STMicroelectronics NV (ADR) (NYSE:STM) is a Switzerland-based specialized semiconductor company.

A few years ago, when RFID (radio frequency identification) chips were being touted as the new hot technology, STM stock attracted many investors looking for a stake in one of the biggest players as the subsector caught fire.

Today, RFID are chips are everywhere, primarily because of two key functions: They allow real time remote tracking of goods and they provide for much more efficient inspection of goods when they are being shipped from the factory to the retailer.

The chips are in nearly every package that is delivered to you or embedded into the tags sewn on new clothing .

Basically, they work like this: A factory in China fills a container with shirts destined for the U.S.

The shirts as well as the container are fitted with RFID tags, so that container as well as each shirt can be tracked.

When the container lands in the U.S., a quick scan of the container tag tells customs as well as the longshoremen, where the package came from and where it is supposed to go with a simple scan gun.

The container is routed to its destination and customs logs its entry and can bill the importer and exporter.

RFID tags are especially important on high-end goods and name brand medicines that can be stolen and replaced by counterfeits.

Internet of Things Beckons
It is a good business, but it pales in comparison to where STM has been expanding in recent years. Now it is a leader chipmaker for smart cars and the massive Internet of Things (IoT) revolution. According to IoT research firm Postscapes, the market is expected to grow from $130 billion in 2015 to $883 billion by 2022, a compounded annual growth rate of 32% for the next five years.

Not all of this will be STM’s, but the point is, the Swiss company will be a major beneficiary as will its larger competitors like Texas Instruments Incorporated (NYSE:TXN) and NXP Semiconductors NV (NASDAQ:NXPI).

Unlike those rivals, though, STM stock stands out because it’s a more-focused play than its competitors, having built a solid niche with original equipment manufacturers supplying a number of major car companies.

Trajectory for STM Stock
Its Q1 numbers were mixed when they came out in late April; earnings, gross margin and revenues were up smartly but came in slightly below estimates. Q2 should prove that the trend that was in place in last quarter is now increasing.

STM is consolidating its efforts now on smart cars and IoT and getting out of its other businesses. That effort continues and with the upswing in the broad tech sector should gain speed in coming quarters.

STM is going to be a player in this fast-growing sector for years to come and right now, it’s fairly priced even after its 44% run year to date. The Q2 numbers will be just a blip on the trajectory of STM stock, one way or the other.

— Louis Navellier

[ad#IPM-article]

Source: Investor Place