STMicroelectronics' Content Growth Opportunity Outweighs Short-Term Cyclical Pressures

Everybody talks about companies surprising the Street, but, every once in a while, the Street has its own surprises - for instance, when investors are willing to look past near-term pressures and focus on the bigger picture. With weakness in autos and industrial markets pressuring STMicroelectronics (STM), analysts could have responded to lowered guidance for the second half of 2019 with "Hah! I told you they couldn't do those numbers!" Instead, the Street seems to be willing to look past a few bumps in the near in favor of the increasingly attractive long term.

While I'm a little surprised to see it, I agree with it. I think STMicro has a very attractive long-term story, driven by content growth and new product opportunities across a range of markets. What's more, I think this downturn has offered solid evidence that this is a new, better, more sustainably profitable company than in the past. Although I'd ideally like to pick up shares below $17.50, I think the stock can still work from here, particularly for more buy-and-hold-oriented investors.

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STMicroelectronics' Content Growth Opportunity Outweighs Short-Term Cyclical Pressures