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Nanophase Paints the Town

Nanophase Technologies (Nasdaq: NANX  ) picked up its pace last week, reporting that its 2006 revenue increased 32% year over year. Today, thanks to news of a major new product deal, I'm even more bullish about the company's long-term prospects.

Yesterday, while attending the NanoBusiness Alliance's annual conference in New York, I learned that Nanophase's proprietary nanoparticles are now being used in Behr's Premium Plus Ultra paint. Nanophase's nanoparticles not only lend the paint improved adhesion and anti-mildew properties, but also allow users to forgo the normal two-step priming and coating process. The new paint reportedly does both in a single step.

I don't know about you, but painting isn't one of my favorite chores. I'm willing to pay a few extra bucks for a gallon of paint if it'll help me save a couple of hours -- especially in the summer. (According to Nanophase's president, Joe Cross, Behr will indeed charge a hefty premium for this new paint).

Cross also indicated that 800 Home Depot (NYSE: HD  ) stores already stock Behr's new paint, with another 1,400 stores signing on in the next couple of weeks. Behr plans to launch a major marketing campaign for the new paint, according to Cross.

While Behr controls an estimated 25% of the market for external architectural paints, Nanophase isn't tied to an exclusive agreement with the company, leaving it free to sign additional agreements with rival paint firms like Sherwin Williams (NYSE: SHW  ) , PPG (NYSE: PPG  ) , or Benjamin Moore.

All of these factors, in turn, lead me to believe in Cross' confidence that Nanophase can increase its 2007 revenues between 40% and 50%. Combined with the company's ability to also increase its margins (since its manufacturing facilities will be running much nearer full capacity), I see a nice run ahead for the company.

Don't expect a huge jump in its stock price. But by year's end, you might be able to use some of your Nanophase profits to either paint the town for an evening, or -- if you prefer something a little more practical -- perhaps give your house a new coat of paint.

We're primed for further Foolishness:

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Fool contributor Jack Uldrich is the author of two books on nanotechnology, including Investing in Nanotechnology: Think Small, Win Big. He does not own stock in any of the companies mentioned in this article. Home Depot is an Inside Value pick. The Fool has a strict disclosure policy.

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