Trading Himax Technologies Can Be Very Lucrative

About a month ago, I recommended investors to sell Himax Technologies, Inc. (HIMX) as the stock had rallied to new highs.

Previously, I had been bullish on Himax Technologies for several years and the stock had performed very well. After my latest sell call, Himax Technologies lost considerable market value on account of several analysts’ downgrades.

Here is your opportunity to profit

As someone who has been following Himax Technologies for many years, I can say that the stock tends to be very range bound and investors can profit considerably from timing the rallys and selloffs.
After the pummeling Himax Technologies took in the last few trading sessions, I think investors can consider buying the stock on the pullback, at least for the short-term.

Although Himax Technologies is a growing company and its presence in the VR and AR market makes it a pick for the long-run, I think the stock can be a great winner for short-term investors as well.

While long-term investors should see this pullback as a buying opportunity, traders can also benefit from the downfall by going longs via call options.

Heading into the earnings season, I expect Himax Technologies to continue performing well as the company’s business is still fundamentally strong.

Himax’s current valuation may not be conservative, but many investors have bid up the stock with high expectations, despite knowing that both the VR and AR industries are still in their nascent stages of development.

While Himax Technologies may be overvalued at 40x trailing price to earnings ratio, I think investors’ enthusiasm and the company’s strong business should help it bounce of the recent pullbacks.

It's expensive, but traders should capitalize

Investors are expecting a lot from Himax Technologies down the lane as the stock is trading at over 40x trailing earnings despite reporting very little year over year growth.
Trading Himax Technologies Can Be Very Lucrative
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While Himax Technologies may deliver in the long run, I think short-term investors can consider buying the stock after the recent pullback.

I expect Himax Technologies to report good earnings and can see the stock inching towards $10 mark again in the near future. Investors can also go long via call options to maximize their gains.

Disclosure: No position.
Published on Oct 7, 2016
By Ayush Singh

Copyrighted 2020. Content published with author's permission.

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