Spectra 7 Microsystems Inc. a small player chasing virtual reality market

Dec 24th, 2014 – Comment

If SEV’s technology can elbow its way into the supply chain serving the virtual reality sector with its high growth potential then the rewards might justify the risk associated with this micro-cap speculative stock.


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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SEV LOGO

Good Day Sir,

Big fan! I’ve have been enjoying your commentary from your days on television and to the present with AM 640. I have holdings in Spectra 7 Microsystems and would like to know your thoughts as to the outlook of the company for the next 6-12 months and the VR market as a whole.

Thanks in advance,

Gary

 

Hey Gary,

Thanks for the assignment and your long term support! Both are greatly appreciated. Spectra 7 Microsystems Inc. (SEV TSXV) has 39 patents that cover their development of chips and cables that make electronic products smaller, lighter, and faster, while delivering a cleaner signal at a lower price. The company seeks opportunities in high definition displays, active cables, and wearable computing.

Through 2014 SEV has announced three developments on the chip side of the business. In May they announced that they has begun production of their VR 7100 virtual reality chip. In October the VR 7050 was introduced which was designed for gesture recognition and motion control. Finally in November the VR 7200 was showcased boasting the ability to feed dual ultra high resolution displays for virtual reality goggles.

The company also develops and sells cable systems that integrate with the chips and push all the data along one thin wire as opposed to the current standard of multiple cables to achieve less robust speed and signal quality.

Some of the factors that you should be aware of include a market capitalization of $50.17 million and average daily volume of 576,837 shares over the last thirty days. What you might also want to consider is that when the company reported its second quarter results in August of 2014 revenue came in at $1.1 million.  These issues demand that you make SEV a part of the  speculative portion of your holdings.

An investigation of the charts will add greater context to my thoughts.

 

SEV

The three-year chart depicts the big jump that started in September of 2014 as chatter on the bull boards stoked a speculative buying. The move took the shares from just above $0.30 to a 52-week high of $1.04 by November. The company had to put out a news release on September 29, 2014  that management had no explanation for the trading activity. The MACD and the RSI both generated sell signals in November coinciding with the 52-week high.

 

 

 

 

SEV2

The six-month chart highlights the move higher in September and the buy and sell signals provided by the MACD and the RSI over the last four months. Currently the momentum indicators are attempting to turn up but haven’t gotten there yet. The shares are holding support near $0.55 which demands monitoring to provide greater visibility as to direction.

You asked about the market for virtual reality and having tested an Oculus Rift headset at a trade show I would have to say that it has a lot of potential not only in the computer gaming space but other sectors as well. If SEV’s technology can elbow its way into the supply chain serving the virtual reality sector and its high growth potential then the rewards might justify the risk associated with this micro-cap speculative stock.

Make it a profitable day and happy capitalism!

 

 

 

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