Updated from 9:58 a.m. EST
Earlier today we recommended investors investigate taking a speculative bet with nanotechnology company
. Two minutes after our story hit the site, the company announced it had been awarded a European patent for the design development and production of Titanium Oxide structures. This process enhances the production of titanium metals, which cuts the cost of titanium production used to build military tanks.
Altair's shares have rallied some 16% in the past two hours, and in keeping with the discipline we employ in our Stocks Under $10 model portfolio, we would be selling about half of our position here and locking in the gain.
Under $10 stocks often make large moves like this on good news, and the hype around nanotechnology has enhanced the strength of Altair's performance today. Not all of our stocks rise like this, but when they do, you have to move quickly to book your gains.
Here's the original story from this morning:
Some of the stocks we select for TheStreet.com Stocks Under $10 model portfolio carry more risk than others. One such stock is
We aren't taking a position in Altair here because we already have a number of speculative plays in the portfolio. But for those who have a high tolerance for risk, Altair is a stock to consider.
Altair appeared on our radar screen when the company announced Feb. 10 that it had achieved a breakthrough in lithium ion electrode materials that will allow it to produce a new generation of rechargeable batteries -- with three times the power of existing batteries -- for the same price. Altair's shares soared 213% in the two days after the announcement.
This news could be a harbinger of more breakthroughs to come, and we believe a small bet on Altair with discretionary funds could pay off in a big way.
First, though, let's take a quick glance at what nanotechnology actually is. In simplest terms, it is the process of fabricating particles until they are near the size of a molecule. Particles this tiny have different physical and electrochemical traits that enable manufacturers to use them to build materials that are stronger, harder and more wear-resistant. These particles have many uses and are essential in everyday items like stain-resistant clothing as well as more niche products like lighter, more durable military tanks.
Breathing Life Back Into Nanotechnology
Nanotech was a buzzword back in 2003 and early 2004, and any company that claimed it could bring a nano-based product to market saw its stock shoot to the moon. But like most crazes built more on hype than reality, the bubble burst and stocks like Altair plummeted back to earth.
Altair's recent announcement has breathed some life back into the group, and we believe there is more good news to come for the company. For one, Altair's breakthrough in battery technology, which it has already patented, could revolutionize the consumer electronics industry by allowing consumers to use portable electronic devices up to three times longer and recharge batteries in just a fraction of the time required with current technology. Altair is in discussions with some of the world's leading battery manufacturers -- though it won't disclose which ones at this point -- and we believe any formal partnership announcement will boost shares.
Life Beyond Batteries
Altair's fortunes aren't tied solely to its ability to bring a battery to market.
agreed to license Altair's RenaZorb, which is used to treat hyperphosphatemia, or high phosphorus levels in the blood, of end-state renal disease patients. RenaZorb, which uses Altair's lanthanum nanomaterial technology, is evidence of Altair's diverse product platform. The deal provides Altair with 100,000 shares of restricted Spectrum shares, the purchase of $200,000 worth of Altair shares by Spectrum, and undisclosed milestone payments based on future clinical and sales goals.
Altair notched $1.2 million in sales in 2004, a small amount to be sure, but the total was a marked improvement from the $73,000 in sales the company generated in 2003. That said, the company has a solid balance sheet and recently took advantage of its surge in market value to sell 5 million shares, bringing its total cash balance to $31 million with virtually no debt. This should be enough to allow Altair to bring a product to the market within the next few years.
There is a lot of hope built into Altair's stock at its current $200 million market cap. But with just 43 million shares outstanding and no analyst coverage, Altair's shares could rally meaningfully on good news and an increased media following, as its battery technology moves from a great idea to a marketable product.
Based upon our conversations with sources familiar with the company, we wouldn't be surprised to hear a partnership announced within the next three months, which could push shares over the $5 mark and in front of institutional investors who ordinarily shy away from low-dollar stocks. Given the inherent risk with the stock, though, we would look to pare any losses near the $3.80-a-share level, or 9% below the stock's current quote.
William Gabrielski is a research associate at TheStreet.com and is accredited with a Series 7 license. In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks.
David Peltier is a research associate at TheStreet.com In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Peltier welcomes your feedback and invites you to send your comments to