Markets have been relentless in sending small and micro-cap names lower. In fact, very few stocks have been spared from the broad-based correction in major markets. But that doesn't mean the markets have justification for doing so. While price is the truth of the day, it's still most appropriate for investors to look at a company's fundamentals, history of growth, guidance, and the sectors where they do business before bowing to correcting prices. In other words, instead of following the herd mentality, taking advantage of the opportunities exposed could be a better and more profitable course of action. KULR Technology Group (NYSE-AMER: KULR) stock is one of those exposed opportunities.
Why? Because KULR represents exposure to next-generation lithium-ion battery safety and thermal management technologies, and by all measures, KULR is in the right markets at the right time to seize massive revenue-generating opportunities. That's due to the "green" revolution ushering in the most significant shift in how everything from cell phones to hypersonic missiles gets powered, resulting in billions of compact high-energy power sources already into the markets and tens of billions more to come. But what's missing from the technology could be the most vital part of the "green" commitment- safety.
And that's the market KULR targets, leads, and is ideally positioned to generate millions in new revenues over the coming quarters. Thus, with KULR shares beaten down to roughly $1.40 a share, it presents an investment opportunity is too good to ignore.
In fact, following on the heels of reporting its best quarter and yearly results in its history, trading ahead of its Q1 results next week may be the perfect time to capitalize and profit from prices suggesting KULR shares are substantially disconnected from even a conservative intrinsic measure. More simply put, KULR is an attractive and timely consideration.
Video Link: https://www.youtube.com/embed/cqFtv-RjT0I
Battery Safety Is A Need, Not A Luxury
Remember, battery safety is not considered a luxury option; it's a necessity. Videos of exploding cars, phones, hoverboards, and consumer home products validate that point. And the risk to manufacturers utilizing lithium-ion battery power gives them every reason to be concerned. In addition to product liability, a preventable event could cause brand name deterioration, loss of market share, and very commonly, loss of shareholder value. Tesla ($TSLA) stock is a prime example of how one video can cost millions in market cap in a single day. If the video implies inherent risk, billions can be lost.
It's a reason for global concern, and rightfully so. But the thing to know about the KULR technology is that it is ready to address those concerns today and already has the technology to significantly mitigate explosion and fire caused by lithium-ion batteries across a broad use spectrum. Current clients include NASA, Lockheed Martin (NYSE: LMT), Johnson Controls, Leidos (NYSE: LDOS), and the Andretti United E Team racing group.
And that's only a few of the A-list clients. Other companies contribute to the Who's Who client list, helping KULR transform from a small-cap battery-safety solutions provider into a potential revenue-generating juggernaut.
Green Technology Needs Safety
That's not an overzealous presumption. KULR technology and products can be critical to lithium-ion battery safety. Better still, from an investor's perspective, they may be the best at doing so. So good, in fact, that KULR technology has already been used by NASA and Microsoft ($MSFT) as part of its Mars Perseverance 2020 rover. But, more than reaching into space, things on earth are also promising. And with a quickening pace on a global scale to replace fossil fuels, the multi-billion dollar market opportunities are likely to move closer to a trillion-dollar market over the next decade. The EV sector alone will be a more than $500 billion combined industry opportunity.
Tesla (NASDAQ: $TSLA) expects to produce 20 million vehicles by 2035. And they are just one of more than twenty manufacturers contributing to the booming sector. But forget the cars for a moment. While their well-designed shells attract customers, what's powering the vehicle is a common factor in all- battery power. And a lot of it is in very compact packaging.
With that compact size and power capacity, the risk associated with thermal runaway, the primary cause of battery fires, is, and should be, a concern of an industry in hypergrowth. While not getting the headlines deserved and only some social media to help expose the inherent dangers of these lithium-ion capsules, more attention than ever, even if only behind the scenes, is earning their place on the desktops of industry executives.
Company leaders understand by not working proactively to prevent potentially catastrophic events, they could face liability. Not only financial but also brand reputation, market share, and, as noted, loss of shareholder value. Most important, and one that deserves the most attention, is the loss of life from not taking appropriate and every available precaution. And that last consideration may be the one to generate the government intervention, in this case, a good thing, to make sure products are safe for use. Obviously, mandates have happened for decades, and it's only a matter of time before the EV sector gets hit with theirs.
For KULR, it can be a considerable value driver. For consumers, a lifesaver.
Multiple Industries In-Play
The better news for battery users and investors is that KULR battery-safety technology is already touching multiple sectors. A notable working and developing relationship is with NASA, where KULR has and continues to design innovative, IP-protected systems to monitor, package, protect and prevent battery systems from "thermal runaway." And while a potentially big deal today, as systems become more complex and a growing number of NASA products use batteries as their primary source of power, it could lead to potentially exponential revenue growth from that interest alone.
Face it, NASA contracts don't tend to pay thousands of dollars. More likely, tens of millions of dollars, potentially billions long term, are in play through NASA. Factor in SpaceX, Blue Origin, and Virgin Galactic, and the stakes can get even more substantial. The space industry is battery operated; no denying that fact.
But that's just one sector in play. Consumer, defense, and government business markets are also in the KULR crosshairs. And from KULR's perspective, the best news may be that with thousands of products utilizing high-powered compact battery design and potentially thousands more being designed, it's a market that won't slow anytime soon. On the contrary, the speed at which lithium-ion power has become mainstream, coupled with aggressive initiatives to shift to an "all-green" economy, makes the KULR battery-safety proposition even more compelling.
As noted, these markets can't continue to grow unchecked. Actually, they aren't. The United States Coast Guard recently announced new safety requirements for the passenger vessel industry and provides additional battery safety options for the cargo, fishing, and cruise verticals. KULR is targeting that market with its KULR-Tech Safe Case enclosure preventing cell to cell thermal runaway propagation and deterring excessive heat, fire, and explosion. And it could become the go-to first-to-market product meeting the USCG requirements.
Better still, KULR technology may be the only option that provides passive propagation resistant ("PPR") solutions for maritime lithium-ion battery safety. Thus, in addition to KULR's broader market opportunities getting substantially more significant, they could potentially corner the market in that marine application. The USCG may help usher in that opportunity, and it may also enhance the FAA's interest in KULR battery-safety technology for aircraft.
Keep in mind that application is one of many. KULR's deals with Johnson Controls ($JCI), Lockheed Martin, and other industry giants could help establish the framework for safety regulations and protocols that set the benchmark for monitoring, recycling, transporting, and disposal of batteries. If that's the end result, the roughly $2.5 million in sales generated in 2021 could be a drop in the revenue bucket in 2022 and after.
Revenue-Generating Momentum Into Q1
While the share price may indicate company weakness, that's not the case. On the contrary, KULR is in its best position in history to best already record-setting performance. And revenue-generating momentum is on KULR's side, evidenced by a 267% increase to $766,000 in Q4 compared to a year ago. That impressive quarter capped off a record-setting year, with operating income surging 287% to $2.4 million in 2021. Here's better news for investors considering the KULR proposition today- the company guided for revenue growth to continue, with early success in penetrating the energy storage, battery transportation, and recycling sectors continuing to gain revenue-generating traction.
Fueling momentum could be it's $14.9 million in cash reported at the end of the last quarter. In addition, a recently announced three-year multi-million-dollar deployment order for its PPR solution suite from Volta Energy Products, a subsidiary of Viridi Parente, Inc., is already contributing to an expected Q1 surge. The PPR solution, which includes the patented thermal runaway shield ("TRS") product, will be used for Volta's stationary and mobile lithium-ion battery power systems. The initial deployment order totals approximately $1.6 million for immediate delivery, with higher volume shipments expected throughout 2022. Thus, that deal alone equals more than half of all 2020 revenues.
Another boost should come from new revenues after acquiring the patented intellectual property rights from Centropy AB. That deal brings advanced carbon fiber-based heatsink technology for HPC applications, strengthening its thermal management solutions for cloud computing, AI, and crypto mining applications. Moreover, with accretive integration, Centropy's cooling solutions can be quickly combined into KULR's existing technology portfolio and extend its business services reach to include air and liquid-cooling of HPC applications such as crypto mining, cloud computing, and AR/VR simulations. Thus, revenues from that acquisition do more than create new streams; they also put billion-dollar shots on goal into play.
There's more to like.
All-Time Best Operating Performance
Adding to the active 2022 revenue stream is an initial order from Lockheed Martin totaling approximately $500,000 for its PPR battery systems. Like its deal with Volta, this one too is front-loaded, with the initial order set for immediate delivery and a potential starting point in the working partnership as LMT evaluates KULR's technological advancements in PPR energy products for its Advanced Energy Systems. Other deals strengthen the operating tailwind.
KULR announced expanding its services with Heritage Battery Recycling due to HBR's merger with Retriev Technologies, creating the largest lithium-ion battery recycler in North America. That expansion adds to the existing e-bike and scooter customer programs, positioning KULR with significant sales opportunities from providing safe transportation logistics to Retriev's battery collection operations in North America.
That deal fits nicely with KULR joining Clarios in the U.S. Department of Energy's lithium-ion battery lifecycle initiative to develop the manufacturing and reuse of lithium-ion batteries and their chemical elements in the United States for the purpose of domestic national interest. In other words, battery safety is a hot topic from the private sector to the public interest, and moreover, that discussion is generating real-time opportunities for KULR.
By the way, KULR and its investors aren't the only ones bullish on the near-term future. Analysts at Litchfield Hills Research Group appear to be so as well.
Litchfield Hills Research Expects 400% Upside
They recently updated research suggesting KULR shares are significantly undervalued and set a 12-month price target of $7 per share, a more than 400% increase from its current price. Litchfield based its bullish thesis on the discounted value of future earnings and its valuation relative to comparable firms in the industry. They argue that an expected surge in revenues over the next twelve months could and should tighten the valuation disconnect. Of course, that makes sense.
KULR is doing its part to make that happen, with initiatives and expenditures in Q4 setting up 2022 to be its best year in history. They're off to a great start, with updates suggesting that KULR may have already booked sales close to 2020 revenues in Q1 alone. And with Q4 investment accretive to Q1 and all of 2022, the bullish trend is expected to continue. Keep in mind that those expenses included an aggressive expansion of its workforce, strengthening its infrastructure, and an ambitious R&D and sales pipeline accretive to current and future quarters' bottom line.
Knowing that companies don't often increase their employee headcount, including new senior positions, without substantial business growth could be a clue to expect another record quarter, with Q1 potentially the first of four record-setting reports in 2022. Thus, trading ahead of earnings next week may be a wise consideration.
KULR Positions To Rally
The bottom line is easy to understand; KULR is exceptionally well-positioned for growth, and its shares are priced to surge. And that's not blind speculation. It's a justified assumption based on KULR being better positioned today than when it traded at its 52-week high of $3.65. Moreover, KULR's sum of its parts, coupled with very bullish guidance, supports the case for the stock to trade appreciably higher.
Better yet, the confluence of those revenue-generating parts could be driving revenues higher faster than expected. And if so, the current $1.40 share price on Monday could be the launchpad for a sustained and justified move to the upside, even in broader market weakness.
Thus, totaling KULR's intrinsic value with its inherent potential from its contracts with several of the world's largest companies, KULR's share price is too attractive to ignore. With that said, and ahead of another potential record-setting quarter expected to be announced on May 16th, at these levels, perhaps investors shouldn't.
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