The first movie I ever saw was "2001: A Space Odyssey," directed by famed movie maker Stanley Kubrick. My father took me to see it at a young age because he believed Kubrick's film had a significant cultural and philosophical message.
I remember being blown away by some scenes, not understanding most of it, and being terrified by the rogue computer robot HAL 9000. HAL was nothing but a light and a voice, but seeing that a thinking machine could control the life of the astronaut crew truly forced me to think about the future.
I consider this old movie to be the spark that triggered my interest in technology, computers and even economics in a roundabout way.
The main thing that the film accurately predicted is the economic and cultural shift caused by computers, automation and robots. This shift has radically changed all aspects of the labor market and economy, as well as how we live our everyday lives. It has also opened up countless opportunities for investors.
My favorite company in the robotic/automation arena is Adept Technology (ADEP). This low-priced microcap stock is on the forefront of innovation in the intelligent vision-guided robotic systems and services field.
The company was founded in 1983 and has since grown to be the largest U.S.-based manufacturer of industrial robots. Its customers include such notables as Procter & Gamble (PG), Ford (NYSE: F), IBM (IBM), General Motors (GM) and Boeing (BA), as well as a host of other leading global companies.
After a string of losses, Adept reported a surprise profit for its fiscal 2013 fourth quarter, ended in June. Revenue increased 25% in the fourth quarter to $13.7 million from $10.9 million in the third quarter. However, it was down 19% compared to $17 million in the fourth quarter of fiscal 2012.
Operating loss narrowed to $242,000, a $1.6 million improvement from the previous quarter and $300,000 better than the prior fourth quarter. In addition, EBITDA came in at $186,000, which was substantially improved from the previous quarter's EBITDA loss of $1.1 million and Q4 2012 loss of $341,000.
Commenting on the progress, President and CEO Robert Cain stated, "Fiscal 2013 was a year of transition for Adept, in which we embarked on a major restructuring. Our efforts have yielded initial favorable results, as we begin to stabilize and grow the business. By partnering with our key suppliers on a cost reduction program as well as focusing on higher margin products and services, we increased fourth quarter revenue, gross margins, adjusted EBITDA and our net operating results on a sequential basis."
Mr. Cain ended his statement on a very positive note: "We enter fiscal 2014 a reinvigorated Company, with focused execution across all aspects of the business. Adept is the leader in vision-based autonomous robotics, with an installed base of more than 57,000 automation systems worldwide, addressing a broad spectrum of high-growth markets. We are well positioned to execute on our strategy of organic growth with mobile and industrial products, and to capture the momentum in the robotics industry."
The company also boasts a new management team, has zero debt and access to an $8 million credit line. Now that it is wrapping up the restructuring, Adept has a bright future in the robotic business. This low-priced stock provides investors exciting, high-return potential in the business of the future.
The stock has exploded higher over the last several weeks, hitting an all-time high this week of $6.25 before pulling back. Short-term resistance exists at $6.25 with support at $5.
My strategy is to purchase one half of my intended position on a daily close above $6.25, and then purchase the other half on a breakout close above $6.50.
Recommended Trade Setup:
--Take a 50% position in ADEP on a daily close above $6.25 and the remainder on a daily close above $6.50
-- Stop loss at $4.73
-- Set initial price target at $13 for a potential 100%-108% gain in 12 months
- Stanley Kubrick