1 Huge Risk Universal Display Corporation Bulls Need to Know

1 Huge Risk Universal Display Corporation Bulls Need to Know

Shares of Universal Display Corporation (NASDAQ: OLED) may have risen 118% year to date, but the stock is still a buy. Why? The company's decade-long strategy to go all-in on organic light emitting diodes, or OLEDs, is finally paying off -- but there are plenty of opportunities left to expand the market. Thanks to a patent portfolio spanning some 4,200 exclusive claims to OLED technology, any display panel maker that wants to take advantage of it pretty much has to go through the company.

Then again, placing all of your chips on a single technology works both ways. It will drive growth for the foreseeable future, but it also exposes the company to significant risks if and when the technology landscape changes. While it remains a relatively distant threat, there's a clear pathway for replacing OLEDs with a superior technology -- and it starts with what is likely its largest customer. It's one huge risk Universal Display Corporation bulls need to know.

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Source: Fool.com