Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Himax Technologies (NASDAQ:HIMX) fell more than 12% Friday on the heels of Thursday morning's earnings report, and following a downgrade by Chardan Capital Markets from neutral to sell.
So what: Himax stock opened 11% lower yesterday morning when the company reported in-line first-quarter results and weaker-than-expected second-quarter revenue guidance. However, shares recovered by yesterday afternoon after Himax CEO Jordan Wu explained the Q2 weakness was only a temporary headwind caused by "a certain end-customer's inventory position." Wu added, "We often times need to remind investors of the normal volatility in the semi industry to which we are not immune."
Now what: But that obviously wasn't enough to appease Chardan Capital's Jay Srivatsa, who previously downgraded Himax from buy to neutral in late January. Scrivatsa observes Himax's unnamed customer must be Samsung, which "appears to be struggling to compete with the white box handset manufacturers in China."
In the end, I'm inclined to believe Himax management's assertion that this pain should be temporary. And even if it's not, shares of Himax now trade around 9.8 times next year's expected earnings, so should provide investors a reasonable margin of safety going forward.
Six more stock picks poised for incredible growth
If you're still not convinced of Himax's potential, don't worry; there are plenty of other great tech names in which you can invest. Consider the expertise, for example, of Motley Fool co-founder David Gardner, who has proved skeptics wrong, time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently, one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.
Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.