The automotive industry is changing rapidly. While Google and Tesla garner the most attention when the subject of semi-autonomous and autonomous cars is brought up, I think some of the most interesting companies —and compelling investment opportunities — lie further down the food chain.

One such business is Seeing Machines (LSE: SEE). In its own words, the Canberra-based company “uses advanced technologies to track eye and facial movement in order to monitor fatigue, drowsiness and distraction events“. This has clear benefits for any business engaged in potentially dangerous work. Indeed, the company’s products are now used across the globe in the automotive, mining, trucking fleets, hazardous material fleets and aviation industries, with BHP Billiton and Boeing among its customers.

According to Seeing Machines, its technology has detected and intervened in over 150,000 fatigue events since 2015. The question for investors is whether, in addition to saving lives, it also has the potential to grow their wealth over the medium to long term.  Recent updates would suggest this is looking increasingly likely.

Recent developments

After a largely uneventful few years, shares in Seeing Machines have rocketed almost 60% in the past two weeks (from 3.6p to 5.7p) following the announcement that it has produced the world’s first automotive driver monitoring computer chip. The company believes the development of the embedded FOVIO chip should reduce the overall cost and time to market of the company’s DMS (Driver Monitoring Systems), with plans for it to be integrated into cars from 2018. Further down the road, there’s the possibility that Seeing Machines could enter the Internet of Things and Artificial Intelligence markets. Following such exciting news, it’s understandable if today’s final results received more attention than normal.

Overall, investors should be cheered by the figures. Revenue increased by 161% from the previous year, up to a record A$33.6, thanks largely to the licence fees the company received from Caterpillar for its mining product. And 29% growth in its fleet-focused product, Guardian, was a particular highlight. Thanks to significant efforts in marketing, this part of the business now expects to sell more units in the first quarter of 2017 than in the whole of the last financial year. Cash reserves at the end of June were also A$2.7m higher than the previous year.

Although investors may be disappointed that the statement didn’t contain much in the way of detail about its planned spin off into the automotive market, it did reiterate that Seeing Machines is “poised to capture significant value” from this industry and that demand for DMS is forecast to grow “from US$0.68 to US$13.8bn by 2022“.  So long as shareholders are prepared to wait, I think the rewards could be substantial. 

Off the radar… for now

With a market capitalisation of just £62m before today, Seeing Machines can still be considered a market minnow. However, recent events, backed up by today’s announcements, suggest that the next few years could see the company expand at an incredible rate. A US-listing for its automotive spin-off could be a catalyst for this, especially as other companies in this area now trade at massive valuations. Mobileye, a specialist in advanced collision-avoidance systems, for example, now carries a market capitalisation of around $9.5bn. Assuming one of the bigger players doesn’t bid for the company first, it’s not completely unreasonable to suggest that Seeing Machines could reach a similar valuation in time.

Small can be beautiful

Although nothing can be guaranteed in investing, learning to recognise a promising small company and buying its shares ahead of the herd can turbocharge your portfolio and allow you to smash your financial goals a lot sooner than you think.  

If' you're willing to take on board more risk for the possibility of higher returns, you should definitely read a special FREE report by the experts at the Motley Fool. They've found another top small cap share that, like Seeing Machines, could offer substantial rewards to investors in the medium to long term.

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Paul Summers owns shares in Seeing Machines. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.