Testing a flexible phone-sized OLED screen. Photo: Universal Display.
What: Shares of Universal Display (OLED 1.10%) gained 53.2% in November, according to data from S&P Capital IQ.
So what: First, the OLED technology researcher reported strong third-quarter results early in the month. At this point, Universal Display was already beating the market with authority, having collected a solid 18% gain.
Then, CFO Sydney Rosenblatt spoke at an industry conference, dropping hints that mighty Apple (AAPL 0.64%) might soon start using OLED technology in its high-volume iPhone product line.
"We do know that Apple has been working on OLEDs," Rosenblatt said. "There are lots of reports that they're going to be used for a next-generation iPhone. Realistically, based upon the number of phones that they sell, capacity won't be in the marketplace until 2017 if they decide to do it."
Universal Display shares spiked more than 10% higher the next day, looking back at a total November gain of 40%.
More Apple chatter continued throughout the month, raising the stakes ever higher. That's how you build a 43% surge in just 30 days.
Now what: Apple shipped 250 million iPhones during the last year, and that's certainly a massive additional market for Universal Display. But Mr. Market still appears to get this stock all wrong.
Consider this: One 55-inch TV screen covers roughly the same area as 100 5.5-inch iPhone 6S Plus phones. And Universal Display tends to get paid royalties by the square inch.
In other words, adding Apple as an OLED user is absolutely good news for Universal Display and its investors, but it's arguably more important to see the market for big-screen OLED TV sets taking off.
That story will play out in December's shopping frenzy and be reported in early 2016. Sure, listen to the Apple discussion, but keep a close eye on that narrative, too. Lighting panels can wait for another year. So can the flexible displays, or the transparent screens.
