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Orbotech Stock Has Many Growth Catalysts

Today’s stock represents another of our favorite methods of investing in growth stocks. The picks and shovels method of investing implies investing in stocks of companies that provide solutions for the popular prevailing technology trends. Investors stand to gain superlative returns if they consider these stocks for the long term.  

The case in point being

Orbotech Ltd (NASDAQ: ORBK), which is a leading global supplier of cutting-edge solutions for the manufacture of electronic products. Its technologies are used in the manufacture of the world’s most advanced consumer and industrial products throughout the electronics and adjacent industries. Orbotech systems are used to produce virtually every electronic device in the world.

The company provides cutting-edge solutions for use in the manufacture of Printed Circuit boards (PCBs), flat panel displays (FPDs) and semiconductor devices (SDs). These solutions are used in the production of next-generation electronic products besides improving the cost-effectiveness of electronics production processes. The future looks still better for the business and ORBK stock.    

The breadth and reach of Orbotech solutions can be gauged from a recent piece of news that has come about. Orbotech announced today that LG Display has ordered multiple Quantum AOI (automated optical inspection) for Flex solutions for its new flexible OLED display Gen 6 Production line.

LG Display is a leading innovator of display technologies and Orbotech solutions are to be used for its flexible mobile device display production. Delivery of the solutions is expected to be split between the first and the second quarter of 2018. (Source: >Orbotech Solutions Selected by LG Display for New Flexible OLED Display Gen 6 Production Line, Orbotech Ltd, February 14, 2018)

The President of Orbotech Pacific Display, Edu Meytal, said that the repeat order from LG Display is evidence of the high quality of the advanced solutions by Orbotech.

With the rising megatrends of connectivity, artificial intelligence (AI), smart vehicles, high-performance computing, augmented/virtual reality (AR/VR) etc., there are huge opportunities for Orbotech stock to grow in future. Orbotech solutions are deployed from high-end mobile devices to smart vehicles and are in demand from large area FPDs such as large-size LCD televisions and OLED displays.     

Internet of Things (IoT) is expected to be a primary growth driver in the near term, which will create new opportunities for semiconductor devices and printed circuit boards.  As per a forecast by Gartner, 20.4 billion connected things will be in use worldwide by 2020. (Source: >Gartner Says 8.4 Billion Connected “Things” Will Be in Use in 2017, Up 31 Percent from 2016, Gartner Inc, February 2017)

Orbotech is well-positioned to capitalize on such new opportunities. As the demand for connectivity, smartphones, OLED, AR/VR and other applications increases in future, the demand for Orbotech’s tools and solutions shall keep on rising, which bodes well for Orbotech stock.   

The company announced preliminary fourth quarter and fiscal year 2017 results last month and updated its full year 2018 guidance. Revenue is expected to be about $256 million for the fourth quarter with gross margin likely to be in the range of 47%-47.5%.

The CEO Asher Levy commented that the company offers “unique solutions to the manufacturing processes for the world’s most advanced consumer and industrial electronic products.” He further added that the recent introduction of new products and technologies is resulting in stronger revenue momentum and improved visibility in 2018. (Source: >Orbotech Announces Preliminary Fourth Quarter And Fiscal Year 2017 Results, Orbotech Ltd, January 17, 2018)

The improving performance has had a positive impact on ORBK stock as well. The following chart shows this phenomenal rise over the years. Orbotech stock has gained more than 400% in the last five years and over 50% over the last one year.

orbotech stock chart>

Chart courtesy of >www.stockcharts.com

Analyst Take

As Orbotech announces its fourth quarter and full year 2017 results today, investors will have good reasons to consider this picks and shovels stock. The company is helping to shape the future of electronics and shall benefit immensely from the adoption of new technologies in the industries that it serves.

Orbotech enables the transformation of the electronics industry with innovative production processes and solutions. Over the past three years, it has become a stronger and more diversified company and less vulnerable to short-term industry cycles.

The prevailing trends in smart mobile devices, automotive electronics, flexible applications and devices, IoT etc. are likely to drive the demand for Orbotech solutions higher. Investors should consider Orbotech stock on dips.

Source : https://www.profitconfidential.com/stock/orbotech-stock/orbk-stock-gaining-from-the-megatrends/

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