If you are a regular Equity Insight reader, you know that we have been following Kontrol Energy since November 2018 and have built a great deal of trust in the management team. We have seen this team consistently execute on their business plan and deliver value for shareholders. From our point of view, it was only natural that one day Kontrol Energy (CSE: KNR) would rally hard - it was a matter of time until investors started to see what we saw in KNR.
The event that brought so much attention to Kontrol Energy (CSE: KNR) was the initial announcement on August 5, 2020 of the BioCloud technology for rapid on-site air detection and alerting of pathogens, notably COVID-19. From August 5th to September 11, KNR went on a monster rally fueled by some great news.
On September 11 the stock closed at $4.88 and we published Kontrol Energy: Still a 10x Opportunity. In that piece we outlined a thesis as to why we think KNR will continue to push higher in the coming months and reach valuations close to $1 billion. The Company outlined in a news release on September 23rd (link) that the fundamentals were lining up to potentially justify a future valuation of $1 billion: CSA certification in sight, commercialization targeted for November, large government orders potentially around the corner, etc. Given our confidence in management, we firmly believe that all milestones will be hit and that investors will be rewarded before Christmas 2020.
When we look at the stock, it has been acting exactly as it should, consolidating between support and resistance levels with the majority of the trading occurring in the $3.80 to $5.00 range.
There is an obvious psychological barrier at the $5.00 level. If however the above technical structure is valid, we believe that KNR is forming an extremely large bullish structure. Once KNR pushes through the $5.00 level, close above there on a daily basis we feel that the charge to the extremely important technical level of $5.95 will happen relatively quickly with price targets well into the double digits.
The price action for the rest of the year could look something like this:
Again, assuming all of the above works out, based on the fundamentals we would rip right through the 1.618 and charge at the 2.618 around $12.00 or the 3.618 at around $15.00 where KNR would have a market cap of $400-500M.
We cannot predict when stocks move or how far they will move. However, history tends to repeat, human psychology and behavior tends to be constant and thus patterns tend to repeat in price action. So looking at the expected news flow, milestones which include CSA certification and lead orders coupled with the structure of the price action, one may draw a reasonable road map for what may happen over the next few weeks on KNR.