It’s always great to find a stock tapped into a major growth industry like 5G technology, renewable energy, or industrial automation.
But if you can find one stock that’s tapped into all three of those industries and pays you a nice dividend to boot, that’s even better.
That’s the case with our dividend stock today.
In fact, there are a whole slew of applications for its hardware and software for testing and measuring. Companies use these products to collect data efficiently, test prototypes, enable machine vision, and more.
Even if we just take these three industries that use its products – which is just scratching the surface – you’ll get an idea of the profit potential:
- The global 5G telecommunications market is expected to reach $277 billion by 2025, more than doubling in value every year along the way, according to a report acquired by ResearchAndMarkets.com.
- The global solar energy market is expected to hit $422 billion by 2022, according to Allied Market Research. That’s more than five times what it was in 2015.
- Allied Market Research also projects the global factory automation to be worth $368 billion by 2025, up from $191 billion in 2017.
We’re talking about three industries that are all growing exponentially and will be worth more than $1 trillion combined within the next few years.
On top of that, this stock also just got a top score from our Money Morning Stock VQScore™ system.
Now, this stock did just pull back slightly after a recent earnings miss.
But the market overreacted, and it missed how undervalued the stock was to begin with.
That opens up a nice short-term profit opportunity for investors who are ready to pounce.
Here’s one of the best dividend stocks to buy today…
From a Garage to the Top of Its Industry, This Company’s Rise Isn’t Finished Yet
National Instruments Corp. (NASDAQ: NATI) was founded by a trio of researchers from the University of Texas. They were annoyed by the tedious, inefficient processes of collecting and analyzing data with the computer technology of the time. So, they started a business to solve their own problem.
They started in the garage of one of the co-founders, James Truchard – or “Dr. T,” as he came to be known. Within two years, they were successful enough to move into a real office. And two years after that, the trio quit their day jobs to run National Instruments (NI) full-time.
They didn’t let success go to their heads, though. Throughout his tenure as president and CEO, Dr. T worked in an open cubicle like everyone else and didn’t even have an assigned parking spot.
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Today, NI has more than 7,500 employees operating in more than 50 countries and serving more than 35,000 corporate customers every year.
Because NI’s products include both hardware and software and are highly customizable, they serve a wide range of industries. And the company has proven to be able to adapt as new technologies emerge.
As the world prepares itself for 5G communications, for example, NI’s products are a must-have for companies to develop and test their 5G-compatible prototypes. Specifically, the company’s PXI chassis – outfitted with a couple key hardware items – communicates with the LabVIEW software platform to analyze the performance of a 5G device and display it through an easy-to-read graphic interface.
NI also plays a key role in the global trend toward renewable energy. That’s because its analytics tools streamline the process of taking old, fossil fuel-burning power plants online and implementing new, renewable energy plants in their place.
The National Grid in the United Kingdom, for example, uses 110 monitors running NI’s CompactRIO platform to keep its system running smoothly and spot inefficiencies that can be corrected. Perhaps most importantly, CompactRIO gives the company flexibility in implementing new energy solutions that it hasn’t even planned for yet. So, this central command platform should last the utility company for many years to come.
And in the case of industrial machinery, NI’s Sound and Vibration Toolkit software add-on for LabVIEW can detect changes in a machine’s performance that anticipate a breakdown or loss of efficiency. That way the equipment can be repaired before it’s a problem and thus minimize downtime and expenditures. This kind of capability is becoming absolutely essential in the age of automation, when a human isn’t always monitoring the equipment.
Thanks to the growth in large-scale projects in these booming sectors, orders of $20,000 or more have been NI’s fastest-growing segment over the last three years.
In July, the company’s excellence was recognized at Analog Devices Inc.’s Global Supplier Day in Boston. ADI gave National Instruments its top award, Supplier of the Year 2018, along with the Top Performer award for Equipment and Services.
That quality is going to keep NI in business for many years to come as companies work to bring the next generation of technology to market.
But even before that, you can grab a quick gain if you pick up your shares now…
Now Is the Time to Buy NATI
NATI shares had been rallying since June, but a slight earnings miss in late July sent it tumbling almost 11% in a day, down to just over $40.
But given its past performance and long-term prospects, the stock was undervalued even at $45. The stock’s latest downturn is an opportunity to grab shares at a significant discount.
Net income nearly tripled from 2017 to 2018, from $52.4 million to $155.1 million. As a result, NATI increased its dividend for the sixth straight year in 2019. At 2.48%, its yield is now three times the industry average.
Last year was also the third straight year National Instruments increased its net operating cash flow, which at $277 million is up 70% from 2015.
The latest fall in share price has only made the stock’s already enticing valuation metrics even more so. NATI’s forward price/earnings and price-to-cash-flow ratios are both below the industry average. And its price-to-sales and price-to-book ratios are both at half the industry average or less.
Those numbers aren’t likely to go unnoticed for long. So if you grab it now, this great long-term pick could hand you a quick short-term gain too.
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Source: Money Morning