Many investors are on the prowl for the next big thing. The next PC, iPhone or smart speaker. The problem is, smash hit products like these don’t happen very often. And by the time they do, shares in the company responsible are going through the roof. However, there’s another strategy for investing in tech stocks that lets you take advantage of these big releases, but on a broader scale.
Think smartphone instead of iPhone and you get the picture. Each of these tech stocks is a key part of the supply chain. They may not always get the glory, but they provide the technology that powers much of today’s popular technology.
- Corning (NYSE:GLW)
- Himax Technologies (NASDAQ:HIMX)
- LG Display (NYSE:LPL)
- MicroVision (NASDAQ:MVIS)
- Nova Measuring Instruments (NASDAQ:NVMI)
- Sonos (NASDAQ:SONO)
- Taiwan Semiconductor (NYSE:TSM)
- United Microelectronics Corp (NYSE:UMC)
More importantly in terms of long-term growth potential, each of these tech stocks is also helping to build the next big thing.
Tech Stocks: Corning (GLW)
Corning is an incredibly innovative company and one that has been directly involved in many of the hottest technology trends.
As a glass-making company founded in 1851, on the surface it seems out of place on any list of tech stocks. However, Corning is a big part of some of the hottest technology trends. Its Gorilla Glass protects the displays on mobile devices and Corning glass is used by the pharmaceutical industry for purposes like cell culture production equipment. Corning’s optical fiber is a critical component in everything from data centers to 5G installations and TVs.
Whatever the next big thing is, there’s a very good chance Corning will be part of it. And as UBS analyst John Roberts pointed out in January (after upgrading GLW stock), with sand as the largest raw material, glass is “an unusually high-margin materials business.”
Over the past 12 months, Corning shares have delivered a return of 63%.
At time of publication, GLW stock had a ‘B’ rating in Portfolio Grader.
The future is displays. We all carry around a smartphone and interact with it primarily by using its touchscreen display. If you have a smartwatch on your wrist, it’s built around a touchscreen display. VR headset? There are a pair of displays inside. Look at one of the biggest selling features in many of today’s cars — increasingly super-sized touch displays. Screens are even making their way into household appliances including refrigerators.
Display technology is big business now and integral to many of the world’s most popular products. The proliferation of screens means there’s also a very good chance the next big thing will have one as well. That’s why an investment in Himax is a smart move. This Taiwanese company is a major supplier of the chips needed for screens and touch displays. Over the past year, HMIX stock has rewarded investors with 284% growth.
The current Portfolio Grader rating for HIMX stock is ‘A.’
Tech Stocks: LG Display (LPL)
While Himax supplies the chips and controllers used in displays, South Korea’s LG Display specializes in the actual panels. The company is the world’s largest supplier of these panels, including LCD, OLED and the new generation of flexible displays.
From smartphones to TVs, LG Display has played a key role in the development of many of today’s hottest consumer electronics. It is a very safe bet to assume that the company will play a critical role in the next big thing — whatever that ends up being. Shares in LG Display have nearly doubled in value (96% growth) over the past year.
LPL stock currently earns a ‘B’ rating in Portfolio Grader.
MicroVision is a company with a focus on the future. Its core technology is called PicoP, an ultra-miniature sensing and laser projection solution. PicoP is currently used in applications like projectors, interactive displays, and 3D sensors. However, MicroVision is looking beyond, with LiDAR technology. This opens up all sorts of markets including self-driving cars, smartphone cameras, and augmented reality (AR) systems.
I’ve written about how Reddit investors and their “meme” stock approach has added a high degree of volatility to MVIS stock. However, despite the muddying of the waters — and being well off its February and April highs — MVIS has still delivered a gain of 1,520% over the past year.
The Portfolio Grader rating for MVIS stock at time of publication was ‘B.’
Tech Stocks: Nova Measuring Instruments (NVMI)
Unless you’ve been living under a rock, you’re probably well aware of the global shortage in semiconductors. The world’s demand for these chips is off the charts. Inability to meet demand is making it difficult to buy popular video game consoles, limiting supplies of popular laptops and crippling automobile production.
Nova Measuring Instruments provides process control technology that helps fabrication plants to improve their output. That means this company is front and center as chip fabricators rush to improve their yields. We saw this in effect when the company reported record first-quarter revenue that was up 38% year-over-year. There is also expected to be a surge in investment in new fabrication plants, which means more opportunity for Nova Measuring Instruments.
With semiconductors being found in more products than ever, the next big thing is going to be packed with chips. That’s good news for NVMI stock, which has already posted a 100% gain over thee past 12 months.
NVMI stock currently rates a ‘B’ in Portfolio Grader.
Sonos is a bit of an outlier on this list of tech stocks. The reason is that Sonos has been a huge part of one of the current hottest tech trends: multi-room, wireless streaming audio.
However, after spending the better part of two decades focused on premium wireless home speakers, Sonos is expanding. It recently released the Roam portable Bluetooth speaker. Sonos audio systems are now being offered in premium cars. The company is also reportedly eying wireless headphones — a market projected to experience 20% CAGR between 2020 and 2026.
In addition, Sonos owns a number of patents related to wireless audio, and it has been using those in lawsuits against some of the big smart speaker players. The expansion beyond its core market has been paying off for Sonos, which saw revenue increase 90% in its last quarter, while reporting a net profit of $17.2 million. Over the past 12 months, SONO stock is up by 188%.
At the time of publication, SONO stock was rated ‘A’ in Portfolio Grader.
Tech Stocks: TSMC (TSM)
Let’s have another look at the global semiconductor industry. The current shortage of chips shows just how important they are to everything. As products get smarter and connected, they need semiconductors. Not just consumer products, but industrial products as well. The global semiconductor market was worth nearly $426 billion in 2020. That’s a huge number. However, it is expected to nearly double, to $803 billion by 2028.
There are different ways to define “biggest” semiconductor producer. Market capitalization, revenue or number of chips measured among them. No matter how you measure biggest, when it comes to semiconductors TSMC is in the top three. It fabricates chips under contract for a who’s who in the world of tech stocks. As of 2019, TSMC’s fabrication plants produced more than 12 million 12-inch equivalent wafers. Whatever the next big thing is — or the next big thing after that — odds are high the chips inside will be produced at a TSMC facility.
Its critical position in the tech supply chain is reflected in TSM stock growth. Shares have delivered a 117% return over the past 12 months.
TSM stock currently earns an ‘A’ rating in Portfolio Grader.
United Microelectronics (UMC)
Finally, one of my favorite semiconductor companies. United Microelectronics was Taiwan’s first semiconductor company, but it flies under the radar compared to giants like TSMC. However, the company is still a big player. It operates a dozen custom fab plants across Asia and holds some 14,000 semiconductor IP patents.
What is particularly notable about United Microelectronics at this point is the company’s pledge to step up its production on behalf of the automotive industry. It’s a safe bet that cars will be one of the next big things. Electric cars and self-driving cars, that is. These will be packed with semiconductors to a degree that dwarfs current generation automobiles. Many of those chips will be produced by United Microelectronics. UMC stock growth over the past 12 months has been 225% and that could be just the start as the chipmaker ups its importance in the automotive supply chain.
The current Portfolio Grader rating for UMC stock is ‘A.’
On the date of publication, Louis Navellier had a long position in HIMX, NVMI, TSM, and UMC. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article. InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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