STMicroelectronics (STM)

[ap17]

Snip of SA report:




Capital Returns


ST has been actively repurchasing its stock and has authorization remaining to continue. Keeping in mind that the shares pay a dividend, some future financial flexibility can be obtained by eliminating distribution when stock is bought back. Various ratios also should improve because of the lower share count.

Valuation and Price Target

Even if there is no wireless charging design win with Apple or Samsung, other drivers are in place to potentially limit the downside. However, if continued prospects are evident, an investor can potentially own shares for the long term. Particularly fast growth is already being forecast by the analyst community, however.

Also, the stock is just off its 52-week high. It would be nice if it comes down some. A 5% pullback could provide an opportunity at $16.57.

In the meantime, the shares can be directly compared to peers that also pay dividends. A valuation table that uses PEGY follows:



If the share price reaches the current average, the stock would trade at $24.76, or 45% higher.

Conclusion

Apple is widely anticipated to implement wireless charging in its newest devices. There is reason to suspect that ST has won the slot. If not, it probably has gained content with Samsung. Not only that, but the Others segment is revitalized, and there is relatively strong growth in automotive. Despite these things, the stock trades at a discount.

Risks include foreign activities and exchange rates.

Overall, STM appears to be worth consideration as a potential long-term investment that can outperform, particularly if it is available near $16.50.

https://seekingalpha.com/article/4095749-stmicroelectronics-looks-like-buy?app=1&auth_param=1bsqd:1cog7ni:6317a3b5cf2ca29614a17f10a53d68c7&uprof=45#alt2