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AUO thoughts +2
A subscriber just asked for my quick thoughts on AUO...
The company just released December and full year earnings, up 3% MoM, but 21% YoY. As I've discussed in other posts, that extends a general improving trend since the bottom in the LCD market a year ago, which has accentuated in recent months.
As I've also said all along, AU Optronics possesses superior technical know-how, and it most recently demonstrated that again with a bi-directional foldable display. Nonetheless, I can't get to excited about this as an entry point. Foreign stocks are chronically undervalued, and I don't see that changing. The yearly dividend doesn't come until July and I see the general market as overbought. Thus, for those who didn't act on the opportunity that I identified closer to $2.50, though AUO may appreciate some in the short term, it goes in the same category as many other stocks, where I would prefer to wait for a severe market downturn to buy a dip. Even if that does not come soon, the only way I can see the stock sustainably exceeding the $4+ top I called back in August would be with firm developments on my Apple theory, and I haven't seen any compelling new evidence on that front. If anything, the prospects look less likely because Taiwan seems less-inclined to support its industries than, say, Japan or Korea. Solar is another possible, but more tenuous, longer-term, growth factor, which is not likely to develop before the dividend. In summary, I continue to like the stock and the company, but not the entry point.