Good Thursday morning, ladies and gentlemen. Yes, it's another morning edition of the SCN newsletter, to introduce an all new trading idea.
We've had this one on our radar for a while now, doing our due diligence and waiting for the right time to pull the trigger. With Biotricity (BTCY) up 33% since we told you about it on Monday and with Sack Lunch Productions (SAKL) jumping 20% yesterday following its big news, we figure today's the right day for the next trade -- investors are welcoming small cap ideas.
We think you're going to like this idea for several reasons, the biggest of which is the simple fact that it's already in business, driving real revenue. Incredibly enough, this is something you can't say for too many small cap and micro cap stocks. But, the company is of heightened interest now just because it's on the verge of unveiling a new product at the same time it's about to leverage a new distribution relationship. The combination should be a game-changer. It's a little like catching lightning in a bottle, minus the risk of stepping into a company not driving one penny's worth of revenue yet.
The company? Pressure BioSciences (PBIO).
It's not likely to be a company many of you've heard of. That's ok -- six months from now that could be a very different story. The ideal time to get into such an opportunity, however, is before the company earns that notoriety.
Pressure BioSciences makes a handful of scientific instruments you'd find in research and medical labs. It's been in business for years -- yes, driving revenue for years -- setting it apart from many other small cap stocks. But, like we said, what makes PBIO a "here and now" kind of opportunity is a combination of a new, superior product in conjunction with a new, big-time distribution deal. This has all come together in the past few weeks, and that flower's going to bloom, so to speak, in the next few weeks.
Let's just start with a quick explanation of how the company's newest product is a head-turner.
Just as a quick disclaimer to all the science-savvy readers out there, I'm not a science guy. Neither are most of our readers. So, my apologies in advance to all the true scientists who receive our newsletter. I'm just trying to explain this in simple, layman terms. Ready? Good.
Do you know how researchers prepare a sample of cells or organic material to study using a mass spectrometry device? Since the goal is to break down the material in question into its basic components, lab workers will basically pulverize the material in question. Centrifuges do the trick, as does manual mashing and shredding. Sometimes you can even freeze a sample, breaking it apart in the expansion/contraction process.
The problem with such sample-gathering approaches is, the process of breaking open cellular samples also often destroys the very material researchers would like to leave intact... different proteins, cell components, amino acids, and more.
Pressure BioSciences has built a better mousetrap, so to speak. Rather than pulverizing a sample to a pulp (literally and figuratively), PBIO makes a machine that applies alternating degrees of pressure to break open a cell without breaking the pieces of the cell.
The idea's actually been around for a while, but Pressure BioSciences pretty much perfected the process with the latest version of such a device -- called the 2320EXTREME -- which was unveiled last week at this year's annual conference of the American Society for Mass Spectrometry.
Pretty much anybody who prepares samples for mass spectrometry will want a 2320EXTREME.
And yes, there are plenty of these people. All told, 500,000 scientists are working in 80,000 biological research labs worldwide, all of whom would like better equipment in order to do better work. The sample-preparation market alone is worth $6 billion per year.
It's not just the game-changing equipment that makes PBIO such an interesting opportunity right now, however. Two other factors chip in on the bullish argument.
The first one is its newly-forged relationship with SCIEX.
SCIEX isn't exactly a household name, but within the scientific equipment community it commands respect. It's one of the biggest names in mass spectrometry, with plenty of support from parent company Danaher. It matters, because in January SCIEX and Pressure BioSciences entered into a joint venture to make and market next-generation mass spectrometry sampling equipment.
This relationship is expected to start generating revenue before the end of the year, and once it does, look out above. Like we said, SCIEX is a name with plenty of clout.
The second bullish argument for PBIO is the razor/razorblade business model the company already employs, but will be further developing.
While mass spectrometry reading equipment only needs to be purchased once, the materials used to create a sample can only be used one time; for each new sample, new sampling supplies are required. Truth be told, Pressure BioSciences always had some element of this business model at work. With the introduction of more devices to the more active labs that SCIEX works with though, supplying the consumables needed to use the devices will mean more (relatively and absolutely) recurring revenue. Multiple revenue models is always a good thing.
Better yet, PBIO is already in business, and as such isn't starting from scratch. The advent of the partnership with SCIEX and the rollout of the 2320EXTREME will simply expand the existing numbers, the existing sales channels, and the existing manufacturing capacity.
The kicker: Pressure BioSciences is aiming to uplist to a NYSE or NASDAQ listing within the foreseeable future.
The urgency lies in the fact that all of the work the company has done over the course of the past several months will start to bear fruit in the latter half of this year... which has already begun. Few investors know about it yet, but as veteran traders can attest, once the word starts to spread it often means the "I'll do it later" investors end up chasing a stock rather than riding the bullish wave.
That said, take a look at the nearby chart of PBIO. It looks like a few investors have already "found" the company, and are starting the second wave of bullishness by pushing up and off some key moving average lines. If you want in, you may not want to tarry.
You ladies and gents know the drill by now. That is, don't allocate more to any one trade than you can afford to lose, use a limit-entry, and then use a stop-loss to protect yourself should you get into the trade. All the same, this looks like a compelling risk/reward scenario for a speculator willing to give the trade a little time. It's not too often you'll find a name on the verge of a revenue explosion while it's already got a history of revenue-generation. It's even less often that company is undervalued with only a $10 million market cap. You could own a large piece of PBIO with not much capital.