KULR Technology (NYSE-AMER: KULR, $KULR) is in its best operating position in history. And one would think that its share price has followed in tandem. It hasn't. In fact, in the face of KULR Technology inking some of the most transformative and potentially lucrative deals in its history, KULR shares have been sluggish, currently consolidating in a channel between $2.40 - $2.50. It's significantly less than the 52-week high of $3.81 about four months ago. And, by all measures, it makes little to no sense for KULR to be trading anywhere below that level.
But, investors shouldn't be too discouraged by recent KULR trading. Instead, they should understand that the pricing models used to score publicly traded stocks are usually more than inaccurate; they're sometimes just plain wrong. So, to those evaluating the KULR investment opportunity by following its chart, don't be fooled. KULR is crushing it on the business front, and it's only a matter of time, probably a short amount of it, before KULR stock represents the values it deserves.
Frankly, although its $2.45 price doesn't show it, KULR has already earned its justification for a higher valuation. Not only that, they are adding to its value proposition by continuing to announce significant deals that place them deeper into multiple billion-dollar sector opportunities. Its recent Q4 earnings call adds more bullish flames, with management noting a significant 2021 revenue-generating tailwind to create new opportunities and maximize existing ones. Few, if any, left the call thinking anything other than 2022 will likely be KULR's best year ever.
Reasons To Be Bullish
And listeners have reasons to be bullish. Foremost, KULR management is credible, and they rarely, if ever, missed on meeting or beating even its most bullish guidance. Thus, when commentary from KULR's Q4 conference call set a decidedly bullish case for this year's expected performance, investors responded by sending shares about 14% intraday and closing the day with a 10% spike. A 10% increase is impressive by any standard, but those who listened likely agreed the day's gains clearly undervalued what KULR said.
Savvy investors, after all, trade with a forward-looking perspective. History provides color, but guidance tells where a company is going, and KULR did well to layout its path to a potentially record-breaking 2022. And KULR just didn't tout its ambition; they showed that efforts on the ground are producing real-time results.
They announced making new contracts with the Department of Defense, seizing upon a massive opportunity related to the United States Coast Guards' upcoming safety requirements for the passenger vessel market, accelerating revenue-generating opportunities with Lockheed Martin (NYSE: LMT), Andretti Enterprises, NASA, and Leidos (NASDAQ: LDOS), and provided compelling reasons to believe that KULR growth is in its highest gear.
The Q4 results tell part of the story. Last quarter, KULR scored a 267% increase in total revenues, increased its cash position by $6 million, expanded its business reach into new market segments, and gained across-the-board momentum in getting its best-in-industry battery safety technology into multiple and diversified markets. While already an excellent quarter, it gets better.
Strong Results, Strong Capital Position
KULR also announced having $14.9 million in cash at the end of Q4, one of its most robust cash balances in recent history. And the plan is to put that cash to work to facilitate KULR's near-term plans to expand operations, support new business, and fund ongoing product development through the remainder of 2022. In short, Q4 was excellent, and the guidance was even better. The most heard message was clear: while 2021 was a great year, 2022 will be transformative. Clues are front and center.
A big one is that KULR added about 40 new employees to the KULR team, saying it did so to stay ahead of surging client demand. Yes, companies are proactive, so hiring ahead of expected demand is prudent. But KULR didn't say that. They said they scaled up its workforce six-fold to meet surging demand. There's a difference between expecting and meeting, and this isn't a semantics lesson; it's pointing out a difference to support what KULR said coupled with what it's doing.
And obviously, KULR management can see behind the curtain. So, deducing that KULR needed 40 more team members to operate efficiently says that KULR is working in high gear in many different directions. By the way, KULR didn't just add entry and mid-management positions. They also added high-caliber management talent to its executive team, appointing former NASA Johnson Space Center senior leader, Dr. William Walker, as its new Director of Engineering. KULR said his role will be to work with its engineering team on its next-generation high-performance computing ("HPC") and hypersonic vehicle thermal management initiatives.
Multiple Market Segment Opportunities
Still, that's just one focus. The other roughly 40 new team members should also stay busy, likely helping develop, sell, and market KULR's groundbreaking battery safety technology into surging demand to generate more big-ticket revenue-generating deals than ever before. That's not pure presumption. KULR updates have indicated that to be the case. And with record numbers of powerful lithium-ion batteries used and most compacted into smaller housings, the need for KULR's products isn't going away anytime soon.
On the contrary, entirely reasonable safety mandates could position KULR for exponential growth, partnerships, and even a possible buyout. Its technology is that valuable to the market and user safety. And that's through using a power tool, riding a lithium-ion powered skateboard, or traveling to Mars on the 2020 Perseverance Rover. They all need KULR battery safety technology. Thus, while KULR's 267% growth in Q4 revenues was impressive, don't rule out 2022 adding an appreciable multiple to those numbers.
Moreover, KULR stock's 24% spike since March 15th may be the precursor of more to come. And with plenty of intrinsic value ignored and even more inherent value not factored into its current share price, that could happen much faster than many expect. Remember, too, KULR is uniquely positioned to close that disconnect on performance, not hype. Thus, when investors bid KULR shares higher, they can do so with confidence knowing that KULR has the business muscle to support new highs.
Analysts Present Case For 180% Upside
Notably, retail and institutional investors aren't the only ones with a bullish sentiment. Last month, Litchfield Hills Research group reiterated its $7 price target on KULR. Their report supported their belief that KULR is undervalued based on two valuation techniques, one absolute and one relative; 1) The discounted value of all future earnings was used for its price target, 2) Valuation relative to peers. Read the full report HERE.
Litchfields's valuation models and narrative is compelling. In fact, the combination of the two in the Litchfield report explains the groundwork done by KULR in 2021 and lays out in simplest terms why KULR is positioned for triple-digit-percentage growth over the next 12-months.
In addition, it helps prove that quarterly numbers aren't always what they seem. In KULR's case, its Q4 bottom line doesn't accurately depict what's happening in real-time, and investors need to read beyond the last lines to fully appreciate that hiring, infrastructure builds, and front-loaded project costs took a phenomenal topline number and lessened its attractiveness with a greater than expected loss on the bottom line. However, by understanding and moving those expenses and assets into Q1, investors can get a more realistic picture of KULR's 2022 prospects. And for all intents and purposes, they are ideally positioned to create substantial shareholder value.
Guidance Calls For Accelerating Growth
And that's likely, noting that milestones reached in 2021 can become catalysts in 2022. Again, KULR's end-of-year update foreshadowed that may indeed be the case.
A near-term catalyst could come from KULR's expansion of its KULR-Tech Safe Case product line with a new Passive Propagation Resistant (PPR) for maritime lithium-ion battery safety. This product has the potential to become the first PPR solution to market that meets the United States Coast Guard's new safety requirements. It's a significant market opportunity, with the USGS set to require battery safety enhancements in the massive commercial cargo, shipping services, fishing vessels, consumer products, and cruise ship markets. Obviously, the combined market presents a multi-billion dollar revenue-generating opportunity. And because the USCG is requiring, not recommending these changes, a substantial new revenue stream is already in KULR's crosshairs.
KULR's drive to post a record-setting 2022 doesn't stop there. Volta Energy Products, a subsidiary of Viridi Parente, Inc., has ordered a three-year deployment of KULR's PPR solution suite – a multi-million-dollar transaction. Accessing KULR's Thermal Runaway Shield (TRS) technology gives Volta Energy an increased ability to improve its stationary and mobile lithium-ion battery power systems. Already, KULR has readied over $1.6 million worth of products set to ship immediately. KULR guidance suggests that shipment and order volumes are expected to increase throughout this year. Thus, this is a big deal that is getting even bigger.
Keep in mind that KULR also acquires assets to help reel new market opportunities. Centropy AB, which KULR acquired last year, is the proprietor of a novel carbon fiber-based heatsink technology for High-Power Computing (HPC) applications. This technology dramatically bolsters KULR's thermal management solutions for HPC applications, ranging from crypto-mining and VR simulations to big data analysis and healthcare imaging. This tried, and proven technology is being leveraged to increase its business with NASA, with KULR's heatsink being used in four different NASA projects, including the X-38 re-entry vehicle.
Still, working with NASA's impressive, but KULR opportunities extend well beyond. First, KULR can benefit from the skyrocketing HPC demand, especially with big data analysis dominating a myriad of industries. Second, the product has ideal synergy with the rest of KULR's product line, minimizing the dampening effects of administrative inefficiencies and mismatched demands. In other words, diversified market interests won't dilute KULR's ability to maximize revenues.
Instead, the added products are synergistic to its broader asset portfolio. Better still, they can help revenues fall faster toward the bottom line by working as a seamless conduit to its other assets.
Business From A Who's Who Client List
Centropy AB was an accretive acquisition. But, don't forget, KULR is also generating revenues from a Who's Who client list. There, KULR is establishing relationships with some of the world's top defense, aerospace, and consumer products companies. One is the Lockheed Martin Corporation (NYSE: LMT), which recently ordered about $500,000 worth of KULR's PPR battery systems. Notably, it's a fair assumption that if Lockheed Martin is impressed by KULR's products, this initial deal could pave the way for new contracts ushering in potentially millions in new revenues for the company. Actually, millions may be a conservative estimate, noting that deals in the sector regularly exceed tens of millions and even reach into the billions of dollars exchanged.
KULR isn't stopping there. The company announced joining the U.S. Department of Energy's lithium-ion battery life cycle initiative alongside Clarios. Together, the two companies are working to improve the sustainability of lithium-ion batteries by enhancing the manufacturing and reuse processes. KULR also extended its partnership to Heritage Battery Recycling, which recently merged with Retriev Technologies to create the largest lithium-ion battery recycling company on the continent. Having secured these high-caliber contracts, KULR is well-positioned to earn a substantial share of that sector opportunity. Of course, working alongside the largest recycling company on the planet brings that kind of potential.
KULR is also generating revenues by working with NASA and Andretti Enterprises, representing potentially enormous revenue streams in the near and long term. In addition to the company's heatsink technology used in several NASA projects, KULR also played a role in the 2020 Mars Perseverance ROVER program. Mentioned above, KULR also collaborates with the Andretti team to develop battery safety solutions for EVs that target another booming market. And investors trying to make a fair evaluation can't leave out KULR's working relationship with Leidos (NYSE: LDOS), which is helping the company bring additional lithium-ion battery storage solutions to the markets.
That's not all. KULR technology may be the go-to choice for thousands of other global clients, protecting everything from EVs, aircraft, power tools, consumer products, and even hypersonic missiles. In fact, some argue it's not a matter of if but rather an issue of when legislation causes all lithium-ion battery products to be encased with KULR or competitive technology.
Noting KULR's IP portfolio, the competitive landscape may stay thin, even non-existent in some targeted markets, when those changes get implemented.
2021 Milestones To 2022 Catalysts
Need an example of a valuation missing its appropriate mark? KULR is it. And more than having assets alone to support a higher share price, the inherent value of what its assets can do to earn a share of billion-dollar markets must also be factored into the equation. KULR's market cap shows that's not the case.
But, the most excellent news is that things are changing, and industries recognize KULR's technical strength and necessity in their respective sectors. And that acknowledgment keeps the wheels in motion for KULR to be a much different and stronger company by year-end.
And whether share prices continue to rise in April at the same pace as March may not really matter. KULR's time will come, and its valuation will reach its fair and appropriate level. Don't forget, analysts are bullish, too, modeling for a more than 180% gain in its share price by the end of the year. Still, KULR may appreciate much faster than the experts think. They have made a case to do just that by being in the right markets, with the right technology, at the right time. Moreover, they have multiple shots at lucrative near-term revenue-generating goals. The combination is a good one.
Thus, while its Q4 report was impressive, its Q1 could be appreciably better. Taking it a step further, if KULR shows what analysts and investors want to see, KULR stock could be off to the races, and it wouldn't be the first time KULR stock posted high double-digit percentage gains after publishing good news. And if KULR goes on a similar bullish run after reporting Q1/2022, one thing can still be counted on, it likely won't be the last time that happens.
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