"Maybe we've read too many science fiction novels, but looking out to the end of the century, we think the next industrial revolution will come in space," says analyst William Gibson, of San Francisco-based Sutro & Co. Inc.
And Anaheim-based Odetics Inc. looks like one good way for patient investors to buy into the coming cosmic business boom, Gibson says in a recently issued "buy" recommendation.
Despite its small size, Odetics has won wide acclaim for the spindly, spiderlike robot it has affectionately named "Robin." The company also is a major player in the market for video recorders used in space.
Because of its edge in robotics and its experience with project related to the National Aeronautics and Space Administration, opportunity exists for Odetics "in niches such as supplying the remote arms and necessary vision systems needed to construct and maintain the station," Gibson said.
Other reasons to buy the stock, Gibson said, include strong orders for an Odetics system that uses computers to automate television broadcasts. Gibson projects that Odetics will sell 20 to 30 of the units, which cost at least $250,000 each, during its fiscal year 1988, which began this month.
Though Odetics appears to have a bright future, Gibson cautioned "that this stock isn't for everyone." The payoff isn't likely to occur until the next decade, he said, and the stock will be expensive in relation to its earnings until then.
Moreover, Odetics may be a dominant player in some markets--such as robotics--for now, but new competition is likely to emerge. And innovative companies such as Odetics always are in danger of getting ahead of the markets, he added.
On top of that, Odetics is "illiquid" and the stock is difficult to buy in quantity, Gibson said. Insiders own close to 20% of the 2.78 million class A common shares outstanding and just under half of the 1.17 million full-voting, class B common shares outstanding. Daily volume is low, and much of the stock appears to be in hands unlikely to trade, he said.
Odetics' class B common stock closed Friday on the American Exchange at $11.25 a share, near its high for the last 12 months of $11.875. Its low for the last year was $6 a share. The company's class A shares, which carry one-tenth of a vote each, closed at $9. Their high for the year was $10.125 a share and their low was $5.625.
Although investors may have to wait a while for Odetics to pay off, Gibson said, he believes that "history will prove that Odetics was a bargain at these prices for investors with patience."