I believe KVH Industries, Inc. (NASDAQ:KVHI) is positioned to be the Netflix of the commercial maritime industry, which has over 200,000 vessels. KVH has spent the last four years investing in content and technology for IP-MobileCast, its subscription-based service launched in late 2014 that provides news, entertainment and onboard training to crews on ships at sea.
KVH alone has the IP-MobileCast satellite technology and the content rights. It also has the number one market share of satellite communications antennas, and demand for communications and content should grow. I believe KVH's installed base of antennas, news, DVD and training course customers provide an available market with years of potential growth.
Is there a margin of safety in investing now? KVH is valued at just 0.9x enterprise value/revenues. The company has been profitable for 10 of the last 11 years and had only a small loss in 2009. In addition to the maritime communications business, it is also a leader in fiber-optic gyroscopes for stabilization of self-driving cars, drones and other exciting new applications, and of TACNAV systems used on military vehicles for geo-location when GPS is out of range.
Martin Kits Van Heyningen is a visionary CEO who has led the company through a number of strategic transitions, and has a plan for improving life at sea for mariners by bringing the benefits of big data to the maritime industry. I believe the company is poised to reap benefits from years of investing in IP-MobileCast and its other initiatives.
From Needham Funds commentary: What to Look For in Small Caps (and What to Avoid).
