The Mysterious Moneymaking Laser

Lasers are everywhere today. They play our DVDs…read prices off the products we buy…even correct our eyesight. Yet these beams of concentrated light still capture our imagination, fueling dreams of high-tech and futuristic devices.

More importantly — even 40 years after the first laser was invented — lasers can be your ticket to some big gains.

For instance, I have my eye on a tiny laser manufacturer that has its hands in several lucrative market streams.

First and foremost is the U.S. government…specifically, the military and Homeland Security.

One application of defense lasers you’ve probably heard of — the missile defense shield that President Bush has commissioned. But this company has been developing lasers for smaller-scale projects, like protecting individual planes from missiles. It can also provide unprecedented information about potential targets — allowing pilots to find, identify, track and eliminate any threats.

Other defense applications include identifying biochemicals, providing communications and even triggering explosives from a distance.

The company specializes in making lasers smaller and more energy-efficient — exactly what you need to stick them on military vehicles. And so far, the military must like what it sees, because 65% of this company’s revenue is from government contracts. In fact, it recently delivered a batch of high-powered lasers to a company that’s developing “directed-energy” weapons.

In other words, laser guns…like the kind you see in science fiction.

The defense applications alone make this laser company exciting to explore. But it’s also making headway in other hot markets, too.

For instance, it’s a pioneer in the field of laser cutting and welding. That’s right…instead of saws, blowtorches and other imprecise tools, more and more things are being constructed with the help of pinpoint-accurate lasers.

Once again, this company’s lasers are perfect for the job. The company has developed a high-powered laser that’s relatively cheap to make and more precise than currently available models.

Then there are medical applications. Lasers have found a role in dermatology, ophthalmology, even dentistry. And this company’s high-energy, low-cost lasers are small enough to give doctors the precision they need to get the job done.

I could go on and on…like how scientists are depending on this company’s lasers for atomic research…or how printers and publishers are using lasers to cut costs and boost efficiency.

But before you get too excited, keep in mind that this company isn’t perfect.

For one thing, it’s a relatively new technology company. And like most startups, there’s little more here than potential. The company is burning through cash and has yet to turn a profit. In fact, even after boosting its revenue nearly 200%, it still posted an $18 million loss. The company was holding about $2.8 million in cash and is nearly $8 million in debt.

The question you have to ask as an investor is does the opportunity here outweigh the risks?

It’s a question you have to consider for yourself — and one I can’t answer for you. I think there’s some potential money to be made here, which is why I recommended the stock to my Bulletin Board Elite members. It’s clear that interest in lasers is nowhere near its peak…and I think you should grab a ride while you can.


July 26, 2007

The Daily Reckoning