Don't be fooled by KULR Technology's (NYSE-AMER: KULR, $KULR) share price consolidation. They are better positioned than ever to reach all-time highs this year. As a matter of fact, KULR has closed several deals that make them appreciably more valuable than when its stock traded at the $3.81 level just a few months ago. So, why the recent decline? More likely than not, a result of broader small-cap weakness whose tide is bringing all ships lower- even the good ones like KULR.
But investors already following KULR know this- lower stock prices historically present an opportunity too good to ignore. KULR, after all, has proven itself quite capable of surging higher when market conditions improve. And with clouds of economic uncertainty clearing, KULR investors could be in store for a rally of massive proportions.
That's not bullish hyperbole; it's a sentiment based on KULR doing everything right to create shareholder value and maximize several recently announced deals that should help KULR continue posting record-setting financial results this year. Thus, reclaiming 52-week highs is more than wishful thinking; it's in the crosshairs.
A Strong Track Record to Support Bullish Guidance
Actually, the rally could start sooner than later, ahead of what's expected to be another stellar quarter of operational performance. Indeed, KULR's guidance has set the bar high, and investors know that KULR isn't a company to over-promise and under-deliver.
Instead, KULR habitually exceeds expectations. Not only that, they reach milestones, which more often than not become catalysts. That's what's in play now. And Q4 results teed up expectations very nicely, with KULR enhancing its revenue-generating mission by tapping into several new billion-dollar market opportunities. Moreover, KULR has a running start into Q1, with a 267% quarter-over-quarter and a 287% year-over-year revenue surge fueling the power of its cash balances that increased by over $6 million compared to the same period a year ago.
That report is now history. But what isn't is that KULR is accelerating its already impressive growth. They recently announced deals with the Department of Defense, capitalizing on new U.S. Coast Guard battery safety requirements, and working more closely with government and industry giants NASA, Lockheed Martin (NYSE: LMT), Andretti Enterprises, and Leidos (NASDAQ: LDOS). These deals are more than a testament to this small-cap's lithium-ion battery safety technology; it exposes a valuation disconnect too significant to ignore.
Capitalizing on an Impressive Cash Surplus
Thus, pay attention. Better still, consider taking investment action, especially with KULR ending 2021 in its best operating position in history and entering 2022 with a revenue-generating tailwind to fuel appreciable growth.
Moreover, that tailwind is enhanced by an enviable end of Q4 cash balance of $14.9, an amount sufficient to expand operations and capitalize on an increasing number of business opportunities as early as the current quarter. And if new hirings are a clue, that mission is well underway.
KULR recently on-boarded 40 new employees, a six-fold increase from their previous workforce, indicating their intent to stay ahead of surging product and services demand. It also suggests that KULR's bullish guidance wasn't typical CEO rhetoric. Instead, putting company money to work to build an infrastructure capable of keeping pace with a surge in business sends a different message; KULR is in hyper-growth mode.
And the new team isn't only entry or mid-level management. KULR also strengthened its executive team, bringing aboard former NASA Johnson Space Center senior leader Dr. William Walker as Director of Engineering to spearhead its R&D for the next generation of High-Performance Computing (HPC) and hypersonic vehicle thermal management projects. Dr. Walker's hiring and his agreement to work with KULR signal another thing; new contracts could be closed. That's speculation. But having a talent of that magnitude join KULR without something in the queue is a stretch.
Meeting Surging Demand in Billion-Dollar Markets
While the appointment of Dr. Walker definitely provides a reason for investors to get excited about what KULR has in store, it's also true that his position is only one of many that were filled to keep up with demand for the company's products. The even better news is that with an ever-increasing number of lithium-ion batteries being used in applications across the board, this demand for KULR's battery technology won't be slowing.
As a matter of fact, the rapid increase in demand for lithium-ion batteries themselves isn't even the only driver of growth for KULR Technologies' products. In addition, more rigorous safety standards for battery technology open the door to KULR for substantial new revenue streams through increased demand for the company's innovative battery safety products from a wide array of industries, allowing KULR the opportunity to embed its potentially life-saving battery technologies in consumer electronics, transportation, electric vehicles, and even the 2020 Mars Perseverance Rover.
Seizing those opportunities isn't a long-term goal; it's happening now. That's what makes the current share price so attractive. Valuations at current levels hardly factor in even a single market opportunity, let alone a massive IP portfolio, deals with several of the world's largest companies, and revenue-generating momentum that is increasing, now slowing.
Predictions for a 200% Higher Price Target
Analysts are even updating research to highlight the valuation disconnect. Litchfield Hills Research Group announced a $7 price target on KULR based on two criteria: the discounted value of future earnings and its valuation relative to comparable firms in the industry. And with their models suggesting a potential tripling in share price over the next twelve months, paying attention to the details in its analysis is a wise consideration to justify investment.
Timely, too, Litchfield Hills' models indicate that the valuation disconnect could begin to resolve sooner rather than later based on a simple connecting of the business dots. Of note is that KULR's recent financial results may have misguided investors. Instead of evaluating a front-loaded Q4 expense book to strengthen 2022 growth, investors may have interpreted bottom line results as a gauge to future earnings. That's hardly the case.
Costs to close out 2021 appear intended to set KULR up for massive growth this year. These costs include an aggressive expansion of the company's workforce, new infrastructure, and an ambitious R&D and sales pipeline accretive to current and future quarters' bottom line.
Pushing the Boundaries of Countless Industries
In other words, KULR is set up for near and long-term success. Moreover, they are targeting the markets that need them. One potentially transformative technology in KULR's portfolio that could get significant near-term traction is its KULR-Tech Safe Case product line with Passive Propagation Resistance (PPR), designed for maritime lithium-ion battery safety applications.
As it stands right now, this product may very well be the first of its kind to meet new U.S. Coast Guard safety requirements, opening the door to a multi-billion-dollar opportunity for KULR. This would allow the company to meet the demand for its products in commercial cargo, cruise lines, logistics services, fishing, and consumer electronics, offering the potential to add several tremendously profitable revenue streams from just one product line.
But again, that multi-billion dollar sales opportunity is just a single part of a much larger equation. KULR's innovative technologies also attract big-time business. Viridi Parente, Inc.'s subsidiary Volta Energy Products has signed a multi-million-dollar contract with KULR for a three-year deployment of the company's PPR product line. More than $1.6 million in products has already been prepared for shipment, with order volumes predicted to increase over the year.
KULR Technologies is also diversifying its portfolio of products through shrewd acquisitions of novel technologies in the High-Performance Computing (HPC) industry. One such technology comes from KULR's acquisition of Centropy AB, which developed a groundbreaking carbon fiber heatsink for usage in HPC applications, significantly boosting KULR's HPC product line. The opportunities in that sector are enormous.
Already, with HPC applications increasingly relevant in fields ranging from healthcare imaging to cryptocurrency mining. Centropy AB's heatsink technology has helped KULR engage contracts with NASA for use in different projects, including the X-38 re-entry vehicle, relying on the technology.
It sounds impressive for a small-cap company like KULR to be working closely with NASA. But, that's just one application for its new Centropy AB technology. KULR is also well-poised to capitalize on skyrocketing demand for HPC applications, especially in the crypto-mining space, while benefiting from a synergistic business model to help KULR effectively capture the lion's share of an expanding market and have more revenues fall toward its bottom line.
A Reputation that Precedes KULR
Undoubtedly, Centropy AB was a shrewd acquisition for KULR. But there's much more contributing to its value proposition. As noted, KULR Technology already enjoys deeply rooted relationships with industry-leading defense, aerospace, and consumer electronics institutions. And in an industry where reputation for having high-quality innovative products, and a team to service them, takes precedence, KULR doesn't disappoint. Neither does its client list.
Lockheed Martin Corporation ($LMT) recently ordered half a million dollars in KULR's PPR battery solutions, with the potential for additional contracts in the future. This seems likely from KULR's track record – one thing KULR has not shown is disappointing its clients. As a result, expecting add-on deals that could reach the tens and even hundreds of millions of dollars is not out of the question.
But there's more to like. KULR recently announced a partnership with Clarios, joining the U.S. Department of Energy's lithium-ion battery life cycle initiative. As part of this initiative, KULR will make advancements in the sustainability and re-usability of lithium-ion batteries, ensuring their long-term viability to meet potentially extraordinary future demand. KULR is also partnering with Heritage Battery Recycling, which became the largest lithium-ion battery recycling firm after its merger with Retriev Technologies. Indeed, with skyrocketing demand for lithium-ion battery products and that need expected to surge, KULR is in the right markets at the right time. Most importantly, they have the right products.
Yes, there's still more to like. Beyond those mentioned, KULR is working with Andretti Enterprises to develop more effective battery safety solutions for electric vehicle applications. This working partnership presents a massive opportunity for KULR, with electric vehicles experiencing soaring demand and further expecting to overtake traditional vehicles within the next few decades.
Another value driver is its working partnership with Leidos ($LDOS) to develop new lithium-ion battery storage solutions, delivering another opportunity for KULR Technologies to benefit from the lithium-ion battery revolution in modern technology.
These partnerships become especially exciting when considering recent changes to safety regulations surrounding lithium-ion batteries. Consider this: KULR enjoys the unique position of possessing what could be the first technology to adhere to the new safety guidelines for both government and private sector relating to lithium-ion battery safety. And with these power sources getting housed in increasingly smaller packages, which can have explosive consequences, KULR's technology is a matter of when, not if.
And for those that think the competitive landscape is stocked, think again. Not only is KULR the leader in the space, but it also has an IP portfolio providing substantial insulation from potential competitive poachers. Thus, while competitively strong today, as the industry evolves, KULR does too.
Looking Ahead to H2 2022
So, here's the bottom line. Accounting for KULR's past, present, and future, its stock is considerably undervalued. It's a classic example of investors missing the mark to find an appropriate valuation. Ironically, they are not seeing what's in plain sight.
KULR finished off Q4 2021 with its best operating performance ever, a healthy balance sheet, a 267% growth in comparable Q4 revenues, and enhancing its infrastructure to support massive 2022 growth. Moreover, if the clues provided and KULR's guidance isn't enough to warrant immediate interest, read Litchfield's analysis to see why they expect KULR stock to surge during the next few quarters.
They, and others, point to the obvious. KULR is doing the right things in the right markets at the right time. Moreover, the sum total of those targeted markets puts more than a few billion dollars of potential revenues in play; it puts hundreds of billions into KULR's sights.
Thus, while a valuation gap may exist today, don't expect it to last too long. Too many good things are happening at KULR for its share price to not catch its intrinsic value. And the better news is that investors catch more than intrinsic value; they get inherent value as well, which at these levels, makes an already bullish proposition exponentially more compelling.
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