TOP IDEAS: A designer of computer system modules for high-tech products of tomorrow, Intrinsyc Technologies Corp. (TSX: ITC) is starting to attract attention today. Stock is up 39%.
About a decade ago Intrinsyc Technologies (then named Intrinsyc Software) was a high-tech "star” stock trading up over $10.00 per share. With mounting losses, the star-status faded and so did the Company's stock price. But with a new business model, is Intrinsyc’s star rising again?
We first profiled Intrinsyc Technologies Corporation (TSX: ITC - $1.04) as one of Investorfile’s Top Ideas
3 months ago, then trading at $0.75 (See: Intrinsyc Technologies: A high-tech turnaround play, for small cap value investors).
We were intrigued by the transformation happening to the Company’s financial results; a turnaround from consistent losses to a string of quarters with revenue growth and some profits. The quarterly results and the Company’s strong balance sheet were the impetus for the value proposition of the stock.
As important as the fundamentals is Intrinsyc’s growth story. This story is getting more and more interesting as the Company has transitioned from a service provider to designer and manufacturer of embedded computer system modules that power the cutting-edge next-generation high-tech products.
Intrinsyc has a close relationship with Qualcomm Technologies Inc. The Company is a Qualcomm licensee and a leader in Qualcomm® Snapdragon™ product development program for the Snapdragon family of mobile processors. Incorporating the Qualcomm processors, Intrinsyc designs proprietary computer modules which become embedded systems that drive the dedicated functions for new high-tech products.
The Company provides solutions that span the development life cycle from concept to production to help high–tech device makers (original equipment manufacturers – OEMs) with the ability to offer compelling differentiated products with faster time to market. The revenue model for Intrinsyc includes the sales of its proprietary computer modules and development kits, as well as engineering services related to those modules and kits for the creation of new products. The recurring revenues occur from computer modules sales and/or design royalties based on the OEM’s product sales.
One such OEM customer is Stream TV Networks, which has developed Glasses-Free 3D technology. Stream TV contracted Intrinsyc to turn 3D-processing technology into something that can be done via a chip to be embedded within a TV set, smart phone, tablet or digital media display. Stream TV is on verge of commercializing its technology, which could translate into significant future recurring revenue streams for Intrinsyc. (Intrinsyc has also become an investor in Stream TV Networks). Intrinsyc has dozens of OEM customers with emerging high-tech products in a wide variety of vertical markets, including: Automotive, Communications Infrastructure, Consumer Electronics, Surveillance/Security, Industrial Control, Energy/Power, Medical, Retail Solutions and Military/Aerospace.
In many ways Intrinsyc is a company of the future, the future success of high-tech products that the market has not yet seen. But for investors it is starting to become the investment of today as the Company’s stock is up 39% since we first recommended that small cap investors should accumulate the shares up to a price of $1.20.
Is Intrinsyc’s star rising again? It is still too early to tell. But if the Company’s new business model is a success then our accumulation target price of $1.20 will prove to be one of the best bargains around.
The Company has approximately 20.5 million shares outstanding.
Author’s share ownership disclosure: ITC - Yes
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