current news and long-term investment strategy ?3

15:30 19-Mar-18

Today I think we're seeing a microcosm of why my investment priorities have shifted.  Although many of the dividend names that I've espoused have underperformed the market, today it's technology stocks and momentum stocks are taking it on the chin.  Universal Display is the worst of these, with a 15% percent drop attributed to a Bloomberg report that is really just the natural continuation of the Apple/AU Optronics collaboration that I wrote about at the end of 2015.  AUO was at below $3 back then, and I still am not very interested in it above the $4 level, as both the display market and work with Apple can be perilous.  Getting back to the spectacular demonstration of the latter point in OLED shares, I find it ridiculous that shares should move this way in response to a news item with virtually no scientific detail and closes thing to a quantified business projection being that an Apple microLED consumer product is still a few years off.  Any one of the numerous technological announcements we've seen in anticipation of SID Week should have been more important, as was Samsung's Wall demo at CES, and some of them are positive for UDC.  Even so, I also don't think there's much of a value argument to be made until OLED gets down to the $80 range, and even that would be tenuous. 

Much of the attention focuses on VR headsets, but indicates that the market is still not ready to move to microdisplays.  As such, I will monitor the eMagin fourth quarter report, scheduled for March 28th, but will probably not write about it, unless there is something truly surprising.

Instead, I am looking at how the dividend names that I have been accumulating are much steadier (with the expected exceptions of CTL and CQH) than the rest of the market in the face of the latest macro uncertainties.  The spot lights are falling on Powell's first FOMC meeting, and Mueller moving up the food chain.  I expect the market will get past both in the short term as though the latter may eventually prove to be more than political theater.  The tariff issues that I've cited all along are another matter, but nobody really knows what will happen with them at this point. 

I note that ABB is narrowly below what I would regard as fair value, but as with when I first wrote about, I would not be at all surprised to see better opportunity emerge right before the next dividend in early April.  ABB Ltd. continues to chug along in the key areas of automation and electric vehicles, and the latter has become a lobbying point with companies like AES as well.  Feel free to post a note to that effect in my latest article on SA.  On the other side of the vehicle equation is the new Volvo natural gas truck, which uses Wesport technology.  I still view WPRT and RESN as potentially disruptive enough to be worthwhile on the non-dividend side.