About Small Cap Stocks Article of the Week
Written by Allen Caron
Apple’s big announcement on October 22nd revealed the latest iteration of their bestselling tablet, the iPad Air. Coming in at a weight of one pound - and 20 percent thinner - the upgrade seems to be more about style than substance. While it’s faster than previous iPads with its A7 processing chip, this may not be enough to get consumers to ditch their current tablets in favor of the latest version.
However, as a recent LA Times article points out, the “tablet revolution” may be running out of steam. iPad revenue grew by 83 percent in 2011 and 71 percent in 2012 - in contrast, Morgan Stanley research analyst Katy Huberty projects that iPad revenue will only grow by 8 percent between 2013 and 2016.
Of course, just because Apple’s iPad releases may not be as innovative doesn’t mean that tablet computing is dead. In Q2 this year, Android shipped twice as many tablets as Apple, capturing 67 percent of the market share that quarter. Plenty of small cap companies are also jumping in with new technology investment in tablet components or even entire devices. Especially as new generations of tablets are released, component providers are also focused on the potential upgrade path from first and second generation tablets. This short list of small cap stocks is just a few of the companies who are setting their sights on tablets:
Jhubei, Taiwan-based Silicon Motion Technology Corp. (Nasdaq:SIMO) creates controllers to support NAND flash products produced by a long list of clients, including Samsung and Toshiba. The company focuses on providing components for smartphones, tablets and notebook PCs. They’re also a dedicated provider of 4G LTE transceivers for Samsung’s Galaxy line of tablets. The company recently announced their latest project, a controller solution for new USB 3.0 flash drives. According to their press release, the new USB 3.0 flash drives have an industry-leading data transfer rate of up to 160MB/s. SIMO closed October 28th at $12.00, down $0.50, with a market cap of $396.95 million. Its 52-week trading range is $9.90 - $16.19.
OmniVision Technologies Inc (Nasdaq:OVTI), based in Santa Clara, CA, is one of the top three image sensor suppliers to the tablet and mobile market, working primarily with mobile phones. Their CMOS-based systems consume less power than CCD-based systems while also integrating all camera functions onto a single chip. OmniVision recently entered the wearable technologies market with their OmniGlass prototype, scheduled to begin production in late 2014. OVTI closed October 28th at $14.135, up $0.385, with a market cap of $796.56 million. Its 52-week trading range is $12.06 - $20.48.
While San Jose, CA-based Synaptics, Incorporated (Nasdaq:SYNA) falls just outside our usual scope with an $1.5 billion market cap, it’s an interesting company worth discussing when the topic of tablets comes up. Synaptics creates and supplies interface solutions for tablets and other devices. They have more than 1,900 capacitive touch solutions in the market currently, most notably their Synaptics Gestures Suite for Windows 8. Synaptics recently acquired Validity Sensors, Inc, a market-leading provider of fingerprint authentication, to enter the biometrics field. Fingerprint authentication is becoming more mainstream after Apple’s inclusion of the feature as an optional method of secured access for the iPhone 5S. By acquiring Validity, Synaptics can add biometrics functionality to their mobile devices. SYNA closed October 28th at $46.50, up $1.78, with a market cap of $1.5 billion. Its 52-week trading range is $22.94 - $56.50.
Shenzhen, China-based Nam Tai Electronics, Inc (NYSE:NTE) is an OEM manufacturing company that creates many different components for tablets and other electronic devices. They create color LCD screens that are incorporated into many products, from cell phones to fax machines. The company recently received an additional order for 12 million liquid crystal monitor, or LCM, screen units for smart phones, widely rumored to be components for Apple’s iPhones and iPads (by way of Sharp Corporation, a Japanese component manufacturer). NTE closed October 28th at $7.33, down $0.29, with a market cap of $327.52 million. Its 52-week trading range is $5.55 - $16.37.
Although analysts may not be positive about Apple’s continued ability to sustain double digit growth, tablets are likely here to stay. Small cap component manufacturers may be a great option for investors seeking out a technology investment that could remain lucrative for some time to come. In fact, tablet computers are set to overtake PC sales by the end of 2013 - just another sign of the times.
The About Small Cap blog covers breaking news on small cap stocks from around the world, delving deep into pressing issues both large and small that affect small caps. For example, we recently covered groundbreaking news about artificial heart technology in the small cap world. We write about things like natural gas drilling and interviews with notable personalities across a wide variety of industries, like Elemer Piros in the biotech sector.