I just bought a small amount of Adept Technology (ADEP) at $5.92 a share. I'll be watching to see if future developments warrant further investment.
Adept Technology is a small cap company that makes industrial robots. It has been around for quite a while. I like robots. This is my second go round with Adept. Despite my trying to be a long-term investor, and my shifting to biotechnology stocks, I bailed out of ADEP once already, and with good reason. If you do decide you like ADEP, be wary.
I originally bought Adept in 2012, when it was in deep trouble due to falling sales. I bought at $3.95 on 11/5/2012 and then at $2.94 on 11/09/2012. My final purchase was for $3.34 on 2/8/2013.
It was a turn around bet, and after Adept hit bottom some small brokerages started recommending it. The stock rose faster than its revenue, and so I started selling. I sold at $7.92 on 10/7/2013, then at $14.45 on 12/26/2013, and the remainder at $18.63 on 2/10/ 2014. The stock went even higher than that, but neither sales nor profits justified the high prices, to me.
Of course eventually the stock price stalled and started falling. I continued to cover Adept at OpenIcon. You can read my notes about the Adept Technology March 2015 quarter results and analyst conference.
My reasoning for today's purchase is that the current market cap is about $80 million. In March revenue was $14.1 million, and June quarter guidance is for revenue between $13.5 and $15.0 million. Margins are not great, so they are losing money, but could hit profitability on a bit more revenue.
But feedback on their mobile robots (for warehouses, etc.) is good, and they expect to sell significantly more as the year progresses, though perhaps in a lumpy manner.
My rule of thumb for P/E is 20. So they need $4 million per year, or $1 million per quarter, to justify the current price. I think Adept could reach $1 million profit per quarter by the end of the year. They could also fail for a variety of reasons, including less than expected sales of their old-line, assembly-line robots, or of the new mobile robots.
Again, I hope that Adept succeeds gradually, and the stock price just goes up to reflect the level of success. So I can be a happy, long term investor, rather than having to sell after concluding that the stock price has been pumped up beyond reason.
Especially when investing in micro-cap stocks it really pays to