Left for Dead, This Stock Has Huge Potential

When a company with a ground-breaking technology takes a long time to evolve as a revenue-producing entity, its stock tends to drift lower over a prolonged period as investors seek better opportunities elsewhere.  The net result is that the stock either drifts to oblivion or is essentially left for dead, allowing management the time to right the ship and perhaps the stock as well. While I do not typically recommend fishing in this bottom-feeder arena, some real bargains can be found, especially if the company is in a non-sexy, boring business.

A great example is Liquidmetal Technologies, Inc. (OTCQB – LQMT - $0.21). The stock has clearly been left for dead, despite its strong trading volume.  But, with just a little bit of good news, these shares could be a double from here.

Liquidmetal Technologies is the leading developer of bulk alloys and composites that utilize the performance advantages offered by amorphous alloy technology, which is billed as "the metal of the future." Amorphous alloys are unique materials that are distinguished by their ability to retain a random structure when they solidify, in contrast to the crystalline atomic structure that forms in ordinary metals and alloys. Liquidmetal Technologies is the first company to produce amorphous alloys in commercially viable bulk form, enabling significant improvements in products across a wide array of industries. 

Although 2013 was not exactly a financial blockbuster for Liquidmetal with just over $1 million in reported revenue, some great strides were made that could result in meaningful revenue this year. In 2013, eighteen prototype shipments were delivered to customers in the aerospace, defense, medical and other industries. Separately, during the fourth quarter of last year, the company secured a $20 million equity line of credit under a common stock purchase agreement. Utilizing this equity line facility, the company raised $3 million earlier this year and is now debt-free.

As of year-end, Liquidmetal Technologies’ IP portfolio included 53 owned or licensed U.S. patents, with an additional 54 patent applications pending. Its patent applications relate to the composition, processing and application of Liquidmetal alloys. Clearly, with its patent portfolio alone, there is a good deal of value here.

Looking ahead, if even just a few of the prototypes shipped in 2013 are found to live up to their expectations following a battery of field tests, investors can expect that meaningful revenue can be generated this year, for the first time, which would have a profound impact on the stock.  Trading at the mid-point of its 52–week range, such news would surely take the Liquidmetal's  stock to its year high of $0.41, and likely approach $0.50 rather quickly.  Considering it is debt-free and has been largely forgotten, the risk/reward appears to be strongly in the favor of opportunistic investors.

 

 

Read More