March 25th, 2009

I do get a little tired sometimes of all the focus on precious metals and energy that we have these days. So, I decided to write about one of these tiny tech-companies that very much resemble junior-miners in that they too can have a big break-through and make you lots of money in short order. What's great about tiny tech-stocks is that you know what it is your buying; so it just becomes a game of figuring out just how viable is their product.

Cymat has a fairly easy to understand tech: Aluminum Foam. Actually the product that they're selling is aluminum foam, but the technology that makes them unique is how they actually make the stuff.

The use for aluminum foam is pretty straightforward; it's a very low-density inexpensive material that has a strong shock or pressure resistance. This makes the material very good for use in particularly the military (road-side bombs, mines) and the auto industry (light, shock resistant and stabilizing).

Metal foams have been around since the 1940's, so it's not a new innovation. Since I'm no expert I can't judge if theirs is the best way to make it, but according to Cymat management, what makes their tech really different from similar producers is that they can mold the foam into basically any shape and size they want, which has been difficult in the past.

Cymat has a manufacturing plant in Toronto, Canada. So far Cymat has made a few deliveries, mostly for novelty use in architecture. They have delivered prototype orders to the autoparts-manufacturer Georg Fisher and they will be getting a 10% royalty if GF choose to use it. They also have prototype testing on-going in the Canadian and US military, which management optimistically expects future orders from.

The numbers right now are: No debt, ~$1M cash, mcap ~$10M. I beleive that pretty much all that needs to be said has been said. Cymat management is sounding very optimistic and from the recent testing in the auto and military sections it looks possible that they might receive real orders that would start giving them some real revenue. But buying this stock remains a very big gamble; there seems to have been an almost infinite supply of these sorts of small tech companies that have had one product that hey've been trying to sell, and although they've received lots of prototype orders, they've never quite made it all the way. I cannot honestly judge how good their tech is. Even if their tech isn't all that spectacular they could still get lucky. My final judgment would have to be: buy a very small amount of shares if you like to gamble.

(Note: I wanted to mention that I put up a 'Leave suggestions' page on the top menu, where you can leave suggestions of companies for me to write about. I put it up because it's hard to find interesting stuff to write about sometimes, and also it's an opportunity for readers to partake more in the blog.)