"The Engineer’s Holy Grail"

This one came in on a teaser ad for Tobin Smith’s MicroCap Investor on April 26 … and a reader also sent in a suggested solution (and was right — this happens more than half the time, that readers send in a solution and they’re correct … I’ve definitely got the smartest readers in the investing blogosphere).

But anyway, what are we dealing with here? This is a tease that describes the engineer’s holy grail as a material “which combines plastic’s very best qualities, lightweight and moldable, with the best qualities of metal — strength and the ability to conduct electricity.”

The applications are mentioned as being hugely important — lighter vehicles improve gas mileage, cell phone cases become antennas that increase range, plastic can be substituted for silocon in semiconductors, and on and on.

And apparently, Toby Smith has discovered the company that owns the patents and process to build this material.

He compares an investment here with getting in on the ground floor with other new materials or patents — Teflon and Qualcomm’s CDMA are both mentioned.

MicroCap Investor is reportedly already up 100% on this stock … but, according to Smith, “we’ve just reached the point where this rocket is launch-pad ready and about to go stratospheric.”

So what is it? Come on, come on!

Some specific clues:

“They’ve got a manufacturer on board. Dozens of companies are already testing the product, which just garnered a key industry award.”

“The Discovery Channel just did in-depth interviews with the lab scientists.”
The company’s name? Well, thanks to my intrepid sleuth of a reader, I can tell you that this space-age conductive plastics company is …

Integral Technologies (ITKG on the OTC market)

The key industry award they just won was at this year’s Consumer Electronics Show — they won a “CES Innovations 2007 Design and Engineering Award in the Enabling Technologies product category.” They also were awarded a similar price from Popular Science back in 2004, so this has been around for a while (that part didn’t take much sleuthing, I must confess — both awards are listed on their home page).

The product in general is called ElectriPlast, and they’ve got that cell phone idea that’s called the PlasTenna. Clever names, at least. The first commercial order for ElectriPlast came earlier this year from a hearing aid company, which is an application I wouldn’t have thought of.

I don’t know how well this company will do, or if their products will take off, but they are at least limiting risk in some ways — they’re not planning to do any manufacturing or production themselves, they’re aiming to be solely an intellectual property owner, and to license their technology and techniques to the actual makers of these new ElectriPlast products. Looks like Jasper Rubber, another company I know absolutely nothing about, will actually be making the stuff.

So, this is an “asset-light” intellectual property company — their $90 million or so in market cap means we’re hoping each of their patents (assuming they’re all approved) is worth an average of about a million bucks … there isn’t anything else there yet to speak of, though there are several licensed manufacturers now (no idea whether they’ve actually made any ElectriPlast products yet, though I doubt they’re moving that fast).

I’m no engineer, but it does sound like pretty cool stuff. I have no idea how unique their product is, though they do have over a hundred granted and/or pending patents, but if this is really the “holy grail” I have to imagine that others are at least trying to develop similar products — and for all I know, they already have.

The shares are right around two bucks right now, though they’ve definitely spiked on the occasions when the few licensees were announced, and they’re far below their $4 high from last year. Very interesting technology, whether or not it’s a good company to invest in I’ve no idea. Good luck, all, and thanks to my reader for sending this one in.

The author will always disclose any direct long or short equity, debt or option position in any stocks written about as of the day of publication, and will not trade in any stocks mentioned for three days (72 hours) after publication. Full disclaimer is at the bottom of the page.

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