Economic recovery and new technologies made the consumer-electronics sector hot for investors—the sector was up 36 percent in 2013. However, as industry analyst Jeff Kagan puts it, most companies that are in this sector aren’t “hitting it out of the park.” Consequently, a safer play is to look for companies that supply components to consumer-electronics companies, says Steve Frankel, who is an analyst at investment bank Dougherty. For that reason, Frankel likes Universal Electronics (Nasdaq: UEIC; Price: $37.00), whose customers are the electronics companies that sell to consumers.
Universal Electronics beat profit expectations in 2013 and should remain a good bet in 2014, Frankel says, because the company provides wireless control devices and chips for home entertainment equipment. As Universal Electronics customers introduce cable boxes, DVR technology and high-definition technology, “that pulls through a new remote control for Universal Electronics,” he says.