Has VirnetX (VHC) Become the Perfect Stock?

VirnetX is a company that owns intellectual property related to keeping 4G LTE communications secure. Having obtained those patents from former parent SAIC, Inc. (NYSE:SAI) seven years ago, VirnetX has spent much of its history in court trying to collect damages from tech companies that VirnetX claims infringed on its technology.

VirnetX has had considerable success in its legal efforts. In November, it won a $368 million jury award against Apple Inc. (NASDAQ:AAPL) over allegations that Apple’s FaceTime video-calling service infringed on its patents. With post-trial motions still ongoing, VirnetX hopes to get an injunction against Apple pending a possible appeal of the jury verdict.

Yet so far, VirnetX hasn’t been able to generate much recurring royalty income from its past victories. As a result, investors will have to hope for similarly positive results in VirnetX cases against Cisco Systems, Inc. (NASDAQ:CSCO), where VirnetX is targeting VPN routers and voice-over-Internet products, and Siemens AG (ADR) (NYSE:SI).

For VirnetX to improve, it needs to keep winning its patent fights and exhaust its opponents’ remedies for appeals and other delays. Until it reaches final resolutions of its cases, VirnetX will be a highly speculative play dependent on favorable rulings for its main profit potential.

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The article Has VirnetX Become the Perfect Stock? originally appeared on Fool.com and is written by Dan Caplinger.

Fool contributor Dan Caplinger owns shares of Apple. The Motley Fool recommends Apple and Cisco Systems and owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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