Walk into the BMW factory at Cowley and you'll see hundreds of robots bashing out thousands of Minis, every single week. Every car on the production line is slightly different: one might have dark chrome alloy wheels, while another might sport blush leather seats. So the robots need to be able to recognise each vehicle as a unique object with its own distinct properties.
Ubisense's real-time location software, which uses ultra-wide- band radio, provides these robots with the eyes and ears to do just that. It's like having an indoor radar system in the assembly plant that tracks each car in 3D. This results in greater efficiency, fewer errors, and big savings for BMW.
While this market is in its infancy, it is growing fast. Datatech estimates that the sector could be worth $500m by 2018. Ubisense is signing up new clients across numerous industries: this month it won major deals from two of the world's largest car makers, to add to a roster of clients that includes Airbus, Caterpillar, and Hyundai.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
This was reflected in its first-half results: underlying turnover jumped by 12.8% to £12m. The company did suffer temporary delays on a handful of deals in North America. Yet in some cases the delays were a result of longer negotiations due to a widening in the scope of contracts. And since June, most of these orders have come in anyway.
Ubisense (Aim: UBI)
House broker Canaccord Genuity predicts 2012 turnover and earnings before interest, tax, depreciation and amortisation (EBITDA)of £27.5m and £1.5m respectively, rising to £37.4m and £4.5m by 2014. I rate the stock on a 2.5 times sales multiple. Adjusting for net cash of £3.3m, that gives an estimated worth of more than 300p a share.
Of course, nothing is risk-free. Contracts tend to be lumpy and there are a number of new rivals ranging from start-ups to Nasdaq-listed entities trying to muscle in on the action. While protected by patents, Ubisense could be affected by rivals developing more effective technology in future. Finally, the firm is exposed to the cyclical nature of its end markets and to currency fluctuations. But if all goes to plan, the shares could easily triple in the mid- to long term.
Rating: SPECULATIVE BUY at 218p
-
Stop inheritance tax perk on pensions, says IFSThe government could raise billions of pounds in revenue by closing inheritance tax loopholes, such as on pensions and AIM shares. Is your pension at risk?
-
Revealed: Best buy-to-let property hotspots in the UKLooking for the best buy-to-let property locations in the UK? We reveal the top 10 postcodes with the strongest rental returns
-
Somero: trading this overlooked bargainFeatures Mechanical-screed maker Somero dominates its niche and is attractively valued. Matthew Partridge picks the best way to trade it.
-
How to find big profits in small companiesCover Story The small- and micro-cap sectors are risky and volatile. But with careful research and patience, investors could make huge gains. Matthew Partridge explains how to find the market’s top tiddlers.
-
The hidden gems on Aim, London's junior marketFeatures Aim, London’s junior market, is risky – but you can find solid stocks at low prices. Scott Longley reports.
-
Is Aim finally coming of age?Features The Aim market of mostly smaller companies has traditionally been seen as a bit of a backwater. Is it time to change that view? Matthew Partridge talks to Paul Latham and Richard Power of fund management company Octopus.
-
Three Aim-listed firms that will thrive in a post-Brexit worldOpinion Matt Tonge and Victoria Stevens of the Liontrust UK Smaller Companies Fund pick three Aim-listed firms that will survive Brexit turmoil.
-
Fetch! The Chinese small-cap stocks to buy in the Year of the Dog
Opinion Each week, a professional investor tells us where she’d put her money. This week: Tiffany Hsiao of Matthews Asia selects three Chinese small-cap stocks with exciting potential.
-
Small and mid-cap stocks with big potential
Opinion Professional investor Guy Anderson of the Mercantile Investment Trust selects three small and medium-sized firms with promising prospects that the market has missed.
-
Get cheap, reliable growth from smaller companiesFeatures One of the most reliable long-term investment trends is the long-term outperformance of smaller companies over blue chips. Max King picks some of the best ways to buy into this growth.
