Himax Technologies (HIMX -0.93%) has been crushed by the stock market sell-off in 2022, with shares of the chipmaker down 40% so far this year.

But the fabless semiconductor company's first-quarter results released on May 12 indicate that it may be a good idea to take advantage of the stock's pullback and buy shares. Himax has not only been delivering terrific growth quarter after quarter, but it is also on track to capitalize on several fast-growing technology trends, and it wasn't surprising to see shares of Himax surge 13% following its quarterly report. Let's take a closer look at Himax's latest results and see why it could turn out to be a terrific long-term bet.

Impressive growth

Himax delivered Q1 revenue of $412.8 million, a nice jump of 34% over the prior-year period. Its adjusted earnings shot up 81.5% year over year to $0.70 per share.

Headwinds in the traditionally slow quarter included supply chain disruptions caused by lockdowns in China to contain the omicron variant, as well as Russia's invasion of Ukraine. However, the robust demand for Himax's display drivers that are used in applications such as televisions, monitors, automotive displays, smartphones, and tablets led to strong growth in the company's top and bottom lines.

A person pointing up toward a rising red line on a wall.

Image source: Getty Images.

Himax also enjoyed a favorable margin profile. It reported an adjusted gross margin of 47% last quarter, up from 40.2% in the year-ago period. However, the company issued a cautious near-term forecast due to the headwinds mentioned above, as well as softness in end-market demand. Himax expects Q2 revenue to fall 18% over Q1 at the midpoint of its guidance range, to $338 million. Adjusted profit is expected to range between $0.45 and $0.50 per share.

Himax had delivered adjusted earnings of $0.62 per share on revenue of $365.3 million in the year-ago period, so the company is expecting a year-over-year decline. Himax management says that a combination of higher foundry costs and a reduction in pricing power due to slowing end-market demand will weigh on its short-term performance.

But the good part is that Himax expects its business to pick up momentum in the second half of the year. As CEO Jordan Wu said during the conference call with analysts:

As COVID-induced lockdowns begin to fade and supply chain disruptions are alleviated, visibility will improve and ultimately lead to a rebound in market demand. We anticipate Q2 sales to be the low point of this year. For [the] full year, despite the murky short-term market condition, we remain upbeat about our top line ... supported by the automotive business and two new revenue streams which all enjoy solid business visibility.

Himax expects full-year revenue to stay at 2021 levels. This may not look appealing to growth investors, but don't be surprised to see Himax's revenue growth accelerate in the long run thanks to a few solid catalysts.

These catalysts can supercharge long-term growth

Himax's automotive business is growing at an impressive pace. The company sees its automotive revenue doubling this year following similar growth in 2021. Himax's automotive chip sales were up 170% year over year in the first quarter. This helped the segment become Himax's biggest revenue stream, accounting for a quarter of the top line.

The automotive business seems built for long-term growth on the back of the increasing deployment of displays in vehicles. Analysts expect each car eventually to be equipped with as many as 12 display screens. The global automotive display market is expected to hit nearly $40 billion in value by 2027 as compared to $18 billion in 2020. Himax is in a solid position to take advantage of this opportunity as it controls 40% of the global market for automotive display drivers.

Meanwhile, Himax has also started tapping the market for AMOLED (active-matrix organic light-emitting diodes) displays. The company has started the production of AMOLED display drivers for tablets, and it is working to launch solutions that can be deployed in smartphones, televisions, and notebooks as well. Himax claims that it has "secured meaningful capacity in this area with our secured capacity fully booked up by leading panel makers."

This could unlock another meaningful growth opportunity as the global AMOLED display market is expected to grow at an annual pace of 16% through 2026.

Given the lucrative markets that Himax could benefit from, it makes sense to consider buying this tech stock right now. It is trading at a dirt cheap 3.8 times earnings, which is a massive discount compared to its five-year earnings multiple of 55.