For the week ended July 13, LCoS and 3D Sensing supplier Himax Technologies (NASDAQ: HIMX) traded close to the $8.00 level. Although short-term movements are largely unpredictable, Himax typically has seasonal strength ahead of its yearly dividend distribution. Is a breakout past $8 possible or should investors take profits in the stock?
Himax continues to trade in a narrow range in the $7 - $7.75 range. Longtime shareholders may only wait for at least a few quarters more to participate in the bigger upside. The company is transitioning its plants to support the build-out of 3D sensing, in partnership with Qualcomm (NASDAQ: QCOM). Yet the growth potential here is limited in the near-term. Customers, who are building high-end Android smartphones, each require extra support and more time as they implement their variation of the technology.
This could limit the run-up in HIMX stock in the next one to two quarters.
Ongoing trade war talk is another negative macro headwind. Its direction and potential resolution cast uncertainty on the sector. For now, tariffs are not adding to the costs of goods but in time, it will. That could have a negative impact on smartphone sales, in listing just one of many goods.
Takeaway
Himax’s upcoming dividend is lower than last year, so getting the distribution is not enough of a reason to hold the stock. Still, the payout is a vote of confidence from management that the company rewards its fixed-income investors and other shareholders.
