WaveStrength Market Trends for November 07, 2006
The New Era of Television
By Ann Sosnowski
My father used to be a conventional man. He would never buy the “hottest new thing.”
So you can understand my surprise when I stopped by to see him a few weeks ago, and there in the living room was a shiny straight-out-of-the-box LCD flat panel 40” television… sitting on top of the TV stand he’s had since the early 1970s.
He looked at me and said, “Now I can watch my John Wayne movies a lot clearer.”
Believe me when I say this, I was jealous. Of course, he’s smack dab in the middle of his lifetime where he has the most buying power he’s ever had as a baby boomer. But I sure wish I had a TV like that.
But it’s not just my father buying these TVs. Parents and grandparents of my friends are dishing out the money to increase their viewing pleasure. My brother, after only two years, is upgrading his 40” TV for a 46” flat panel that you hang on the wall and which emits ambient light according to the colors displayed on the screen.
I’m telling you… it’s a buying frenzy.
According to MSNBC.com:
“By next year, the tube TV will cede its crown of dominance to LCD sets for the first time, according to the market research firm iSuppli Corp. Sales of CRTs [cathode-ray tubes] will fall from an estimated 14.4 million units this year to 10.4 million in 2007, while sales of LCD TVs are predicted to rise from 10.9 million units to 17.8 million.”
That’s an increase in LCD TV sales of 63.3% and an even bigger decline of 72.3% on basic CRT models!
Most of this is due to the current affordability of the technology. As with all technologies that will eventually have legs, as occurred with the DVD player and the CD player, units are first priced on the market at outstanding prices for the more wealthy to absorb. When the technology is absorbed, and a demand is made, the prices quickly go down for the middle class… which is exactly what has happened with LCD televisions.
According to the Web site DisplaySearch, and cited in the same MSNBC.com article, LCD prices have fallen by 30% annually since 2003. 32-inch LCD televisions could be as low as $500 per unit by next Christmas.
Add into the mix the fact that the government has imposed a deadline of February 2009 for all television shows, events, and specials to be broadcasted nationwide in all-digital, and you have every reason to believe that investing in the new era of television is a really great idea going forward.
So what can you do with this information tomorrow?
Well, there are a couple ways I’ve found to play this.
LG.Philips LCD Co., Ltd (LPL:NYSE) is a sure bet. It’s a pure play on the rise of the LCD television, since the company manufactures and supplies thin film transistor LCDs to equipment manufacturers.
The stock is lowly priced at less than $17 per share. Most exciting is that the company’s daily chart is due for a positive crossover, and could rise as much as $3 to its 200-day MA over the short term.
Of course, in light of the extreme paradigm change in the television sector, you would want to keep a hold on the stock for a while if you purchase it.
Also, Matsushita Electric Industrial Co. Ltd. (MC:NYSE), a Japanese company, makes Panasonic LCD screen televisions and JVC electronics. The company’s second quarter/first half-of-the-year earnings showed an increase in revenue, due in part to increased sales of flat-panel televisions.
Those sales will only get better.
MC is priced low at almost $20 per share. It’s currently trading somewhat flat around the 200-day Moving Average, but is extremely oversold, so it offers a good entry point at current levels.