Electronics maker Sony (NYSE: SONY) is a big deal in consumer electronics.
When the company hit the annual Consumer Electronics Show (CES) event in Las Vegas, most were expecting new improvements on old themes.
What Sony brought instead was a whole new paradigm. If I weren’t already bullish on Sony, this would have definitely pushed the needle for me.
Sony led off its year with a slight gain and a huge drop. It went from right around $100 on January 5, 2021, to almost $104 on January 7. However, by January 28, it fell to just over $95.
That was all the catalyst Sony needed for a huge jump in early February. It reached over $116 in the space of a week. Another sharp drop followed, nearly breaking $100 in March’s first week. Another recovery began, and Sony stayed above $100 for the rest of March and most of April.
By May 2, though, it was back under $100, and would keep dropping until May 12. However, May 12 lit a fire under Sony that saw the company begin a gradual, albeit choppy, rise. With the company now well above where it started for the year, Sony is walking into 2022 much better off than it was.
The latest news drew quite a bit of interest Sony’s way. Sony showed off an SUV version of its VISION-S concept EV. Previously, it showed off a smaller version at the 2020 show, but the 2022 show took things a little further.
Sony also established Sony Mobility Inc specifically for EV efforts. The company is also “exploring a commercial launch,” it revealed.
Wall Street’s Take
Turning to Wall Street, Sony has a Strong Buy consensus rating. That’s based on three Buys assigned in the past three months. The average Sony price target of $150 implies 21% upside potential.
A Huge Step Forward
It was one thing when Sony showed off the VISION-S at the CES in 2020. That was an eyebrow-raiser to be sure, but it was, essentially, just that.
With a second prototype in the fold, and the potential for a commercial release, Sony took the EV connection from “eyebrow-raiser” to “share-price-raiser.”
Sony was already a solidly diversified company. It had scads of consumer electronics. Bravia televisions were some of the best around. Cameras and other hardware carried their weight on Sony’s balance sheets even as more shutterbugs turned to their smartphones.
Then, of course, there was Sony’s incredible weight in the gaming market. It’s one of the leaders in console gaming, and it’s still nigh-impossible to find a Playstation 5 available at retail.
That’s all fine and well, but giving Sony a stake in the EV market is only that much better. We know that the EV market is downright explosive these days; all we need to do is look at all the recent entrants into the market to prove that much out. From Tesla (NASDAQ: TSLA) to Ford (NYSE: F) and a slew of Chinese EV makers, the market is packed.
Sony may be getting in on the back end, but it certainly has the name recognition to make a major entry. It also has the electronics manufacturing capability that such a venture will all but require to truly get anywhere.
Some car buyers might hesitate to buy a car from the same company that makes their TVs. However, buying another electrical product from Sony makes much more sense.
Just to top it off, Sony has an excellent dividend history. Sony’s dividend history makes it a good candidate for an income stock. The amount has fluctuated from quarter to quarter — sometimes up, sometimes down — but the company’s dividend traces back to 2016.
That kind of longevity does help, even if the yield isn’t as good as it is in some places.
Concluding Views
If Sony were merely building electric cars, it’d be dismissed out of hand. The market is increasingly full of competition. Some of that competition is well established.
Sony, however, is looking to build electric cars alongside all its other products. Even if the electric car line is only mildly successful, it’s still just a little extra profit to Sony that it wouldn’t have had before.
For Sony, this is one more potential revenue stream in a string of streams it can count to its credit. That’s a lot of why I’m bullish on Sony. It’s not depending on any one thing to make its profit.
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Disclosure: At the time of publication, Steve Anderson did not have a position in any of the securities mentioned in this article.
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