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You Should Buy Sony Stock Because It Now Is a Triple Threat

Sony stock has the goods to make believers out of former critics

By Josh Enomoto, InvestorPlace Contributor

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For several years, Sony (NYSE:SNE) was the black sheep of the consumer-electronics sector. While its rivals seemingly embraced the challenges of the post-recession era, the Japanese icon suffered multiple missteps. This reflected poorly on Sony stock, which was unpredictable in the best of times.

I credit SNE for its drive and willingness. However, management rarely channeled that energy productively. For instance, towards the tail end of my time at Sony Electronics, one of the biggest changes was “BYOC,” or “bring your own coffee.” The leadership team felt that by cutting all employee perks, it could save some overhead costs.

This gives you an idea of how desperate the company was to turn around SNE stock. Today, I’m certain that the morning joe is brewed fresh, hot and free. The once-embattled organization enjoyed a resounding performance last year.

Despite falling prey to the broader market meltdown, I’m confident that SNE is on the longer-term upswing. That’s because Sony stock isn’t just about going contrarian on Japanese tech firms. Instead, management potentially has a triple threat on their hands:

Xperia XZ4 Is a Gamechanger for Sony stock

A few years back, I noticed one of my co-workers had a Sony Xperia smartphone. At the time, only the Apple (NASDAQ:AAPL) iPhone and the Samsung Galaxy mattered. The Xperia was an afterthought.

However, that co-worker was one of the smartest people with whom I’ve had the pleasure to meet. I now realize that he was essentially lightyears ahead of his time.

After earlier models suffered through periods of ignominy, the upcoming Xperia XZ4 could radically boost demand for Sony stock. According to the latest tech rumors, the XZ4 sports Qualcomm’s (NASDAQ:QCOM) advanced Snapdragon 855 chipset. More important, industry experts believe Sony’s flagship smartphone achieved an AnTuTu benchmarking score of 395,721.

For context, the iPhone XS Max averages around 309,000, while the premium Huawei Mate 20 Pro reached 307,000. The Snapdragon 855 chipset itself scored 360,000 points. To put it simply, if these metrics prove true, the XZ4 will be one of the most powerful smartphones available. Obviously, this represents a massive tailwind for SNE stock.

Beyond the technical specifications, Sony also benefits from geopolitical momentum. It’s no secret that President Trump harbors deep-seated animosity towards the Japanese. Initially, this appears net negative for Sony stock.

But in pursuing his aggressive “America First” foreign policy, Trump made a critical error: he sanctioned China and Japan. The Japanese government didn’t retaliate, and instead attempted to sway Trump to rationality.

That effort failed, but predictably, it brought China and Japan closer together. So while Apple’s iPhone sales are tanking in China, I don’t think Sony will experience the same fate.

If you’re a stakeholder in Sony stock, don’t say the Trump administration never did anything for you!

SNE Stock Has the Mirrorless Edge

In my eight years at Sony, I’ve seen more than my fair share of managerial blunders. At the same time, I embraced our moments of sheer brilliance.

Undoubtedly, one of the greatest developments in which I had a direct hand was the mirrorless-camera concept. Japanese companies have a rich history in pioneering this technology, but Sony popularized it through the Alpha NEX series.

Very briefly, traditional digital single-lens reflex (DSLR) cameras use an optical mirror for imaging purposes. While producing superior photos and videos, the DSLR platform is bulky and inconvenient. The mirrorless camera replaces the optical mirror with a digital system, resulting in a smaller, lighter and simpler platform.

On paper, the advantages were readily apparent. However, Sony failed to market the innovation properly, leading to missed opportunities for SNE stock.

Several years later, though, photography consumers have gravitated towards mirrorless cameras. Not only that, mirrorless is doing to the DSLR what the DSLR did to analog-film cameras (remember those?). And guess who’s the leader in this segment?

Credit management for patience towards an eventual winner. Due to its resolve, Sony has obliterated rivals Nikon (OTCMKTS:NINOY) and Canon (NYSE:CAJ) in the mirrorless space. They’re unlikely to catch up now that SNE will soon launch its flagship Sony A7000 camera.

Based on tech rumors, the A7000 will have everything that consumers loved about the predecessor A6500, but with more goodies. Primarily, photographers can look forward to a superior sensor, increased clarity across various lighting conditions, and 4K video capability.

As mirrorless continues to take market share from DSLRs, this trend provides further justification for SNE stock.

PlayStation: The Perpetual Cash Cow for Sony Stock

In my darkest moments at Sony, one product kept us going: the PlayStation console. As every other product failed to attract customers, our video games of all things kept the lights on.

Now, it’s doing much more than that. Despite coming out more than five years ago, the  PlayStation 4 continues to generate significant buzz, irking rival Microsoft (NASDAQ:MSFT). And similar to the mirrorless-camera sector, Sony can further widen the gap with its gaming nemesis.

Based on rumblings within the sector, the upcoming PlayStation 5 represents an earth shattering paradigm-shift. We’ve seen what Sony can do with prior iterations, so I’m confident the rumors won’t disappoint.

More important, SNE is finally leveraging its resources in a cohesive and sensible manner. Last month, I spoke positively about the company’s buyout of EMI Music Publishing. With EMI fully in Sony’s control, the tech giant grew its content umbrella wider.

This move facilitates natural synergies, which Sony is advantaging. Through music and movie licensing rights, the PS5 will offer compelling and exclusive gameplay experiences. That puts Microsoft in a bind since it doesn’t have nearly the same content presence.

Through persistence and good fortune, SNE leads in several product categories. Eventually, the markets will recognize this too.

As of this writing, Josh Enomoto is long Sony stock.


Article printed from InvestorPlace Media, https://investorplace.com/2019/01/sony-stock-triple-threat/.

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