NASDAQ: $DSWL – Deswell Industries – Undervalued precision manufacturer with large upside potential

NASDAQ: $DSWL – Deswell Industries – Undervalued precision manufacturer with large upside potential About the company/product: Deswell Industries, Inc. manufactures and sells injection-molded plastic parts and components, electronic products and subassemblies, and metallic molds and accessory parts for original equipment manufacturers and contract manufacturers. It operates in two segments, Plastic Injection Molding and Electronic Products Assembling. The company produces a range of plastic parts and components that are used in the manufacture of consumer and industrial products. The company sells its products primarily in China, the United States, and the United Kingdom  Share price & growth: The current share price is $3.52 ($52M market cap) Yahoo has a 12-month price target/estimate of $7.75 (+130% within a year) Simply Wall Street gives it a Fair Value of $62.47 (16x than current prices)  Stock Invest classes $DSWL as a rare Golden Star with significant gains to follow.  The cons: The company recently made a loss in 2020 due to lockdowns that halted production. This may again reduce profits in 2021 if Covid gets bad again in China. No known catalysts/news to cause sudden and rapid stock growth at this moment. The pros: Revenue is growing rapidly – up 50% in 3 years. Gross Profit Margin is a stable and strong 15% year-on-year while still ramping up production The company has a lot of assets and very few liabilities. DSWL is highly cashflow positive. Rumoured ties to being a considerable supplier of Tesla’s Shanghai factory (a client with huge growth prospects near-term growth prospects) Due to the strong fundamentals of the company they managed to pay out a very high dividend yield of 7%, something quite rare for a pennystock and also beats traditional investments in FTSE/S&P ETFs. If you’re LONG on this share like myself, the dividends will continue to reap benefits for you each year while you hold the stock High level executives have continuously purchased more and more shares including at an above market rate. Recently the chairman invested another $371K of his own money in one transaction to secure more shares. This should tell you something incredible is in the pipeline such as a new client deal or further, sustainable growth at minimum.  TL:DR The company has incredibly strong fundamentals/financials with a great forecast on future growth. It is a stock with: a high dividend yield, a high price target, great management, in a growing industry. With some visibility this stock could really run to reach its Fair Value. This isn't financial advice, this is just something I wanted to share to encourage discussion.

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NASDAQ: $DSWL – Deswell Industries – Undervalued precision manufacturer with large upside potential

Feb 23, 2021

bullish

fundamentals Analysis

[2 min Read]

NASDAQ: $DSWL - Deswell Industries - Undervalued precision manufacturer with large upside potential

About the company/product:

Deswell Industries, Inc. manufactures and sells injection-molded plastic parts and components, electronic products and subassemblies, and metallic molds and accessory parts for original equipment manufacturers and contract manufacturers.

It operates in two segments, Plastic Injection Molding and Electronic Products Assembling. The company produces a range of plastic parts and components that are used in the manufacture of consumer and industrial products.

The company sells its products primarily in China, the United States, and the United Kingdom

Share price & growth:

  1. The current share price is $3.52 ($52M market cap)

  2. Yahoo has a 12-month price target/estimate of $7.75 (+130% within a year)

  3. Simply Wall Street gives it a Fair Value of $62.47 (16x than current prices)

  4. Stock Invest classes $DSWL as a rare Golden Star with significant gains to follow.

The cons:

  1. The company recently made a loss in 2020 due to lockdowns that halted production. This may again reduce profits in 2021 if Covid gets bad again in China.
  2. No known catalysts/news to cause sudden and rapid stock growth at this moment.

The pros:

  1. Revenue is growing rapidly - up 50% in 3 years.
  2. Gross Profit Margin is a stable and strong 15% year-on-year while still ramping up production
  3. The company has a lot of assets and very few liabilities.
  4. DSWL is highly cashflow positive.
  5. Rumoured ties to being a considerable supplier of Tesla's Shanghai factory (a client with huge growth prospects near-term growth prospects)

  6. Due to the strong fundamentals of the company they managed to pay out a very high dividend yield of 7%, something quite rare for a pennystock and also beats traditional investments in FTSE/S&P ETFs. If you're LONG on this share like myself, the dividends will continue to reap benefits for you each year while you hold the stock

  7. High level executives have continuously purchased more and more shares including at an above market rate. Recently the chairman invested another $371K of his own money in one transaction to secure more shares. This should tell you something incredible is in the pipeline such as a new client deal or further, sustainable growth at minimum.

TL:DR

The company has incredibly strong fundamentals/financials with a great forecast on future growth. It is a stock with: a high dividend yield, a high price target, great management, in a growing industry.

With some visibility this stock could really run to reach its Fair Value. This isn't financial advice, this is just something I wanted to share to encourage discussion.

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DSWL

Deswell Industries, Inc.

3.13

-0.06
-1.88%

Return

-14.71%
Change % Since Posting
-0.54
Change Since Posting
3.67
Price When Posted

Metrics

4.04
Target Price
8/ 10
Confidence
6-12 Months
Timeframe
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Earnings Per Share
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Financials
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Management
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Price to Earnings Ratio
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Dividend
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Other Catalyst

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