|Written by GSCR Staff|
|Tuesday, 07 January 2014 06:53|
In Monday’s Goldman Guide we discussed industrials and how they might be back in favor in 2014 as the economy expands at a greater pace than the anemic rate it has over the previous 5 years. We highlighted Alcoa, Inc. (NYSE – AA - $10.53) back in early 2013 in an ‘outside the small cap world’ play and may have been about nine months premature. AA has climbed over 36% since Labor Day Weekend during a huge accumulation phase.
Of course small cap industrial plays exist today. Just look at Research Frontiers Inc. (NASDAQ – REFR - $6.03 - NR).
The company has entered an accumulation phase as the smart money looks to capitalize on the overall expansion in the industrial space. The Company develops and licenses its proprietary SPD-Smart light control technologies to OEM that produce and market the SPD-Smart chemical emulsion, light-control film made from the chemical emulsion, lamination services, and electronics to power end-products incorporating the film. This technology has a variety of applications from industries that include windows, sunshades, skylights, and interior partitions for homes and buildings, automotive windows, sunroofs, sun-visors, sunshades, rear-view mirrors, instrument panels, and navigation systems, aircraft windows, variable light transmission eyewear products, such as sunglasses and goggles and finally flat panel displays for electronic products. The exposure that REFR has to building products, automotive, and consumer electronics create an outstanding opportunity for investors to get into the industrial cyclical space at a very inexpensive price.
2013 was a banner year for new products and new customers setting the table for this year.
Consensus analysts’ estimates predict that Research Frontiers will have 100% growth in top line revenue to $4.85 million in 2014 which means that the stock is far from cheap, given its $138M market cap. Nonetheless, the Daily Moving Average is very bullish all the way out to the 50 day range and the March and June options point toward a strong bullish indication related to the put-call ratio.
REFR is a unique high tech opportunity for the industrial space in 2014. Look for a 20% jump in price level over the next three to four months.
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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