If not for the weakness in the small-cap index during the past week, KULR Technology Group (OTC Other: KULR) stock would likely be substantially higher. And deservedly so. KULR had what could be best described as a blowout quarter with revenues increasing more than 400% compared to its same period last year. More specifically, quarterly sales surged to $410,000 from $77,509 a year ago. Better still, gross profit for Q1 also saw substantial gains, rising 170% to $140,000 for the period ending March 31st. And according to company guidance, the best news is that Q1 could be a precursor of what investors can expect in the back half of this year. If so, KULR could be setting expectations for a string of triple-digit percentage growth in the coming quarters. In this case, past performance may indeed be indicative of the future.
In fact, KULR's impressive growth in Q1 followed Q4 revenues that increased by more than 298% compared to the same period in 2019. Thus, it's all systems as deals already in place with Andretti Technologies, Airbus (OTC: EADSY), and Jet Propulsion Labs set the stage for what is expected to be a breakout year. However, while past performance acts as a benchmark, markets value stocks based on forward-looking models. And analysts are modeling for potentially exponential share price appreciation.
Taglich Brothers, for instance, has not been shy to publish its bullish thesis. In April, they updated their coverage with a revised share price target of $3.50. From current levels, it represents a more than 70% increase. That bullish proposition is modeled on KULR's pattern of surging revenues, tier-one diversified client list, and its industry-changing thermal management and heat dissipation technology. In fact, they believe that its technology is so compelling that it can generate a tripling of revenues this year. And with its innovative technology earning attention from multiple high-dollar markets, that lofty expectation could be conservative.
Video Link: https://www.youtube.com/embed/DbQxY156hGU
As Seen on Mars
In fact, with its thermal management technology on the Perseverance Mars rover proving itself more than capable of withstanding the demands of inter-space travel, doors are opened to substantial business opportunities from defense contractors, NASA, and private companies like Space X. Better still, those opportunities add to an already impressive client list that is either evaluating or already using KULR's core thermal conductivity and heat dissipation technology in and for its products.
Already, KULR has inked a deal with Andretti Technologies and its EV racing car subsidiary, which 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 clients, KULR is extending its reach to capitalize on massive new opportunities from the more than $127 billion drone markets. Its focus on aerospace boosts that number by billions more.
Perhaps more exciting in the near term is that KULR technology is showing itself to be an essential asset to include in millions of mainstream consumer products. That's because as new technology gets packaged into smaller spaces, rising heat levels could cause everyday household products and gadgets to catch fire and explode. That circumstance makes KULR technology not only timely to the markets but also a potential lifesaver. Don't expect companies to ignore its importance much longer.
Other billion-dollar markets are already in play.
Targeting A Combined $70 Billion Market Opportunity
Investors should also be paying close attention to KULR's focus on penetrating the Energy Storage and Thermal Management markets. The Energy Storage market alone opens up a more than $59 billion revenue opportunity. However, despite its massive size now, Lux Research expects the market to offer a more than $554 billion revenue-generating opportunity by 2035. For KULR, which demonstrates best-in-class performance, that 925% increase could trigger an exponential rise in revenues. Notably, KULR already has a presence in these markets with products designed to serve e-mobility applications, improve electronic device safety, and mitigating fire risks for stationary storage. Thus, KULR is already positioned to maximize opportunities in this sector.
KULR is also working to penetrate the $8.8 billion market opportunity from the Thermal Management Market (TMM). There, KULR is creating solutions to target surging industrial and consumer demand for reliable microelectronics and lithium-ion batteries. As noted, with new technologies generating substantially more heat, KULR could find itself ideally positioned to earn business from its technologies' ability to mitigate fire and explosion. The revenue-generating opportunities in this market alone present a compelling case for investment in KULR.
Better still, these opportunities can come sooner rather than later. Because its passive propagation resistant (PPR) battery design is proven to prevent fire and explosion by providing a single cell thermal runaway from exiting the battery enclosure. Its inclusion from a product liability perspective is enough to generate massive industry adoption.
Could A Deal Be in the Works?
As promising as its core markets are, a deal made between Airbus and Luminor is also attracting attention. This one takes some "reading between the lines" to understand how it can impact KULR, and it goes like this.
In April, Airbus entered into a deal with Luminar to test how lidar technology can make flying safer and autonomous. Obviously, it's a deal that can have substantial positive implications for Luminor. However, some believe it can also deliver a windfall of opportunity for KULR by providing the battery and battery pack solutions likely needed for the project.
If so, expect KULR's valuation to soar. In fact, even news of its potential inclusion could generate a tsunami of interest. Remember, too, KULR is no outsider to the sector. They already have standing from relationships with Andretti Technologies, NASA, Airbus Defense and Space, and the FAA. Therefore, KULR's technology has already been validated, especially if one considers a successful trip to Mars validation. Most do.
And from an operational perspective, revenues generated during the remainder of this year will likely fall quicker toward the bottom line. In Q4, KULR announced a considerable increase in comparable period gross margins from 48% to 80%. Also, excellent news, shareholder equity jumped from a deficit of $525,612 at the end of Q3 to a surplus of $6,118,552 by the end of Q4. KULR also completed a direct offering in January for $8 million to fund 2021 growth opportunities. Expect those improvements to help accelerate growth and maximize near and long-term revenues.
When Small-Cap's Recover KULR Should Outperform
Weakness in the small-cap markets went a bit too far by pulling KULR into its grasp. It's fair to suggest that not only did KULR have an excellent quarter, but it also could be in its best position ever to capitalize on multiple market initiatives. Revenue growth, margin improvement, and balance sheet strength point to a company in hyper-growth mode, not one that is shrinking to the challenges imposed by the pandemic. In fact, recent deals and positioning point to KULR getting stronger in the back half of 2021 by benefiting from its management's ability to transform development stage projects into commercialized revenue-generating assets.
Better still, KULR is likely to benefit from multiple simultaneous shots on revenue-generating goals. Consider this, too. If KULR was to ink a deal with just one of its billion-dollar clients, its share price could soar on a revenue multiple alone. But, as noted before, a more realistic expectation is that KULR will benefit from multiple agreements with multiple clients.
If KULR's stellar Q1 report is an indication of things to come, investors may want to consider current share prices as a massive value opportunity.
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