After a forgettable 2018, Universal Display (OLED 1.73%) has been on a tear. Shares rode the early 2019 stock market rally, but the really big boost came after end-of-year 2018 results and guidance that showed business returning to growth in the new year. Management forecasted a sales increase of at least 32% in 2019, which should lead to even bigger profit gains.

As a result, UDC's stock is up nearly 60% so far in 2019. With the OLED (organic light emitting diode) screen technology the company focuses on only gaining in importance, UDC's top team wants investors to know there could be more left in the tank. Here's why.

The flexibility of OLED

OLED displays have a lot of benefits over the outgoing LED technology. The colors are brighter and the picture has better definition. The screens are also thinner (and therefore lighter), can be made completely transparent, and can even be made with flexible materials to allow for novel form factors.

The Samsung Fold phone. A wallet shaped phone is being unfolded, revealing a large tablet-sized screen inside.

The Samsung Fold smartphone. Image source: Samsung.

With so many new features available with OLED displays, UDC often points out the many new and yet-to-be-thought-of use cases the tech opens up. The foldable phone -- like the Samsung (NASDAQOTH: SSNLF) Fold available later this year for a whopping $2,000 -- is just one example. OLED's flexibility is finding use in lighting, watch faces and other wearables, and auto displays. Add in an expanding lineup of smartphones and TVs using the new displays and UDC has plenty of room to muscle in on the market.

Check out the latest earnings call transcript for Universal Display.

More OLED products means more screen square footage

It all started with smartphones, but growing demand for ultra-high-definition TVs is beginning to add up to big growth for the OLED industry. Laptops equipped with the new displays are also just getting started, as are auto displays, VR headsets, and lighting.

What that means is a fast-expanding OLED market -- up to $29.9 billion expected in 2019, a 21% increase from the $24.7 billion the market was worth last year. More important for UDC, though, is the expected increase in screen square footage that gets manufactured. 8.6 million square meters of OLED should get produced this year, and that number is expected to double to 17.7 million square meters by 2022. Over half of Universal Display's revenue comes from the sale of materials, which carry about a 70% gross profit margin. So the more screens get made, the better.

OLED is good for manufacturers

Manufacturing OLED is more expensive than manufacturing LED, so the devices tend to be more expensive as well. As more product comes on line in the years ahead, though, that could change quickly.

Because OLED is made from organic compounds that emit light when an electrical current passes through them, it has fewer layers than LED. Thus, the manufacturing process has fewer steps than older screen tech, as well as a lower bill-of-materials. That means OLED could be much more cost-effective as it gets scaled large enough.

OLED is also more power efficient and runs at a cooler temperature, and the resulting screen is very lightweight. Thus the displays are gaining popularity with device designers as costs decrease. It all adds up to another growth catalyst for the industry, which plays right into the hand of UDC with its patents and materials for the emerging industry.

An LG OLED ultra high definition TV in a living room.

An LG 4K OLED TV. Image source: LG Electronics.

There's more room for innovation

When OLED first made it onto the scene, the longevity of the screen was a major issue. UDC has made great progress with its emitters, increasing their life span and opening up the technology's use in TVs and other applications where extended viewing times are the norm.

There's still work to be done, though. Blue emitters have been the stubborn problem, and UDC continues to work on increasing their efficiency and longevity, although a specific timetable for their release is still pending. The company has also been working on OVJP (organic vapor jet printing), a new method for the manufacture of large-format OLEDs. As a result, research and development spending is going up -- it increased 9% last year, even as sales fell. But this investment to advance the manufacturing process and life span of devices should help accelerate the decline of older LED in lieu of OLED.

A lot of display and lighting partners

Another reason for more research and development: If OLED continues to advance, more manufacturing partners are likely to jump on the bandwagon. The list is already extensive, covering phone makers like Samsung and the leading OLED TV display maker LG Display (LPL 0.51%), and new manufacturers like Sharp (SHCAY 7.69%) are making their foray into the OLED world as well, to name just a few.

That list of partners -- and the OLED-equipped product lineup they make -- is set to keep growing in the years ahead as the new screen technology slowly takes over the display industry. The best bet on the transition, though, is Universal Display. The stock is headed up again, but the run likely isn't over as the company gets back into growth mode after a sleepy 2018.