Shares of Universal Display (OLED -0.79%) rose by 13% in December 2023, according to data from S&P Global Market Intelligence. The display technology expert's stock moves largely mirrored the broader market's gains and drops throughout the month, but at an amplified level.

A close dance with the leading market index

No joke. It's actually hard to tell Universal Display's December chart apart from the S&P 500 index, apart from the fact that Universal gained 13% and the popular market index stopped at 4.4%. The statistical correlation between the two lines only increased as the days went by:

OLED Chart

OLED data by YCharts

The only significant exception to that rule is found at the very start of the month. The company, whose organic light-emitting diode (OLED) technologies are found in high-end TV sets and many smartphones, posted a 4.2% gain on Dec. 1 while the S&P 500 eked out a 0.6% increase. News of a robust Black Friday inspired market-beating gains in a few consumer electronics stocks, and Universal Display took the lead.

Other than that, Universal Display's stock simply rose a bit faster than the market as a whole last month. That's a common pattern for growth stocks trading at bargain-bin discounts, whose long-term prospects are regaining investor trust in a stabilizing economy.

From modest to princely: Universal Display's 2023 financial evolution

All told, Universal Display's stock rose 77% in 2023. Its price-to-sales and price-to-earnings ratios climbed from fairly modest valuations to a princely 15.5 times sales and 44.4 times adjusted earnings. Investors appear to be comfortable with owning this former market darling at rather pricey ratios again.

You can count me among those satisfied Universal Display shareholders. The current valuation ratios may look steep, but the company has a plethora of upcoming growth catalysts waiting in the wings.

First, a wider range of devices are getting OLED displays nowadays. About 50% of smartphones sold today come with OLED screens, but the technology's penetration of the TV market stops at 3%, leaving a lot of room for growth in that sector. OLED displays are even more uncommon on laptops, tablets, and professional IT system monitors. The potential for rising market share across these devices is enormous.

The unique qualities of OLED screens are also reaching store shelves for the first time. One recent example is foldable smartphones. Other devices make use of transparent OLED screens, and Universal Display is working up stretchable displays as well. These quirky screen formats open the door to entirely new markets and innovative designs.

On a more technical level, Universal Display's patented technologies apply only to the red and green pixels in today's red/green/blue OLED screens. The company has been working on blue OLED elements with light production and lifespans comparable to their red and green cousins for more than two decades now, and a commercial-grade blue solution seems ready for launch within the next year or two. Delivering this new material should lower the power consumption of OLED displays, simplify the production process, and increase Universal Display's royalty-earning presence in each screen by more than 30%.

So I don't mind Universal Display's lofty stock valuation, because the company's future remains bright and its growth may accelerate in 2024. This is a nuts-and-bolts investment in next-generation technology, and I expect the growth story to continue for decades.