Is Himax Technologies Setting Up for a Big Move? – June 21, 2021

Himax Technologies Inc (HIMX) is a semiconductor solution provider dedicated to display imaging processing technologies. It offers display driver ICs and timing controllers used in TVs, laptops, monitors, mobile phones, tablets, digital cameras, virtual reality (VR) devices, and many other consumer electronics devices.

The company is benefiting from long-term demand for displays in smartphones, smartwatches, and other devices. HIMX is a major supplier of the chips needed for screens and touch displays. This demand has led to year over year rises in both earnings and sales in the most recent quarter.

HIMX has a current ratio of 2.1, which indicates the company has more than enough liquidity to handle short-term obligations. Management is also efficient with a return on equity of 20.2%. Analysts forecast 81.4% year over year revenue growth and 4,500% year over year earnings growth in the current quarter.

Even with all that growth, the stock is still highly undervalued with a forward P/E of 7.48. The stock has certainly shown bullish momentum over the past year with a 310.6% return, though performance has been mixed since March as seen in the chart below.

Take a look at the 1-year chart of HIMX below with added notations:

After hitting a peak back in February, HIMX moved into a sideways trading range. While in the range, the stock has formed a resistance level at $16 (red), and a level of support at $10 (green).

HIMX is currently pulling back from $16, but at some point the stock will either break the resistance or the support. The possible long position is on a breakout above $16. The ideal short opportunity would be on a break below $10.

Author: Christian Tharp, CMT