Liquidmetal Technologies Inc (LQMT)

[DMN]

A Critical Moment for Liquidmetal Technologies Inc (OTCMKTS:LQMT)
By Jermaine Farmer - April 23, 2017
Source: http://oracledispatch.com/2017/04/23/critical-moment-liquidmetal-technologies-inc-otcmktslqmt/

Liquidmetal Technologies Inc (OTCMKTS:LQMT) is a recent breakout play that we covered on the main move in the pattern. Since the stock has so far held up well following the technical breakout, but has not truly extended, we thought it may be a good time to take a fresh look.

To review, the company is arguably a leader in “amorphous alloys” with application in devices, medical technology, and automotive parts, among other specialist applications in industrial machinery. The stock recently launched higher in response to news that it had received two hot crucible amorphous metal molding machines from Eontec. The news combined with another prior release that it has passed additional pre-screening biocompatibility tests for use in medical implants and is now pursuing collaborations with medical implant companies. The combination is a potent growth story, as we will discuss below.

Liquidmetal Technologies Inc (OTCMKTS:LQMT) casts itself as a materials technology company that designs, develops, and sells products and components from bulk amorphous alloys to customers in various industries. It offers components for non-consumer electronic devices, including aerospace components, defense parts, medical devices, sporting goods, leisure products, automotive components, and industrial machines.

The company also provides liquidmetal alloys for use in the aerospace, automotive, defense, medical/dental, non-consumer electronics, and sporting equipment applications; and designs and develops components for aerospace and defense customers. In addition, its products related to various medical devices include specialized blades, clamps, tissue suturing components, dental devices, and general surgery devices, as well as tissue manipulation devices and orthopedic instruments utilized for implant surgery procedures.

Further, the company sells tooling and prototyping parts, such as demonstration parts and test samples for customers with products in development; and offers product licensing services. Liquidmetal Technologies, Inc. was founded in 1987 and is based in Rancho Santa Margarita, California.

From the company’s press messaging, they frame themselves as “the leading developer of amorphous alloys that utilize the performance advantages offered by amorphous alloy technology. Amorphous alloys are unique materials that are distinguished by their ability to retain a random structure when they solidify, in contrast to the crystalline atomic structure that forms in ordinary metals and alloys. Liquidmetal Technologies Inc is the first company to produce amorphous alloys in commercially viable bulk form, enabling significant improvements in products across a wide array of industries.”

As noted above, LQMT is a recent technical momentum play that has shown strong upside related to a combination of catalysts that spell out the potential to be a serious player in the medical device space. This move may position the stock to benefit from engagement in several monster growth markets in the medical device space, potentially locking in partnerships in any one of a number of implantable device applications, such as cardiac rhythm, cochlear, spinal, and orthopedic implants among others.

The stock’s action suggests the market is finally willing to give this play a real chance. That said, the move through the recent highs was pretty well covered, and was likely a popular breakout trade. That is not really what you want to see. While we may have strong growth ahead, this stock could be vulnerable if it begins to trade back below the $0.25 level at this point, as that may start to trigger “failed breakout” stop loss order protection.

Overall, the chart shows 39% piled on for shareholders of the stock during the trailing month. The situation may be worth watching. LQMT has a track record that includes a number of dramatic bounces. What’s more, the stock has benefitted from a jump in recent trading volume to the tune of approaching 200% over the long run average.

Currently trading at a market capitalization of $237.3M, LQMT has a significant war chest ($58.9M) of cash on the books, which must be weighed relative to virtually no total current liabilities. LQMT is pulling in trailing 12-month revenues of $480K. In addition, the company is seeing major top line growth, with y/y quarterly revenues growing at 588.9%.