvements in consumer spending patterns. Demand is increasing in the areas of smart phones and tablets, and slowing in more saturated markets such as flat-screen TVs.
Universal Electronics’ CEO, Paul Arling, was honored in 2015 by the Orange County, California Technology Alliance the recipient of an award for “Outstanding Public Company CEO” for both product innovation and impressive financial performance.
The company’s total revenue rose 90% over the last six years, with 2015 revenue reaching $603 million and net income rising 99% to $29.2 million. The Wall Street consensus earnings per share (EPS) growth estimates reflect expected increases of 20.1% and 13.4% in 2016 and 2017 (December year-end). The 2016 price/earnings ratio (P/E) is 15.7, low in comparison to the EPS growth rate and making the stock undervalued.
Universal Electronics carried no long-term debt as of December 2014, and the stock does not pay a dividend.
The stock has most recently been trading between 48 and 53.50, and now appears ready to move higher. Any market weakness in the coming days could briefly pull the stock down to 50. Once it surpasses 54, I expect it to rise to a new trading range of approximately 54–59.
UEIC is a volatile small-cap stock, and is a good choice for growth investors and value investors.
Rating: Strong Buy.
Crista Huff, Smart Investing in Turbulent Times, cabotwealth.com, 800-642-0619, March 1, 2016