Kraken Robotics Inc. is a marine technology company based out of Newfoundland. They design, develop and market advanced sensors for unmanned underwater vehicles for military and commercial applications. One of the main things they are known for is Synthetic Aperture Sonar (SAS), which they are recognized as a world leader in innovation for this technology. SAS allows you to survey seabed’s with ultra high-resolution images at great depths.
Kraken’s AuqaPix line of SAS products uses R&D from NATO’s Undersea Research Centre, (over 2 decades worth), and millions of dollars in funding from NATO government sponsors to provide the same performance as high end military systems at a fraction of the cost. In 2017 Kraken expanded from building advanced sensors to building complete underwater systems (KATFISH and THUNDERFISH). Their technology has been approved and validated by Defence Research and Development Canada, U.S. Navy’s Naval Sea System Command (NAVSEA), the UK Ministry of Defence, and Lockheed Martin.
I don’t normally look at penny stocks too much or spend too much time looking at them. There is a lot more research and investigation required to see if one is a good buy. Their numbers and information tend to be harder to find and misinformation can pop up more often than not. That being said I found Kraken Robotics last year looking at the TSX Venture 50 list. This list compiles the 50 best up and coming TSXV companies as picked by TMX group. If you are looking into penny stocks, this list can be a good place to start.
The main reason that I picked Kraken to write about is because they just recently announced that they acquired three defence contracts totalling 1 million dollars. This wouldn’t even move the needle for a larger company, but for a small company like Kraken this is big news. Not only do they have guaranteed work but they also have their foot firmly in the door to try and get more defence contracts in the future. The funny part about this is that they announced a much bigger contract 2 days ago but it wasn’t reported anywhere except for the Kraken Robotics website.
Kraken announced on September 21, 2020 that they had won a contract from the Danish navy for a total value of $36 Million. This will be a huge product for them and they are expected to receive the majority of the 36 million over a 2-year equipment acquisition phase. This should increase their net earnings quite a bit over the next couple years.
They did have a net loss for the most recent quarter of $166,000 but that is pretty minor especially with Covid and when you consider the fact they have a net profit of $840,000 for the past six months even with the loss of the most recent quarter. They are starting to pick up more and more contracts and the company seems to be starting to grow at a pretty decent pace. Assuming they can have a net profit for the next 2 quarters or at least not lose very much money this will be their first profitable year since they went public.
It is also important to note that despite the most recent quarters loss Kraken has increased their cash by 1.3 Million over the past six months from 2 Million to 3.3 Million. A company having lots of cash on hand and even being able to grow that cash is always good. It allows a company to have the ability to invest in its self when necessary as well as having the ability to weather hard time when the economy is not very good, like during coronavirus for example.
Here are the numbers for Kraken Robotics:
Price: $0.63, Market Cap: 92.85Million, 52 Week range: $0.275-$0.74, P/E(FWD): 126,
Obviously their earnings per share is not very good but that is likely to change for the better with the next 2 earnings. The P/E Forward is also very high, but most penny stocks have either no P/E ratio because their earnings are negative or a fairly high P/E ratio like Kraken. This is also fairly likely to decrease in the near future as well.
All of that being said I would not recommend for anyone to buy penny stocks unless they do a lot of research first and really know what they are doing. This is just one you could consider looking at and maybe putting a small portion of your funds into if you were considering buying a penny stock.
Disclaimer: I am long on Kraken Robotics, though it is a very small position so it won’t make or break my portfolio if it goes up or down a large amount.