Business. NVE Corp. produces computer microchips that are made with leading-edge technology (spintronics) to efficiently acquire, store, and send digital information. The customers are a few large companies involved with medical devices, national security, and the electronics industry.
Business plan. NVE Corp. earns licensing fees and sells microchips to distributors or end-users at a high net margin (40%), which allows the company to control its sales prices.
Market position. “Spintronics semiconductors” is the name of an emerging manufacturing industry that relies on nanotechnology. NVE Corp. competes by owning intellectual property that excludes unlicensed competitors.
Upside potential. NVE Corp. is a candidate for growth or acquisition based on its intellectual property and business success.
Downside potential. Major risks to business success are the loss of a large customer and competing technology.
Stock valuation. NVE stock (NVEC:nasdaq) is a small-cap growth stock with 58% institutional ownership. NVEC does not pay dividends. Loss of corporate earnings would likely devalue the stock.