part of todays write up DGB ;)27 Mar 2017 15:21
by Gary Newman of s hare pr of its ---- The reality is that many of these tech companies at an early stage do burn through large amounts of cash before they actually manage to start making a profit, so Digital Barriers isn’t all that unusual in that respect.
But what has got my attention and could have a major impact on the company, is news that its EdgeVis Shield technology could be used in the US to build Donald Trump’s wall with Mexico – although in this case it would be a ‘virtual’ wall using the company's technology. This isn’t just something that the company has mentioned though, and it has been widely reported in the news both here and in the US.
To build an actual wall would cost an estimated £8 billion, but EdgeVis could do it at a fraction of the cost and has already been proven in Afghanistan, where the company previously secured a contract with the Ministry of Defence to provide perimeter security of British bases, and subsequently 15 other nations have adopted the technology as part of their border protection.
Given the size of the company, with a market cap of around £42 million currently, such a contract win would likely have a major impact, and is very tempting given it is trading at around 26p per share to buy and has just hit an all-time low share price. Aside from that, the directors do have a history in this sector, having sold their former business, Detica, to BAE Systems for £531 million back in 2008.
It is also worth noting that the free float in this company is quite small, with a large proportion of shares being held by investors with an interest of 3% or more – Schroder is the largest holder with over 20%. This does tend to mean that it can move rapidly in either direction on quite low volume due to the lack of liquidity, but that does mean that if there was a contract award for the Trump wall then the share price could rise a large amount overnight.
I certainly wouldn’t recommend risking your life savings in this one, but I do believe that it has potential despite past disappointments, and is the type of company that could offer large upside, given the sector that it operates in, if it was to really make it and can continue to add large contracts.