With KULR Technology Group’s (OTC Other: KULR) innovative thermal management and heat dissipation solutions landing on Mars as a part of the Perseverance Mars rover, its stock could be especially appealing for a touchdown in an aggressive growth stock portfolio. Its inclusion now could be timely, especially with KULR in a state of hyper-growth.
Proof of that came when it reported its Q1 earnings earlier this month that signified nothing less than a blowout quarter. And while the markets have been taking good companies lower in the past two weeks, the inevitable correction higher will likely lift those unfairly treated first. KULR is positioned to be one of them. Deservedly so.
KULR delivered a fantastic Q1, with revenues increasing more than 400% compared to its same period last year. In dollar terms, sales surged to $410,000 from $77,509 a year ago. Better still, gross profit in the quarter also experienced substantial gains, rising 170% to $140,000 for the period. In its conference call, KULR management didn’t shy away from offering strong guidance either. In fact, their message was quite bullish, with the takeaway being that Q1 could be the precursor of even stronger revenues ahead. If so, KULR would stay on pace to meet lofty analyst guidance, suggesting that revenues could triple by the end of 2021.
Indeed, there are lots of moving parts to the KULR story. The excellent news is that they can simultaneously build shareholder value both near and long term. Here’s how:
Q1 Posts 298% Comparative Increase In Revenues
Notably, KULR is expected to continue the momentum created by a robust Q4 that saw revenues increase by more than 298% compared to the same period in 2019. However, adding additional revenue-generating agreements either in place or soon to be with Andretti Technologies, Airbus (OTC: EADSY), and Jet Propulsion Labs, the back half of 2021 could be a transformative period for the company. Analysts at Taglich Brothers are certainly modeling for that outcome.
In its April coverage update, Taglich revised its share price target higher to $3.50 based on contract opportunities that KULR is not only targeting but can earn. From its current $2.00 levels, reaching the revised target could add roughly 70% to a position. Moreover, the analysis offered a de-risked proposition by pointing to KULR’s pattern of surging revenues, tier-one diversified client list, and its thermal management and heat dissipation technology that has massive diversified market appeal. In fact, the report noted that its technology could be so compelling for a broad range of products that a tripling of revenues is in play.
Notably, KULR’s technology traveled roughly 196 million miles to make that point.
A Mission to Mars
Interestingly, this small-cap company actually has its technology roving the red planet. Helping combat the atmospheric challenges associated with inter-space travel, KULR’s thermal management technology was included in the design of the Perseverance Mars rover. Now, with its technology proven more than capable of withstanding the demands of intense temperature variations, KULR is better positioned than ever to capitalize on substantial business opportunities from defense contractors, NASA, and private companies like SpaceX.
Better still, those opportunities, while potentially huge in terms of dollars, represent only a small part of KULR’s impressive client list that is either evaluating or already using KULR’s core thermal conductivity and heat dissipation technology. Most importantly, its applications are universal to product safety and should penetrate electric-vehicle (EV) and consumer markets quickly. Actually, it’s already happening.
A deal with Andretti Technologies and its EV racing car subsidiary, for instance, considers its thermal management and heat dissipation technology a critical inclusion to mitigate the risk of fire and explosion. The more excellent news is that beyond its current class of tier-one EV clients, KULR is extending its reach to capitalize on substantial opportunities from the developing drone market that currently offers roughly $127 billion in potential sales. Adding possible defense and aerospace contract wins adds many more billions to that number.
But even better, KULR technology could almost immediately become a critical component to include in millions of mainstream consumer products. That need is getting more pronounced as new technology gets packaged into smaller spaces, causing heat levels to rise to the point of fire or explosion. And that risk extends to everyday household items and cell phones as well.
Thus, to understand the opportunity presented by KULR, it’s essential to recognize the technology’s diverse applications, importance to safety, and timeliness to market. Consumer safety could end up being a billion-dollar market opportunity over the next few years. That puts long-term, high-multiple valuation models to work.
KULR could further put those models to work from additional revenue-generating agreements already in play.
Energy Storage and Thermal Management Solutions
Beyond the potentially massive projects that KULR is already working on, they are also seizing opportunities in the Energy Storage and Thermal Management markets. Both are impressive in terms of market size, with the Energy Storage market alone exposing a more than $59 billion revenue opportunity. The great news there is that the market is expected to explode into a more than $554 billion revenue-generating opportunity by 2035, according to a report by Lux Research.
It’s also important to note that KULR could have an advantage over competitors by already having a respected presence in these markets, providing e-mobility applications, improved electronic device safety, and mitigating fire risks for stationary storage. Thus, KULR has the potential to lead the pack, not follow.
The Thermal Management market also offers a tremendous near and long-term revenue-generating opportunity. There, KULR targets an $8.8 billion opportunity by creating solutions that focus on surging industrial and consumer demand for reliable microelectronics and lithium-ion batteries. As noted, with more powerful technologies creating sometimes intense heat, KULR, with its expertise and current market position, could be ideally positioned to earn business from its technologies’ ability to mitigate the risk of fire and explosion. Obviously, the revenue-generating potential from this market alone could be a game-changer for KULR.
And because its passive propagation resistant (PPR) battery design is showing itself effective in preventing fire and explosion by providing a single cell thermal runaway from exiting the battery enclosure, deals that adopt its technology could come sooner rather than later.
Catalysts Could Be Close
Also valuable to the KULR proposition is understanding how its technology can fit into the work of industry players. For instance, a deal made between Airbus and Luminor could have a substantial and positive impact on KULR. One simply needs to know how they fit.
In April, Airbus entered into a deal with Luminar to test how lidar technology can make flying safer and autonomous. Notably, anytime Airbus is involved in a contract, expect the dollar size to be substantial. Here’s the twist. As those two companies evaluate lidar technology, speculation mounts that KULR could be the beneficiary of a significant battery and battery pack solutions deal. Keep in mind that KULR already has a relationship with Airbus, making it more likely to extend that relationship through its already proven technology.
Although speculative at this point, if KULR does fit into the equation, expect valuations to soar. Remember, too, with relationships in place with Andretti Technologies, NASA, Airbus Defense and Space, and the FAA, KULR’s technology has already been validated, especially if one considers a successful trip to Mars validation. Most do.
But that’s just one milestone. KULR is positioned to deliver several more. Thus, the timing of this value-play could be critical.
Weak Markets Have No Conscience
Traders often say that weak markets have no conscience and will take strong companies down with the weak. That is likely what happened to KULR. After all, KULR delivered an excellent quarter, with triple-digit percentage growth across the board. They also substantially increased operating margins and closed an $8 million capital raise earlier this year. Thus, they are operationally and financially sound.
Moreover, beyond already surging revenues, deals made after the Q1 report position KULR to generate even stronger results in Q2. Better yet, that expectation extends to the remainder of the year. To make that happen, investors can count on an experienced management team that can transform development stage projects into commercialized revenue-generating assets. Expect that to happen several more times this year.
Better still, KULR has multiple simultaneous shots on revenue-generating goals. Notably, each client is big enough that inking a deal with just one of them could add millions in new revenues. But, while making a deal with one is likely a given, a more realistic expectation is for KULR to reach revenue-generating agreements with several. Thus, shareholder value could increase exponentially.
A great quarter, excellent guidance, and a list of clients interested in KULR’s next-generation technology sets up the remainder of 2021 to record exponential growth. Thus, with all systems go, this pullback in price, which appears to be market sentiment related, could be exposing a short-term opportunity that won’t last long.
Indeed, when markets correct, the better companies get first dibs from bidders. If that’s the case, KULR should soon return toward its April highs.
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