|Written by GSCR Staff|
|Thursday, 18 April 2013 10:08|
Good Morning. There seems to be a general panic induced sell off across the board in equities and commodities as people head to cash. In these times it is crucial for stock pickers in the small-cap space to put priority on near-term growth or hot sectors such as LEDs.
Today’s featured stock is Rubicon Technology, Inc. (NASDAQ – RBCN - $6.34.) RBCN develops innovative sapphire materials and wafers for LED’s (Light Emitting Diode) and RFIC’s (Radio Frequency Integrated Circuits) and other blue laser diodes and optoelectronics. RBCN has a unique and proprietary crystal growth technology which is used in the production of a very high quality sapphire that allows for high volume production of wafers in various sizes and orientations, which could prove vital to drive sales for LED products in the booming smartphone industry.
The main driver for an increase in revenue over the next 2 years is the surge in demand for LED’s for lighting and backlighting applications. Rubicon’s sapphire glass is currently used on the iPhone 5 and several new smartphone manufacturers are scheduled to come out with new phones in 2H13. LED suppliers will need to increase their supply of sapphire products from RBCN. According to a statista market analysis, global smartphone orders were expected to increase by 27% from 2012 to 2013, and an additional 18% from 2013 to 2014. The growth of this market alone should aid in revenue for Rubicon.
On an intermediate term basis, a critical development has occurred which could be extraordinarily beneficial to Rubicon. The Company recently received a U.S. patent that could drive future sales as the technology allows the Company’s customers to decrease the time to production as well as eliminate certain capital expenses. The patent allows for asymmetrical visualization for sapphire wafers used for LED’s and other related products. Operators can verify orientation with the naked eye, without expensive x-ray machines. This differentiating technology should give a dramatic boost to sales given that it will save Rubicon customers significant time and expenditures.
As an added plus, the short term chart analysis remains bullish for RBCN. If the market will cooperate, $8.00 is a reasonable target for the stock.
Have a great day!
Disclosure: Goldman Small Cap Research analysts are neither long nor short these shares but may elect to purchase the stock within the next 48 hours.
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