Our Patriot One Technologies Stock Prediction in 2019 (Buy or Sell?)
As threats from terrorism and violent crime increase, public and private entities face a pressing need for security. That’s the core mission of Patriot One Technologies (OTC: PTOTF).
Patriot One builds scanning systems that detect concealed weapons. The firm has garnered investor interest lately, but it’s a penny stock and as such, risky.
As tempting as it is to purchase a lower-priced stock because of the potential for a big upside, just remember that the downside could very well mean the stock goes to zero.
But let’s give Patriot One a fair shake. Here’s our PTOTF stock prediction, which examines the pros and cons of the company and assesses its prospects in 2019.
What Is Patriot One Technologies?
With a market cap of $217 million, Patriot One researches, develops, and commercializes systems that detect concealed weapons utilizing radar technologies.
The company’s flagship product is PATSCAN CMR, which uses cognitive microwave radar to unearth hidden guns, knives and other threats.
The company boasts that PATSCAN CMR can be used “to combat active shooter threats before they occur, when in traffic areas, such as entryways, hallways, and stairwells, as well as other public spaces in airports, stadiums, schools, and other spaces.”
Patriot One also is developing a threat detection video surveillance product called PATSCAN VRS, which “helps security personnel to detect weapons, public disturbances, and suspicious behavior.”
How Has Patriot One Stock Performed?
- Over the past three months, PTOTF shares have lost 18% whereas the S&P 500 has lost 4%.
- Over the past two years, PTOTF shares have gained 51% whereas the S&P 500 has lost 6%.
How Has Patriot One Stock Performed in 2018/2019?
- In 2018, Patriot One gained 3% whereas the S&P 500 lost 3%.
- In 2019, Patriot One gained 5% whereas the S&P 500 lost 3%.
Who Are Patriot One’s Rivals?
To fully determine PTOTF’s prospects, we must look at its competitors. There really aren’t direct competitors with this particular technology, but several threat detection companies are worth knowing about.
L3 Technologies (NYSE: LLL)
L3 is a $14 billion market cap firm that provides all kinds of detection and security systems for aerospace, military, homeland security, and commercial platforms. L3 has numerous divisions, of which the most relevant is the one that offers intelligence, surveillance, and reconnaissance mission services for business, space sensors, airborne sensors, warrior and maritime sensors, and intelligence and mission systems.
L3 also offers secure communications products for satellite communication terminals, microwave and telemetry products, and secure data links.
L3 is a major government contractor that serves the U.S. Department of Defense, Homeland Security, foreign governments, and commercial customers. L3 also offers network and communication systems.
Thales (OTC: THLEF)
Thales (market cap: $21 billion) is similar to L3 but its security products are more diversified.
Thales designs security solutions for cities, states, cities, and their mission-critical infrastructure and systems, and as well provides cybersecurity.
Thales’ security products are spread across science, industry, space, defense, automotive, railways, and energy conversion platforms. The company’s security platforms are comprehensive, offering communications, command and control systems, mission services and support, as well as protection for combat systems.
Thales also provides surveillance, intelligence operations, and even offers training and simulation solutions for air, land, naval, and joint forces.
Harris (NYSE: HRS)
Harris (market cap: $17 billion) integrates mission-critical operations and systems with security.
Harris’ Communications Systems division offers radio systems that can handle all kinds of wavelengths. The company also offers vision-enhancing products, wireless communications systems, and IP-based voice and data communications systems.
On the defense side, Harris provides systems used in electronic warfare, avionics, command, control, communications, computers, intelligence, surveillance, and reconnaissance for defense and classified customers.
National security, civilian, and defense customers also may avail themselves of the companies products for intelligence, space protection, geospatial, earth observation, exploration, positioning, navigation and timing, and environmental solutions.
Will Patriot One Stock Go Up in 2019 (Should You Buy?)
There’s certainly a market for Patriot One’s products. Schools, hotels, businesses, government agencies — all of these locations would benefit from installing detection systems.
In 2017, the global public security market generated $277 billion in annual revenue and it’s projected to double to $532 billion global market within the next four years.
Considering the company’s systems only cost $10,000 each, and purportedly enjoy a 90% accuracy rate, they’re more effective and efficient than the low-tech metal detectors we often see that cost more. The company claims an order backlog of at least 453 units.
Rising fear of crime, especially in the context of U.S. border security, is a tailwind for companies that make detection systems. Patriot One serves public as well as private entities, which ensures diversification and cushions it from possible government cutbacks.
Will Patriot One Go Down in 2019 (Should You Sell?)
Potential doesn’t make a company successful. Patriot One’s valuation is based entirely on potential. That’s because it has no revenues. None. The company also has consistently lost money.
Let’s look at Patriot One’s three competitors and their respective valuations, to get an idea of what the company must accomplish to be considered a buy.
L3 has a $14 billion market cap. Trailing 12-month (TTM) net income was just over $1 billion. Thus, LLL stock is trading at about 14x trailing earnings.
Analysts project five-year annualized earnings of 15%. As mentioned in earlier columns, we give a 10% premium to that number for each of the following: world-class brand name (no), significant cash hoard (no), and/or robust free cash flow (no). LLL trades at a price-to-earnings (PEG) ratio of 0.93. Anything under 1.0 is a value.
Thales has a $24 billion market cap. TTM net income was $943 million. Thus, THLEF stock is trading at about 24.5x trailing earnings.
Analysts project five-year annualized earnings for Thales of 15%. The checklist: world-class brand name (no), significant cash hoard (no), and/or robust free cash flow (no). Thus, THLEF trades at a PEG ratio of 1.6. That’s too expensive.
Harris has a $17 billion market cap. TTM net income was $830 million. Thus, HRS stock is trading at about 20x trailing earnings.
Analysts project five-year annualized earnings for Harris of 17%. World-class brand name (no), significant cash hoard (no), and/or robust free cash flow (no). Thus, HRS trades at a PEG ratio of 1.16. That’s too expensive.
Is there any argument that suggests Patriot One is a worthy value play?
There’s just one argument: A large, deep-pocketed rival could simply swoop in and buyout the company and its technology.
Patriot One has garnered interest from investors, but it’s been extremely volatile as this video explains:
After examining Patriot One’s competitors, we can see that they have hundreds of millions of dollars of net income. And while a couple of them appear to be overpriced on a traditional valuation analysis, they are not so outrageously overvalued that Patriot One Technologies falls into the “value play” ballpark.
When you’re looking at a company that is pre-revenue, chances are you’ll find that it is overpriced no matter what kind of valuation scenario you create.
Overall Patriot One Forecast and Prediction for 2019
So what’s our final verdict on Patriot One Technologies for 2019?
Stay away. Investor interest has been piqued by Patriot One’s technology, but there’s nothing exceptional about the company’s know-how.
Betting on pre-revenue penny stocks is like rolling the dice in a casino.
Patriot One’s larger rivals could easily crush the firm. Sometimes a company’s proprietary technology is so unique it warrants investor patience while management builds a market. Not in this case.
The only positive scenario we can envision is that Patriot One gets acquired, which would prove a boon for shareholders. But there’s no evidence that a suitor is waiting in the wings.
Patriot One is a dangerous penny stock that wise investors should shun. Like the weapons the company’s products are designed to detect, this stock could blow up in your face.