It’s rare to be able to get in on the ground floor of anything these days, it seems like the world is over engineered. You can pay $200 for a ticket that will transport your body 1000 miles in 3 hours or for $100 you can buy a handset that will carry your voice thousands of miles in an instant. When you get in on the ground floor of one of these trends, you don’t trade it, you buy and hold it for the long term, even if the company’s shares seem overpriced.
And that’s how we viewed this stock…
When we first wrote about Sapphire Glass on September 24th, Apple had announced a patent for a Sapphire laminate that would be layered over a traditional glass screen. It was clear that this technology was about to get a big boost forward. Since that time, GT Advanced Technologies (GTAT), struck a deal with Apple and shares have begun to skyrocket. Even though shares are up more than 100% in the four months since we wrote about the company, resist the urge to sell.
Apple doesn’t want to be a parts supplier so it contracted with GTAT to build and operate a production facility, within an Apple manufacturing plant. That’s right, GTAT owns and operates the equipment that is housed inside an Apple owned building. To launch the facility, GTAT is receiving $578 million as a credit to future purchases of glass. In return, Apple is the sole vendor GTAT will provide Sapphire to in consumer electronics, this means mobile phones, watches, tablets and possibly computer screens.
It’s easy to take the money and run when you have a triple digit return but the experience GTAT is building with Apple can be applied to other industries outside of consumer electronics. Imagine Google glass as a windshield, seeing your speed without ever taking your eyes off of the road. Yes, there are fewer cars on the road than mobile phones but the display size of a windshield is considerably bigger than a handset. But there are opportunities outside of high tech, layering it into body armor for instance.
Even though the valuation is high, the market opportunity is so great that you should consider buying more rather than selling. When the iPhone 6 is announced later this year, it is expected to have a Sapphire screen and with the recent integration into car dashboards, it is likely to be a major upgrade. You can’t use an iPhone 4 or 4S with Carplay. When this occurs, the share price could double again from here.
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Tracking the Jackpot,
Tom Anderson.
Note from Midas Legacy Editor: A former computer programmer, Tom attended NYU’s MBA program and then joined a hedge fund. Today, retired from Wall Street, he manages a small number of private accounts. He also runs our tech-stock recommendation service, Tech Stock Jackpot, available by invitation only.
