LPL - LG Display: A Stock that Should Continue to Shine Through 2021

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As most of us spent our time at home over the past year, we got intimately familiar with our TVs and computers, many of which have OLED screens. OLED screens enable individual pixels to be turned on and off, making them more power-efficient than other types of screens, such as LCD screens, which need to be completely turned on or off. 

OLED screens also produce brighter colors with deeper contrasts. Many top TVs, monitors, and mobile devices use OLED screens. 

LG Display (LPL) is one of the world's largest display panel makers.  It is principally engaged in developing, manufacturing, and selling OLED display panels. Its products consist of panels for notebook computers, monitors, televisions, smartphones, and tablets. The company counts smartphone giants Apple (AAPL) and Huawei as its customers.

While LPL dealt with slow sales of smartphones and TVs in 2019, it bounced back last year. Its revenue rose in 2020, as the stay-at-home trend increased prices for panels used in monitors, mobile devices, and TVs. The company also benefited from the production of the iPhone 12, the first 5G device from AAPL.

In fact, LPL posted a net profit in the third quarter of 2020, which was its first profitable quarter in seven quarters. This was driven by higher market prices and the production of OLED screens at its new plant in China. The company's shipments were also up 5% for the quarter.

This led to strong stock performance over the past nine months, with the stock up 108.7% since June 15th, compared with a smaller gain of 29.4% for the S&P 500.  

LPL is targeting seven million to eight million annual unit sales in 2021. As long as there is demand for OLED screens, the company should see strong revenue. The next big trend will be foldable smartphones, where LPL will have a chance to shine.

The company has an overall grade of A, which translates into a Strong Buy rating in our POWR Ratings system. It also holds a Growth Grade of A, which makes sense since it saw its EBITDA rise 126.4% over the past year. Analysts expect its revenue to rise 57% in the current quarter and its earnings to soar 204.3% over the same period.

LPL also has a Value Grade of B, which is in line with its forward price to earnings ratio (P/E) of 9.7. We also grade LPL based on Momentum, Stability, Sentiment, and Quality. You can find those grades here. LPL is ranked #3 in the Technology – Electronics industry. You can find other top-ranked stocks in that industry by clicking here.

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LPL shares were unchanged in after-hours trading Monday. Year-to-date, LPL has gained 16.94%, versus a 6.03% rise in the benchmark S&P 500 index during the same period.

About the Author: David Cohne

David Cohne has 20 years of experience as an investment analyst and writer. Prior to StockNews, David spent eleven years as a Consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers.

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