If you caught my webinar on February 5 -
How to Corner the Tech Market by March 30 - you'll recall that I named the single best technology investment for the next 60 days.
That company was touchscreen innovator,
Uni-Pixel, Inc. (UNXL).
Mission accomplished!
The
stock is up over 50% since my prediction. In the meantime, the S&P
500 and Nasdaq Composite have both fallen about 1% over the same
period.
Forget about thanking me, though. The question now is: "Do we take profits or let them ride?"
Definitely the latter. Here's why...
Make Way for More Growth
Technically, Uni-Pixel is still a development stage company (i.e. - minimal sales and zero profits).
But
in the company's conference call on Tuesday evening, management
revealed that it's about to make the transition to a full-scale
manufacturing and sales company. In a major way.
The executives expect revenue to catapult from a measly $76,200 in the last year to $5
million in the next quarter.
In case you don't have a calculator handy, that's a growth rate of 6,642%.
Keep
in mind, we're already two months into the first quarter. So the
Uni-Pixel team would have to be downright insane to provide such
guidance unless they were supremely confident of hitting that figure
(or higher) within the next 30 days. After all, Wall Street is all about
underpromising and overdelivering.
Undoubtedly, that $5-million figure is impressive.
But guess what? Uni-Pixel isn't even anywhere close to exhausting its growth potential yet.
You see, $5-million figure is a pittance compared to the total market for touchscreens.
DisplaySearch
pegs the current market size at about $13 billion - and expects it to
more than double to $32 billion over the next five years.
So, clearly, there's much more room to grow for Uni-Pixel.
CEO
Reed Killion confirmed as much when he stated on the conference call:
"It's paramount that we scale capacity as quickly as possible to meet
demand."
The company's actions back up his urgency,
too. Uni-Pixel recently ordered two more roll-to-roll printing machines
and two more plating machines. Each is capable of producing one million
square feet of film per month.
You don't invest in
equipment if there isn't enough demand to justify the expenditure. So
why are companies increasingly anxious to work with Uni-Pixel?
Right Place... Right Time... Best Technology
Well,
for a start, Uni-Pixel is operating in the sweet spot of a growing
industry. Growth that industry insiders clearly underestimated, by the
way.
In December 2012, for example, Bob O'Donnell,
Vice President of market research firm, IDC, revealed, "Touchscreen PC
sales have actually exceeded market expectations."
Around the same time,
Lenovo's (LNVGY) North American President, Gerry Smith, confessed to CNET that the industry had miscalculated touchscreen demand.
But I assure you that Uni-Pixel's potential hinges on much more than the popularity of touchscreens.
It's also positioned at the right time... with the best technology, to boot.
The company's UniBoss technology boasts notable competitive advantages...
- The copper mesh that Uni-Pixel uses costs significantly less than indium tin oxide.
- In addition to lower material costs, the additive nature of Uni-Pixel's production process also reduces manufacturing costs.
- UniBoss scales almost linearly to many sizes and form factors - from smartphones to large computer monitors.
- On
the performance side, UniBoss "offers higher touch response and
sensitivity, superior touch distinction, better durability and lower
power requirements," according to Killion.
Now, a superior product is all well and good. But as investors, we need additional insurance.
And
that comes in the form of the patents that protect Uni-Pixel's
technology. The company currently holds three patents, has filed 71
patent applications, and is in the process of completing another 20 or
so applications.
That means a cash-rich industry giant
can't simply reverse engineer the technology and put Uni-Pixel out of
business. Plus, boasting that much intellectual property is a
significant deterrent to new entrants in the marketplace.
Speaking
of competition, none truly exists, which further explains why
Uni-Pixel has been "inundated with customer requests," and is
"knee-deep in discussions with multiple companies," according to
Killion.
Two Big Announcements Are Coming
As
I noted in our webinar, Uni-Pixel already announced a preferred
pricing capacity license with a major PC maker. The announcement alone
prompted an 82% rally in the share price.
Killion says
the company expects to close another preferred pricing capacity license
with an "ecosystem provider within the next four to six weeks, or
sooner."
And Uni-Pixel is also set to secure a joint venture with a "world class manufacturer" in the second quarter.
Management
remains coy about revealing the identities of these potential
partners. But one analyst pressed Killion on the conference call about
what types of companies would qualify as "ecosystem partners."
The CEO's response?
Google (GOOG),
Apple (AAPL),
Microsoft (MSFT),
Qualcomm (QCOM) or Foxconn "would equate to an ecosystem partner."
So
we're talking about some of the biggest technology companies in the
world potentially partnering with a $221-million market cap innovator.
That doesn't happen unless the technology is legitimate.
Add it all up, and Uni-Pixel still represents the best way to corner the tech market for profits by March 30.
Remember, the announcement of the next capacity license agreement is forthcoming in the next four to six weeks, maybe sooner.
While
I don't expect the announcement of the next deal to produce the exact
same response as the first one, it's definitely going to move the stock
noticeably higher.
Plus, it'll provide additional market validation for Uni-Pixel's disruptive technology.
Tune Out the Naysayers
Of
course, the bashers on Seeking Alpha and elsewhere are bound to renew
their efforts to discredit the company in the wake of these
developments. But I think Uni-Pixel's plan of attack to rebut any such
claims and "misinformation" is spot on: Ignore it and focus on putting
up results, instead.
And please know that my
bullishness isn't because I've followed Uni-Pixel longer than every
other analyst (since early 2011). It rests squarely on the company's
technology, its progress thus far and the opportunity ahead.
In fact, I'm not the only one who's convinced that the latest quarterly report points to much more profit ahead.
Following the call, the analysts over at Craig-Hallum and Williams raised their price targets to $31 and $40, respectively.
I
think both are a tad conservative. But nevertheless, they imply
another 30% to 70% upside to the current share price. So by all means,
keep buying.
Ahead of the tape,
Louis Basenese
