Liquid crystal display (LCD) products are one of the fastest-growing segments in the established display markets.
Yes, I know what you're thinking. "Please, not another article on LCD." But the truth is, more and more businesses are realizing greater operational efficiencies by outsourcing LCD manufacturing -- mainly by reducing overhead costs such as those for facilities, personnel, and tech developments.
I know the Street has already picked over this field like a monkey with a fine-toothed comb. But I think it has missed one little jewel: International DisplayWorks
I like International DisplayWorks' prospects for the following reasons: The company produces low-cost, high-quality products and is able to support customers at every step along the way, from product design to post-sales support. International DisplayWorks' model is attracting customers because it allows them to stay focused on their areas of expertise.
International DisplayWorks' list of new clients is pretty impressive. Just a few weeks ago, SanDisk
And speaking of revenues, for the year ended Oct. 31, 2005, International DisplayWorks reported a 90.9% increase in net sales, with revenues climbing from $46.2 million in 2004 to $88.3 million -- nearly four times the 2003 full-year revenues. International DisplayWorks also reported its ninth consecutive profitable quarter, with net income for the year increasing 251% to $3.8 million, or $0.12 per share, versus $1.1 million, or $0.04 per share, for 2004.
There are some other tasty morsels to chew on, like the 229% revenue growth in Asia last year. The U.S. and China markets weren't too shabby either, as revenues grew more than 50% for both regions last year. And acquisitions have been fruitful: One alone, Three-Five Systems in Beijing, has brought in eight significant customers.
However, there are a few things investors may want to consider before diving in. While selling, general, administrative, and marketing costs have improved over the last year, raw materials prices dunked gross margins by 410 basis points. And although International DisplayWorks' recent stock offering generated about $67.9 million of working capital, which could be used to acquire companies or even pay down debt, the extra shares do put added pressure on the "e" in EPS.
But with the LCD market growing strongly and outsourcing efforts on the rise, it appears the Street may have overlooked this little jewel.
To see other displays of beauty: