By MoneyMorning.com.au

The first Super Bowl was in 1967.

Even back then, the Americans knew they were onto something big. The pre-game entertainment had two men fly into a stadium of 60,000 wearing ‘rocket belts’.

I’d bet my first born there wasn’t a single person in that stadium — or one of the 50 million viewers at home — who didn’t think ‘I have to get one of those.’

Two years before man landed on the moon, there were men flying around the sky with rockets strapped to their backs.

Everyone watching that 21-second flight must have felt like the future had arrived.

However, nothing ever really came of it.

Bell Aerosystems bought the design, but engineers only had theories to increase airtime. They switched propulsion from rockets to jets. But that created safety issues. Jet failures would be fatal to the pilot. Moreover, a jetpack filled with fuel becomes a bomb when it hits the ground.

Further, not many companies were interested in funding the concept. Helicopters were proving to be a safer and more comfortable method of flight. Aside from being cool, not many people were willing to bet on the potential of the jetpack.

For the next couple of decades, slight modifications of the design were dragged out to please the crowds. But the concept largely remained a sci-fi fantasy.

Except for Glenn Martin, that is.

Thirty years ago, after a late night with his mates, Martin decided that if no one was going to build a reliable jet pack, he would.  

A few prototypes later, Martin was sure he’d built a jetpack that would lift a person off the ground. In 1988, he strapped his wife in and watched her rise into the air. The next day he quit his job and started building what has now become Martin Aircraft Co. Ltd.

It’s taken 12 different models, but Martin has built a jet pack that can fly for 30 minutes. It has a top speed of 74 kilometres per hour and can fly at an altitude of 1,000 metres. For comparison, the Eureka Tower in Melbourne is 297 metres tall.

The First Responder Jetpack won’t go on sale until early 2016. An unmanned version will be released later that year. The unmanned craft is designed to help companies transport goods over tricky terrain and waters. A consumer jetpack is planned for release in 2017.

However, at $200,000, it’s not going to come cheap.

While the consumer model will likely be modelled as a toy for millionaires, Martin Aircraft is mostly eyeing government emergency departments for potential sales. The company thinks this unit will be useful in search and rescue, ambulance and fire services.

As Martin said recently:

‘We’ve had paramedics who’ve come to us and said they work in large cities, and when there’s an accident they have trouble getting there because traffic’s so bad. The advantage of this is that it can land in very small spaces — much smaller than a helicopter can land in — right beside an accident.’

The jetpack could be a market-leading product.

But the jetpack will only be commercialised if the company has a successful initial public offering (IPO).

The prospectus is out now. The firm is hoping to raise $25 million at 50 cents a share by December. Estimates place the value of the company around the $97 — $112 million mark.

Now this sounds like a fantastic invention. A high tech product with real world functions. But that doesn’t mean you should jump into the IPO straight away.

Companies like these — especially during their debut —can be very hard to assess. As a result, small-cap companies like this can be risky. And this one has additional risks because it’s a niche product.

Martin Aircraft doesn’t have any customers. None. They say they have a letter of intent. But until that turns into dollars, it’s worthless.

In addition, Martin Aircraft are attempting to create a market. While the founder, Glenn Martin, reckons the jetpacks would suit emergency services work, it’s merely speculation at this point.

And finally, many countries have strict aviation laws for ‘microlight’ aircraft such as this. Some countries will require a pilot to have license. Regulation hurdles could deter clients.

Knowing these risks, I asked Tim Dohrmann, small-cap analyst at Australian Small-Cap Investigator, how investors should analyse a company like this. Tim has couple of guidelines for niche companies.

First, you must consider the stock price. If it seems expensive, it probably is. Tim also told me:

‘Given an Australian ‘IPO window’ has been open since early 2013, private companies have been keen to take advantage. That’s why in that period, around 90 formerly private companies have listed on the ASX. Companies looking for a cash injection are keen to attract capital while investors have an appetite for riskier stocks.’

The timing of the IPO is also important.

Furthermore, investors need to consider the broader industry before throwing money at a specific company. Tim says you must try to nut out whether the company is merely trying to cash in on a rising market sector or if is the company represents a genuinely new trend. Is it truly an exciting small-cap stock ahead of the curve?

So, should you invest in Martin Aircraft during the IPO?

While 50 cents a share might seem tempting, remember this: There’s every chance you’ll never see your money again from a punt like this. Even the Martin Aircraft prospectus refers to the shares as ‘speculative’.

However, the industry the company is targeting hasn’t been tested. Martin Aircraft may very well prove to be an early mover in a new trend in aviation. And that would mean skyrocket gains for early investors.

It’s a tricky IPO full of technological promise and wonder. Could Martin Aircraft finally deliver the personal jetpack everybody’s been longing for since Super Bowl I?

It could. But should the company disappoint the market the slightest bit (or a lot with, say, a fatality), the stock price could fall faster than the jetpack.

However, if Martin Aircraft makes this work, it could be the speculative punt of the decade.

Shae Smith

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By MoneyMorning.com.au