When it comes to building wealth, nothing beats the stock market. But there are risks of losing your money. Because of this, you need to do your homework before investing in a stock. Over the years, I’ve done a lot of homework on stocks and I keep coming back to Texas Instruments (NYSE: TXN).
Whenever I read their earnings reports or look at detailed filings the company has made, I am always looking for the negative. I am looking for that one thing that might give me pause when thinking of investing in this stock.
But I never find it. And that has made me nervous in the past. After all, we all know the old saying, if it sounds too good to be true, it usually is.
But I’ve changed my tune on Texas Instruments. There really is no negative to this stock. It is a powerhouse that consistently delivers for shareholders. And looking towards the future, it looks as though it will continue to deliver.
Let’s take a closer look at Texas Instruments so you too can see how this might be the safest stock to invest in.
Investing In Texas Instruments
To fully understand Texas Instruments, you have to go back to the beginning, back in 1930. This is when the company was founded as an oil company. It wasn’t until the 1970’s when it shifted its focus to computer processors when things started to happen.
Today, Texas Instruments makes computer chips. They have 2 main areas of expertise here, in both embedded and analog processors. Here is what each of these do:
- Embedded processors: the brains of any electronic device
- Analog processors: allows the computer to interact with humans by turning the real world into the digital world
Over the years, Texas Instruments has been a steady source for both income via dividends and through share price appreciation.
In their most recent earnings release, earnings per share came in at $1.24 beating estimates by $0.12. Revenues were up as well, coming in at $4.1 billion. This was an increase of 12% and they beat estimates here as well by $210 million.
In fact, the company has a history of consistently beating earnings reports. The company also has a history of increasing the dividend it pays too. They have raised the dividend for 14 straight years and the grow rate of the dividend alone is 24%.
The Future For Texas Instruments
Of course, when investing, we want to make sure that the future looks bright for any stock we are considering, and Texas Instruments fits the bill here.
On the production front, new technologies in manufacturing are driving down the costs to produce processors. This is growing the profit margins for the company.
On top of that, they are also growing sales. Two areas in particular are automobiles and industrial. With automobiles for example, as more car makers add technology to their vehicles, Texas Instruments is there to supply the processors.
And we haven’t even talked about the potential Internet of Things market yet.
Finally, Texas Instruments has a diverse list of clients it sells to. And for me, this is the best feature of the company. They have over 100,000 customers in 6 different user markets. These user markets can be further broken out to 35 sub-markets.
So any decline in one area should not have a major impact on how Texas Instruments does business.
When it comes to earnings, analysts expect the company to grow 10% in 2018 and around this same target for the next 3 years.
Overall, Texas Instruments is a slam dunk. They are keeping costs low, growing sales and have a diverse customer base. In all, they are a prime target for any investor looking for long term, steady growth. And when you look that their stock chart, you see this played out perfectly.
Add in a growing dividend and there isn’t anything to dislike about the stock. That is unless you want an investment that provides a sky high growth rate. But for me, I’d rather invest in Texas Instruments and enjoy the smooth ride.
This author has no positions in any stock mentioned and does not plan to open any positions in any stocks mentioned for at least 72 hours after publication of this article.