I took some notes from a recent presentation:
This company owns a bunch of touch screen functionality patents and continuously files litigation to reach deals for licensing revs from smart phone makers.
Their are different levels of the licensing (the more complex the license, the more expensive) and they expect a huge opportunity in their high end markets in the next few years.
Catalyst: People want the smartphone look and feel everywhere. This includes microwaves, printers, auto infotainment systems etc. They also believe there is a large market in industrial applications.
98% of revenues are from licenses and royalties
- 2/3 of their revenues come from mobile devices
- 1300 patents in their portfolio (if I remember correctly about half are pending)
- this allows 99% margins
These high margins allow them to pile up cash.
- 50% cash growth from Jan 1st to April 1st
- No debt currently.
They mentioned Chinese companies (a buzz word?) want to work with them to develop HD touch screen products for other markets (specifically noted other forms of entertainment).
Let's take a look at the charts. This first chart shows the all time weekly chart. The stock traded in a wedging pattern for roughly six year and broke out in March. This gives us a long term target of 26.
This next chart just shows the different fibonacci levels. They give us a shorter term target around 17.5-18 and confirm the long term price pattern target near 27.
To recap: I don't think we can argue that high quality touch screens will be less prominent in a couple of years than they are now. That's just the way the world is going.
Also, regardless of what we think of the fundamentals, the charts are showing us there are upside gains to be had in this stock over the coming weeks and months.
So all in all this has to look pretty compelling to funds and investors in the intermediate term. Good luck out there. Keep digging.
Don't forget you can follow me on stocktwits @a_jackson and twitter @a_jackson8
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