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So, let’s get started with our ULBI stock forecast. First, we’ll go through a little about what the company does and where it operates. Then we’ll have a look at the latest events in the news, and past performance and close with our Ultralife stock performance forecast.
Ultralife Corporation (NASDAQ: ULBI) opened its doors in 1990 when a group of investors acquired the Ultralife brand name from Eastman Kodak. In December 1992, the company went public and started quoting as ULBI stock on the Nasdaq exchange.
Note that we are not giving financial or investment advice concerning ULBI stock and any trade or investment ideas that may proceed. Our ULBI stock forecast is purely for educational purposes.
ULBI Stock Profile
Ultralife corporation operates in two divisions: batteries, and communications systems. The company, along with its subsidiaries, designs, manufactures, installs, and maintains power and communications systems across the globe.
The company operates a battery power business across various subsectors which are divided into the following sectors:
- Medical
- Safety & Security
- Energy
- Industrial
- Government & Defense
Ultralife has a wide range of lithium-powered batteries that it sells directly to government agencies and through large distribution chains and retail outlets. Battery products include:
- Non-rechargeable Lithium 9-volt cylindrical
- Non-rechargeable Lithium thin cell
- Military-grade lithium non-rechargeable
- Rechargeable lithium-ion soft & hard packs
- UBI-2590
- Chargers & Power supplies
- Cables & Accessories
- Automobile telematics
The communication systems division also manufactures a wide range of products, which includes the following:
- Power supplies
- Amplifiers
- Antennas, adapters, and accessories
- Vehicle communication
- Portable systems
- Satellite communications
- Cables and connectors
The company operates from various locations around the United States and has four subsidiaries around the world. In the US, Ultralife’s headquarters and Battery energy business are in Newark, New York. While the communications systems business is run from Virginia Beach, Virginia.
The company also has two subsidiaries in the United States, one in Missouri City, Texas, and another in Houston Texas. The company operating out of Missouri City, SWE, manufactures high-performance smart battery systems and packs. And the company in Houston, Excell Battery, also manufactures custom battery packs.
As part of its global strategy, Ultralife has facilities in China, India, Canada, and the United Kingdom. The company, through ABLE a subsidiary, has a 100,000-square-foot facility in Shenzhen China which is ISO 9001 certified. Where they manufacture Li-MnO2 and Li-SoCI2 cells and assemble rechargeable and primary batteries.
In India, Ultralife is running a joint venture in Bangalore, where they focus on design and engineering. They also assemble rechargeable battery packs. Accutronics is Ultralife’s subsidiary operating in the United Kingdom. The focus is on medical markets, where they design and manufacture batteries and chargers.
Ultralife In the News
A ULBI stock forecast wouldn’t be complete without examining the latest news about Ultralife. ULBI stock has seen a considerable amount of insider buying despite the share price having lost 24 percent over the period.
On August 02, 2021, Bradford T. Whitmore, director and 10 percent owner of the company, bought another 25,200 shares, as per SEC filings. The new purchase brought Whitmore’s total of direct beneficial ownership to 589,102.
The director has continued to make regular ULBI stock purchases since then. According to SEC filings, Whitmore made insider purchases on the following dates:
August 17, 2021, 53,251 shares
February 24, 2022, 55,030 shares
June 06, 2022, 42,970 shares
August 02 2022, 100,000 shares
August 17, 2022, 34,100 shares
The series of purchases brings his total direct ownership to 874,453 shares. Whitmore also has indirect beneficial ownership of just over 5.5 million shares through other companies, according to the filings.
Whitmore is not the only insider buying shares of ULBI stock over the past year. Ultralife CEO, Michael Popielec, has been buying also. On August 10, 2021, he exercised options on 12,709 shares. And on October 20, 2021, he filed option rights on 40,000 shares at a strike price of $6.9694.
On December 17, 2021, he exercised rights on another 6,583 share options, bringing his total ownership to 316,509 shares. Philip Fain, Ultralife’s CFO, has also made purchases over the past year bringing his total ownership in shares from 118,160 shares to 128,500 shares.
New contracts
Ultralife has seen itself awarded some lucrative contracts over the past 10 months. In December 2021, the company renewed a contract to supply up to $9.9 million in BA-5390 batteries to the US Defense Logistics Agency.
In July 2022, Ultralife also announced another $4.6 million contract to supply its vehicle amplifier adaptors to a global prime defense contractor. And on September 22, 2022, the company announced it has received a contract to supply $7.5 million in communications systems.
Quick Financial Overview
The first thing I look at when analyzing small-cap companies is their debt-to-asset ratio. Smaller companies can run into difficulties when this ratio is too high, meaning they have a high amount of debt when compared to assets.
From their balance sheet for the period from 2019 to 2021, we can see that for 2021, their debt-to-asset ratio was 0.13. Slightly higher than the ratio in 2019 which was 0.119. However, the ratio is still very low, the company only finances 13 cents for every dollar it has in assets.
Source: YahooFinance
Looking at their income statement we can see that profits over the past 3 years have been declining. Gross profits in 2019 were $31.2 million and for 2021 had dropped to $24.6 million. What is more worrying is that EPS also dropped to negative territory in 2021.
While EPS managed to remain stable at $0.33 for 2020 despite the drop in gross revenue, in 2021 EPS fell into negative numbers at -$0.01.
Source: YahooFinance
Past Performance ULBI Stock
From the initial listing of ULBI stock, the share price is down 53.06 percent, currently quoting at $5.75. However, this stock has seen much higher numbers throughout the years. In April 2004, ULBI stock touched an all-time high of $24.96. While it previously saw an all-time low in October 2002, of $1.55.
Source: TradingView
More recently ULBI stock is down 10 percent YTD, and up by 21.20 percent over the past 3 months. The 52-week high is $7.10 and the low is $4.16. Trading volume in ULBI stocks is typically low even for a small cap. The average volume is 24,370 shares.
ULBI Stock Forecast
Considering what a ULBI stock forecast might look like we are going to have a look at the technical analysis for this stock on the day and weekly charts. Then we’ll conclude with what we found from the news and the financial analysis for the fundamental part.
Technical Look
From the weekly chart below, we can see how UBLI stock is still in a clear downtrend. Although it has broken above the 50-candle moving average an indication that further upward momentum may be on its way. However, the stock price is still well below its 200-candle moving average.
Source: TradingView
For further price increases to gain momentum we would need the price on a weekly candle close above the 200-candle moving average, currently at $7.07. For confirmation of a bull trend, we would look for a weekly close above the black trend line touching previous candle body highs of April 2019 and May 2021.
The day chart below shows we may be in a short-term bull trend. The 50-day moving average has crossed over the 200-day moving average. ULBI stock price is also well above the black trend line that was offering resistance levels from December 2021 to August 2022.
Source: TradingView
For confirmation that this short-term bull trend can convert into a major long-term trend, we would need to see the 50-day moving average remain above the 200-day moving average. While the weeks progress, we would also need to see the 50-candle cross above the 200-candle moving average on the weekly chart.
If that were to happen, it would probably concur with the downward-sloping resistance line on the weekly chart. So, we would also need a candle closing above that trend line to confirm a possible long-term trend.
Fundamental Observations
When making a ULBI stock forecast you should also consider the fundamental factors. Such as insider buying, global positioning, and future revenue prospects.
Insiders have been buying ULBI stock over the past 15 months despite share prices going lower. This seems to be a clear indication that the top management has a lot of belief in the future of Ultralife and the long-term trend for the company’s revenues.
Ultralife has recently landed a few important contracts with government agencies across the world. These contracts are long-term and have a high degree of solvency. Ultralife has a global presence with facilities in China, India, Canada, and the United Kingdom.
The global presence means Ultralife is well-positioned to take advantage of worldwide demand for its products and services. Its presence in countries like India and China which have a large margin for growth means it could benefit from these markets as their economies continue to expand.
What is concerning is the decline in earnings for 2021. Although it still remains to be seen if this is temporary and whether profits will return to positive numbers in the short term. The low debt-to-asset ratio indicates a high level of solvency for the firm and the ability to raise more capital if it were needed.
Conclusion
ULBI stock does have some characteristics that may indicate a bright future potential for the company. However, we are in a period of high inflation, and stocks and bonds may go through a bumpy time until it’s over.
ULBI stock may be able to defend itself from the negative effects of higher prices. Commodity prices are on the rise and especially rare earth minerals like lithium. However, many of its contracts are with defense and other government agencies, all of whom have deep pockets.
Another thing to consider, for any investment, is asymmetry. You may see ULBI stock as an asymmetric investment, as it has the potential to reach previous highs. We are talking of a stock price with a $20 handle. While to the downside, your maximum risk is $5.75.
Bottom Line
Investing in stocks is always a risker matter, especially so when they are small-cap stocks. Speak to your financial advisor to make sure any investments you make suit your requirements for risk and return.
If you are going to invest in a portfolio of stocks where you are going to pick and choose you may want some professional help. Many companies offer their services to investors to guide them through the intricate maze of stock investing.
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Gino D'Alessio is a Broker/Dealer with over twenty years experience in various OTC markets such as Bonds, FX and Derivatives. Currently a Financial Markets and Investments Writer & Analyst
