Why Adept Technology, Inc. Stock Skyrocketed More Than 400% in 2013, and Can It Continue?

Will Adept Technology have a 2014 as explosive as 2013?

Jan 14, 2014 at 6:15PM
Adept Quattro S

Quattro. Source: Adept Technology

Investors in once-little-known small-cap Adept Technology (NASDAQ:ADEP)  had a riveting 2013, with shares up more than 400%. Those kinds of monster gains are nothing to laugh at, and leave investors with several questions: What caused this incredible rally, and is the party over yet?

Breaking down a 400% return  
Before buying or selling any stock, it can be very helpful to analyze why the stock has moved in order to evaluate what the stock market's expectations are for that particular company. When an investor has a good idea of what the market expects out of a company, then she can better evaluate if an investment is warranted. For Adept Technology's share price, the 400% change can be evaluated by looking at revenue and the price-to-sales ratio.

ADEP Revenue (TTM) Chart

*ADEP Revenue (TTM) data by YCharts.

According to this graph, Adept's revenue, the orange line, is unchanged over the last five years. The blue line represents Adept's P/S multiple changing over time and shows that in the last year it has increased by more than 400%. 

Which brings us to the two factors that can cause a price to increase. A stock price is equal to how the company is doing (sales) multiplied by how the market feels about the company's future prospects, which is expressed by the P/S multiple.

If a company can increase sales or if the market raises its expectations, it causes the stock price to go up.The higher the multiple, the more optimistic the market is about a company's future. So just why has the stock market raised it expectations for Adept over the past year?

The market's changing expectations
The incredible rally in shares of Adept largely began when the company's new management team started to show signs of increased profitability. This perceived turnaround sent shares higher, and when Google started acquiring numerous robotics firms, shares went supernova and exploded in hopes of an acquisition of Adept. 

In the video below, Motley Fool analyst Blake Bos describes what caused Adept's incredible rally, delves into whether the company's turnaround efforts warrant the huge spike in share price, and points out what to watch for in the future.

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Blake Bos has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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