Tonight’s focus will be our speculative ‘pick of the year’ for 2018. As hinted recently, there was a good possibility of continuing the prior year’s selection for a very good reason: the fruition of LightPath’s (LPTH) efforts was barely developing.

Sensing the Future

A year ago, we returned to a 10-fold winner of an earlier era that we simply thought evaporated (it almost did); as we learned they were making money and just completed a promising strategic acquisition: ISP Optics. Our entry was between 1.40-1.60 per share; and the stock doubled by summertime.

As that developed, along with realization by a few analysts that LPTH had made not only a transformative acquisition in the infrared optical sensor as well as expanded facilities to accommodate a coming 5G roll-out in China; our focus remained: a speculative investment holding; not a trading stock.

Later in 2017, a peer discovered LightPath ‘after’ it had already doubled for us. That set-up a noted ‘possible’ double-top when it popped to the 4 level. Hindsight suggested it be sold short-term; although we didn’t (at least did not chase the run up there; although believed that in the long-run the other chap who joined-in would be right: that it was a bargain ‘up to the 4 area’).

Now the shares have fallen back to the low 2’s; primarily because of sales by the very buyers near the 4 level who came into the move late; and from the exercise of Warrants, which expired at the end of 2017 (done with that) thinking some holders may not have retained the shares after exercising.

Although it’s hard to say at what point in the new year revenue will perk up from the telecom optical sector in China (where they have expanded too); the progress and ability to serve numerous customers (mostly well-known names in automotive, telecommunications, military, aerospace, medical as well as tools and measurement); it’s notable they expanded and integrated facilities in Latvia as well as the primary Orlando facility during later 2017, in anticipation of growing demand upon their production capacity ahead.

Why continue LightPath as ‘pick of the year’ for 2018? Not only because of the promise that is not yet fully appreciated by investors; but because most stocks these days do not have a decent risk/reward profile after the market run-up of the past year that we forecast as a “Monster Bull” if Trump won; totally based on policies, tax cuts, capital repatriation etc.; not persona.

Perhaps embedded in LightPath is a subtle silence about projects they are working on; probably due to competitive concerns too; given how patents are routinely worked-around; and reverse-engineering not uncommon. It’s actually a plus that LightPath sells to most of the known product makers; a supply relationship which allows them to fill demand no matter who wins in certain areas; like new key ‘autonomous driving’ and ‘vehicle sensor’ fields.

We have pointed out in the past the overlapping relationship (‘colleagues’ is the term they use) with a leading-edge company (California and Florida) in the ‘space’; details of which our members have heard about previously. I think here the exploration into proprietary free-form optics or spectrometry have not even been acknowledged as having a role in existing products. If this relates to AR and AI is also something that’s unclear; but indirectly for sure is; as most all such technologies incorporate optical and/or infrared.