This optical company was recently added to the Russell 2000 Microcap/Small Cap Index, which should invite new institutional interest in the shares.
Top Picks Update
LightPath Technologies (LPTH)
From The Inger Letter
LightPath Technologies (LPTH) remains quite a bright star this year, both with percentage gain from its initial selection as 2017 ‘speculative pick-of-the-year’ in January, and based on confidence in its continuing to execute according to the company’s plans. It has recently been added to the Russell 2000 Microcap/Small Cap Index for the first time, reflecting its better capitalization.
LightPath designs, manufactures, and distributes proprietary optical as well as infrared sensor components, including molded glass aspheric lenses and assemblies, infrared lenses and thermal imaging assemblies, and for fiber optic (mostly telecom use) fused fiber collimators, and their original gradient index GRADIUM® lenses (which triggered our purchase at around 5 before sale around 55, over 17 years ago).
Now the company’s expansion with the ISP Optics wholly-owned subsidiary (merged into LPTH about six months ago) enhances market penetration of sensor use in everything from autonomous vehicles and drones, to medical and military applications.
Since our recommendation in January, shares doubled before settling-back to solid support in the mid 2.50’s or so. We have suggested to new readers that any move in the mid 2’s is an opportunity, if they didn’t have a chance to buy at the original suggested range. I mention this as the shares touched the short-term goal of 3; but we envision it higher (perhaps significantly so) over time.
This move could easily hit 4-5 on an intermediate basis if the company continues its growth pace as it has outlined. Once it hits 5, many funds that do not own any stocks below 5 should recognize it; and that might even allow it to thrust to considerably higher levels on an investment, not trading basis.
We noted that the shares seem to have a very satisfactory intraday pattern flow too; I suspected institutional action. Now we’ve learned that funds indeed initiated or increased positions as the accompany chart notes. We see it as having been under-the-radar, and just resurfacing this year and still undervalued.
Future performance isn’t merely dependent just on its next earnings report or after Warrants vanish late this year, but on executing the company’s game-plan, with the potential kicker of more contracts not known of yet. The expectation of more sensors overall, even shy of full automation in semi-autonomous vehicles, is a trend believed also helpful to growth and should boost business in 2018-20 beyond what has already been outlined by management. Short-term a break above 2.85 would suggest new highs coming over 3.25; and likely to move higher yet later in the year. We rate LPTH as a hold for sure; and a speculative buy for investors.
Gene Inger, The Inger Letter, www.ingerletter.com, July 7, 2017