Ekso Bionics Holdings Inc. (OTC: EKSO) stock, our first Human Augmentation recommendation, has drifted lower in recent trading to around $1.15 a share, causing many investors to wonder if the company’s “okay.”

In a word, yes.

The business case is stronger than ever. The company continues to hit many of the milestones I laid out for you as being essential to building the proper base for a successful future even as key competitors, including ReWalk Robotics (NASDAQ: RWLK) and Cyberdyne Inc. (FRA: 8C4), have delivered double digit losses of 69% and 16%, respectively, over the same time frame.

I know that’s hard to imagine given that the stock hasn’t taken off yet, but to paraphrase David Carradine’s character in the 1972 television series, “Kung Fu,” “have patience, grasshopper.”

Ekso stock is far more stable than the competition and still has the potential to dominate an industry that will grow by 12,627%, from $16.5 million in 2014 to $2.1 billion by 2021, a short six years from now.

Today we’re going to talk about why and, as usual, what it means for your money – including a new development that speaks volumes about why my predictions may ultimately prove conservative.

Here’s why I’m still projecting gains of more than 2,000% in a few years’ time for Ekso Bionics.

[ad#Google Adsense 336×280-IA]EKSO Bionics Is Crushing Rivals in a Three-Front War in Its Industry

Last April, Winter Green Research released a report projecting the exoskeleton market to skyrocket from $16.5 million in 2014 to $2.1 billion by 2021.

Chances are, you can do the math just like I can… that’s a market smashing 12,627% expansion running at a compound annual growth rate of approximately 177%.

You simply don’t see this kind of potential very often which is, of course, why we’re focused on it.

Now most people hear those numbers and immediately think there will be room for a lot of players down the line. So there’s no urgency when it comes to investing… they can always invest later, goes the thinking.

In reality though, the first players in – those with the right combination of products and the marketing savvy needed to gain an early lead and keep it – will be the winners. This isn’t the Internet or a technology company that can literally be replaced at the click of a mouse.

EKSO’s suits are medical devices with complicated financial linkages to insurance companies, medical treatments and, most importantly, patients that cannot be replaced at will. That means every dollar gained is not just revenue but, rather, a dollar the competition has lost. Perhaps permanently.

This is a distinction most investors miss because their emotions get the better of them. Many times they run out of patience long before the stock they’re interested in has had the time to build up the profits that ultimately propel it skyward.

I bring this up because EKSO’s latest earnings report (released Aug. 11) was fabulous…

Total revenue increased 75% year over year, from $1.2 million in Q2 2014 to $2.1 million last quarter. Those are obviously still small numbers, but they highlight the potential to get much larger.

What’s interesting about this is that medical device revenue rose 52% while engineering services revenue grew by 110%. This means the numbers are broad-based and far more sustainable than those of EKSO’s narrowly defined competitors.

For example, the exoskeleton industry has a 40% market penetration among the 77 spinal cord treatment facilities that are accredited by the Committee of Accreditation of Rehabilitation Facilities in America. That means that the industry is only satisfying 40% of the potential demand for its product, signaling great growth ahead.

Yet, Ekso Bionics’ estimated market share in that area is 60% and growing, meaning it’s achieved a dominant hold on a sector that has the potential to grow 150% over the next few years.

EKSO’s seizing the initiative in other areas, too. Notably, Ekso Bionics has already provided 11 exoskeletons for the Veterans Administration, where the industry has an estimated 17% market penetration and the company controls a 65% market share, according to CEO Nathan Harding. This suggests that VA-related demand can potentially grow by fourfold or more in short order.

While we’re at it, don’t forget that EKSO also enjoys another huge, military-related growth opportunity that competitors don’t – a lucrative series of military defense contracts related to the development of battle-ready exoskeletons intended to augment fighting capacity. Unlike many defense contractors that give up everything to work with the military, EKSO has retained key intellectual property rights that – you guessed it – translate directly into their medical and commercial product development.

Meanwhile, the company continues to make inroads with clients seeking its suits for industrial purposes. Its industrial-use exoskeleton, nicknamed “The Works,” has yet to be mass-produced, but is already being championed by the multibillion-dollar German prosthetics company Ottobock as a quick and cost-effective means of easing workers’ burdens and dramatically improving their efficiency.

“The Works” suit is a key demographics play because it will become vital in a world where construction will see a 70% boom by 2025, according to Oxford Economics, yet the number of employees in the construction industry over 60 is growing faster than any other age group.

All of that is fantastic, of course, but I told you there was a really compelling new development, and I’d like to share that with you now.

EKSO Bionics Is Building a Chokehold in Markets Its Competitors Don’t Even Seem to Understand

The exoskeleton industry has a mere 0.5% market penetration in the 4,000 acute care hospitals treating spinal cord injury and stroke, of which EKSO holds close to two-thirds of the market share, according to Harding’s estimates.

This is an enormously bullish statistic that most investors have missed completely for two reasons.

First, Harding’s comment about the miniscule market penetration shows EKSO’s leadership is keenly aware of the opportunity in a market that can grow 200-fold, even as EKSO’s rivals are apparently in the dark. Second, the 66% market share means that EKSO has a particularly strong incentive to market exoskeletons as a part of helping spinal trauma and stroke treatment centers to reach their full potential.

Already, the company has sent teams of marketers and brand ambassadors to hospitals and influential research centers to Europe and the United States, visiting prestigious medical facilities like the Rehab Institute of Chicago, the Hornbaek Center of Glostrup Hospital in Denmark, and the Villa Beretta in Italy, to name just a few.

“These are strong data points that provide clarity on where to focus,” said Mr. Harding, in what may prove to be the understatement of the industry. “When we broaden the market to include stroke victims, we see a very unpenetrated market. A high market share and repeat buyers – that’s the opportunity.”

It’s not just an opportunity, but the opportunity, and EKSO seems to be the only human augmentation company that shows any seriousness in targeting it. ReWalk’s CEO Larry Jasinski made no mention of it in his company’s Aug. 6 earnings conference, though I had to smile when he boasted that 38 veterans are “waiting to pursue a system within the VA, once the VA is prepared to train users and supply systems.” In other words, investors can hope for positive results, if and when bureaucracy gives ReWalk its blessing!

By contrast, EKSO’s suits are already being used by the VA and other institutions in sectors that will see skyrocketing demand for their products. This gives the company a true first-mover advantage – something we talk about all the time.

It’s no wonder that EKSO grew revenue at a pace that was more than three times faster than ReWalk’s progress over the same time frame. If anything, I’m surprised it wasn’t more.

Small Cap, High Reward

So how does that reconcile with the fact that the company’s stock hasn’t taken off yet?

That’s a fair question, and one I get all the time.

There are three thoughts here.

First, EKSO is a micro-cap company, with a market capitalization of $102 million. That means by its very definition, it’s going to be volatile, simply because the company has to build critical support and then tap into its potential. It can’t work the other way around, so don’t expect an immediate takeoff.

Second, EKSO’s also an early stage growth company. That means it’s still going to be money-hungry, so things like warrants and shelf offerings like the one EKSO filed in January are par for the course. At this stage of the game, management wants to be flexible because that gives them the broadest variety of options going forward. If I saw a CEO who wasn’t flexible and a CFO who didn’t support that, I’d recommend you exit this company in a New York minute.

And, third, EKSO’s a products-driven company with significant intellectual property. That means there’s a chicken and egg scenario here. You can’t just hatch a fully matured billion-dollar valuation based on potential like you could with a Facebook-type offering, for example. There are real protocols that have to be followed in accordance with the medical and industrial complex. But, once again, those are significant competitive barriers when they’re in place.

Case in point, each of the following companies are worth billions, yet:

Tesla had to build its first car…

Apple had to build its first computer…

Baxter had to create its first IV solution…

…once.

EKSO Is Not for You If…

You may think this is a strange way to wind up a column on a company with fabulous upside, and I’ll give you that… it is.

Here’s the thing.

Most investors think that the biggest risk to their financial future is picking the wrong stocks. So they get all wound up over a few percentage points here and there.

In reality, the vast majority fail because they lose patience or they commit too much money to a given trade. Sometimes both.

To get around these problems, I recommend that you check with your financial professional to make sure EKSO matches your personal risk tolerance and expectations.

If it does, limit EKSO to 2% of your investable capital and not a penny more. That way you’re not going to blow up your portfolio if EKSO cannot produce the upside I believe it can. If it doesn’t, then no harm no foul.

There are literally thousands of great profit plays out there and we’ll cover the very best right here… together.

— Keith Fitz-Gerald

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Source: Money Morning