Kopin: The Best Small Cap Stock To Ride A Wave of “Wearable Technology” (AR and VR)!

Jan 10

Kopin: The Best Small Cap Stock To Ride A Wave of “Wearable Technology” (AR and VR)!

I’m telling you – if 2018 isn’t the year Kopin (KOPN, NASDAQ) blasts above $5 per share, then 2019 will be the year it blasts through $15!

Looking out to 2020 when Apple and Samsung will have rolled out their “Smart Glasses”, Kopin should be known as a leader in wearable technology components and trading for $20 per share, or more!

Something big is about to happen for KOPN.

I can feel it in my bones.

And this breakout has been a long time coming!

KOPN -- 2018 ch

We’ve all seen this story play out before with “sleeper” stocks. The price goes down or sideways, seemingly forever, and then all of the sudden KABOOM!

I hope some of you regulars aren’t bored with my updates on Kopin but it ranks among my highest conviction ideas (and wouldn’t you prefer quality over quantity?).

A “concentrated strategy” – that’s my approach to investing and portfolio management (and it has worked very well over the years). I have approximately 10 to 15 “core holdings” at any given time (along with a cash cushion of at least 5%). As a rule, I only sell a core holding if I’ve got something superior to replace it with. And right now KOPN is nowhere close to being outranked and replaced.

I’m convinced we’ve got a floor in place near $3, so the downside is roughly 10% and the upside is multiples on your money.

Here’s a closer look to illustrate the downside risk:

KOPN -- 3mo

Also, don’t forget, Goertek invested $24 million at $3.25 per share last year to gain a 10% strategic stake in Kopin. “This agreement further aligns the interests of both Goertek and Kopin,” said Long Jiang, Goertek’s CEO. “We will utilize Kopin’s industry leading technologies to create a range of wearable products with the most advanced features for our customers. We are excited to see the initial products utilizing Kopin key components hit the market later this year.”

Goertek was established in 2001 and has been listed on the Shenzen Stock Exchange since 2008. The company’s market cap is $57 billion RMB (or roughly $9 billion U.S.) and it is one of the largest manufacturers of wearable technology products in China. Goertek’s customers include Samsung, Microsoft, Sony, and Xiaomi.

The partnership will prove to be a game changer for Kopin, and I’m surprised the stock is still trading near where Goertek made its large investment. Plus, in November, Kopin’s CEO Dr. Fan bought nearly $1 million worth of stock at $3.21 (adding to his $13 million stake).

Clearly, insiders are seeing value at these prices.

Bottom line – there’s a difference between “core holdings” and stocks you’re planning to flip for “a trade”.  Be sure you know which is which within your portfolio. I’ll continue to stress the merits of buying Kopin because the opportunity is MASSIVE (billions in market cap) and the downside risk is minimal. And aside from the opportunity, that’s often secondary, for my money I need to get comfortable with the worst case scenario first, which seems to be a loss of 1015% in this case.

Seeing is Believing!

We know Kopin’s microdisplays, which have use cases in both augmented reality (AR) and virtual reality (VR) products, work great because the military has been using them for years.

Now, the majority of smart glasses (and headware) being manufactured, mainly for the enterprise market, have incorporated Kopin’s microdisplays into their products.

KOPN -- products

I don’t think the market is anywhere close to appreciating the wide range of applications these products are being used for right now!

Below are links to YouTube videos showing some use cases:

  • Shima, by Laforge, provides hands free text and directions features thanks to a Kopin display that’s nearly invisible (look how lightweight and sleek that design is!).
  • Today’s workers need the best tools to do the job. Tools that make the job get done safer and faster. The RealWear HMT-1 is the world’s first headworn tablet that’s completely hands free. Watch this rugged product at work!
  • Let there be sight!  Scott Safety’s in-mask thermal intelligence system allows firefighters to see thru smoke. This is cutting edge technology!
  • F-35 Fighter jet pilots are using the most advanced AR available to get unparalleled situational awareness, they cost $400,000 each, and Kopin’s displays are inside!

Oh! And how could I not mention SOLOS!

SOLOS is Kopin’s award winning, high-performance and ultra-lightweight AR smart glasses designed for optimal sports performance, safety, comfort and style. You’ve got to take a look at SOLOS in action, this could become a must have tech gadget for many athletes, from cycling to snow skiing.

KOPN -- solos dash

Last month Kopin hired Tom Futch and his team who’ve had success rolling out health and fitness brands such as FitBit. They’re tasked with increasing the brand awareness, sales and strategic partnerships of SOLOS smart glasses to a broader and more inclusive athletic and active consumer base.

“With SOLOS, Kopin correctly predicted that high-performance augmented reality glasses would be an essential tool for today’s professional and amateur athletes,” said Futch. “My experience leading and advising new fitness technologies to the larger consumer market will serve Kopin well – with my goal being to turn SOLOS Smart Glasses into a household brand name. Our mission is to create the most advanced AR Smart Glasses Platform to inform and inspire athletes and consumers to achieve their full human potential.”

The move to hire Futch and his team tells me Kopin is getting more serious about making a business out of SOLOS.

Originally, Kopin’s goal with SOLOS was merely to demonstrate what its technology components were capable of doing.

Here’s What The Majors Are Saying About AR and VR!

Last year, during ShopTalk Europe, a conference that brings together the world’s most innovative and influential people in retail and eCommerce, Greg Jones, director of AR and VR at Google said, “At some point, we’re going to look back and think, how did we not have a digital layer on the physical world.”

AR is the next step toward intertwining our lives with technology.

Recent insights from Google indicate that 34% of its users said they would use AR while shopping, and 61% said they would prefer to shop at stores that offer AR. Jones added, “AR is set to reconnect physical and digital retail.”

The Home Depot, Ashley Furniture, and many others are already using AR so buyers can see what those new cabinets and refrigerator would look like before they buy.

KOPN -- home depot

Apple has been working toward smart glasses and AR for years now, and some insiders within Foxconn have leaked reasons to believe they are testing Kopin’s displays. Apple is aiming to have a product ready for 2019 that will be rolled out for mass adoption in 2020.

If Apple chooses Kopin that would be a “blast off” event for the stock overnight!

“Simply put, we believe augmented reality is going to change the way we use technology forever,” Cook said during the Q4 conference call with analysts. “We’re already seeing things that will transform the way you work, play, connect and learn.”

The transition toward wearables, AR and VR is already underway!

KOPN is arguably the best pure play small cap stock to take advantage of the trend.

KOPN - wearables

To Summarize

Regarding quality, we need look no further than the U.S. Military, Google, Vuzix, and reportedly Apple to know Kopin is a leader in microdisplays (which will be required for every pair of smartglasses). Goertek, one of the world’s largest manufacturers of wearable tech products, has also come to that same conclusion and put up $23 million to buy a 10% equity stake in KOPN (providing the manufacturing muscle to pump out millions of units). Compared to other high-growth technology stocks, Kopin is arguably cheap at 4 x sales (after adjusting for cash) based on my conservative projection for 2018. Based on the chart and insider buying there’s support near $3 per share, so the risk is roughly 10% in exchange for a reward of 300% or more.

But Wait, That’s Not All!

Voice is going to become the new touch, and that represents another big market opportunity for Kopin (in addition to displays).

Kopin’s Whisper chip is  a contender for becoming an important component in voice/speech recognition.

KOPN - whisper chip

Upon reaching 99% accuracy, “touch” interfaces will largely become a thing of the past. Demand for speech recognition will measure into the hundreds of millions of units (if not billions), because nearly every tech gadget will eventually be voice controlled.

The Whisper chip complements Kopin’s display technologies very nicely. It’s already inside RealWear’s HMT-1 and capable or interpreting over 10 languages. So these products are going global and companies will adopt them rapidly upon realizing the efficiencies gained in the workplace.

The consumer market will follow.

All of this amazing technology and “futuristic stuff” is available and working today. Once the world learns about Kopin and hears someone like Apple is using their components, the stock is going to blast off.  That’s why I’m recommending KOPN as a “core holding” in your portfolio.

p.s. The Consumer Electronics Show (CES) begins January 9th! Historically KOPN has performed well leading up to this big event, as we’ve advised previously. It traded higher by about 6% today, up to $3.46, on better than average volume.


*First published Jan 3 at BullMarketRun

**Daniel has a long position in KOPN


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