Pacific Trader: Investors see the light with Photon Control

The advanced instrumentation maker has nearly tripled in value over the past year

Credit: Courtesy of Photon Control

Photon Controls ISO 9001–certified factory in Richmond

The maker of fibre optic sensors has nearly tripled in value over the past 12 months

The stock: Add Richmond’s Photon Control (TSX:PHO) to the list of stocks making me smack my forehead with my lightsabre for not snapping up at this time last year. Shares of the maker of advanced instrumentation almost tripled to an all-time high of $2.94 in February. Last we looked, the stock was trading at $2.62.

The drivers: Founded in 1988, Photon Control designs and manufactures optical sensors that industry and the research community need to measure things like the operating temperature and speed of semiconductors and flat screens. Its recently acquired California subsidiary, Micronor, was recognized for its contribution to ITER, the experimental nuclear fusion reactor being built in France.

For a tiny tech company—revenue hit $65 million in 2020—Photon Control behaves like a blue chip, complete with regular quarterly profits and a modest price-to-earnings ratio of 19. And the outlook for its main market, semiconductor manufacturers, looks promising as Western countries and companies seek to repatriate production lost to an increasingly problematic China.

Word on the street: “We see Photon Control as an intriguing way to play the current semiconductor cycle, which is being driven by big themes such as the cloud, 5G and AI,” writes Desjardins Securities analyst Kevin Krishnaratne, who has a $3.50 target on the stock. Investor information service Morningstar pegs PHO’s fair value at $3.14.

Coming and going: The public market debut of Coinbase Global (NASDAQ:COIN) on April 14 made at least one early backer from B.C. very…well, wealthier than before. Version One Ventures, controlled by Vancouver entrepreneur Boris Wertz, invested US$2 million in the San Francisco–based company back in 2017. The first cryptocurrency trading platform to go public, Coinbase now has a market capitalization around US$65 billion, making Version One’s stake worth something close to US$50 million.