Stocks & Equities

Two Strong Investment Trends – One Good Idea

One of the most successful investing strategies is to identify long term trends, and then find companies that will ride those waves of changes. Let’s go one better and identify TWO long term trends:

ssc-2Firstly, Western governments will continue to expand programs to reduce greenhouse gas emissions. While much of the media and political focus is on efforts to impose penalties on carbon emitters, there is an even larger push towards energy efficiency and consumption. This is happening internally via directives to every level of government to find reductions in energy use in their building and facilities, in the use of automobiles, shipping choices, supplier assessments – the full gamut of government activity.

It is also happening through government regulation, particularly in Europe, which seeks to force all private businesses and landlords to achieve energy reductions. And the key is – these demands are not in any way tied to necessarily saving money – just that a reduction in consumption is achieved. So the trend will continue irrespective of economic conditions or financial issues!

ssc-1Secondly, the cost of electricity, particularly in warm climates in developed countries around the world, will continue to go up. The perfect storm of rising global temperatures, increasing population in these warm climate areas (think Texas and California versus Massachusetts), and overall consumption demand increases have resulted in huge price hikes in the last 15 years. And there is no sign that those upward pressures will lessen.

All well and good – now we need to identify an investment opportunity. One that is positioned to benefit from both of these trends.

Our favourite pick so far is a “14 year overnight success story” based right here in Canada. Smartcool System (TSX:V – SSC) has a proprietary retrofit technology that reduces energy consumption in HVAC and Heat Pump systems by 20 – 30%. The kind of bottom line savings in energy and money that is being demanded by every developed nation on the planet. Office buildings, school campuses, warehouses, car dealerships, apartment buildings, shopping malls – there is no enclosed space that cannot benefit from Smartcool’s products. Not surprisingly, Smartcool has clients around the world including some of the biggest Fortune 500 brands.

Smartcool almost missed these two trends altogether, mainly due to coming to market prematurely. In 2004 Smartcool was formed to market the technology in North America. Electricity rates had not yet begun to skyrocket and there was very little government impetus towards reducing energy consumption. As a result, Smartcool struggled to gain market traction and growth – a terrible combination for a publicly listed tech company. Interestingly, Smartcool Asia was experiencing significantly greater success than the North American efforts. In hindsight, this was a great indicator of the future demand and potential for Smartcool’s technology.

ssc-4Internally SSC continued to develop the technology and add new applications, but struggled to create shareholder value. The breakthrough that puts this company back on investors’ radar was technological advancement elsewhere – specifically the new generation of heat pumps being installed to replace the older HVAC heating and cooling systems. Heat pump technology, built by the world’s largest manufacturers like Mitsubishi, provides both heat and cool from the same system rather than a separate boiler and air conditioning system.

Smartcool’s retrofit technology performs at significantly higher levels with these systems, so much so that clients are seeing their return on the installation cost cut in half. In some cases as quickly as 12 to 18 months.

This boost has allowed the company to expand its worldwide sales network and even announce a significant acquisition that has boosted monthly revenues to historic highs.

While the stock has not moved yet it has a significant upside, and potentially in a timely fashion. As fatigued early shareholders are replaced with new trend spotters, as quarterly financial numbers hit new highs and as new global sales operations are launched – we suggest you put SSC in your watch list.

Why Apple Will Likely Remain Sole Member Of $1 Trillion Club For A While

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Less than two months ago, Amazon.com, Inc. became the second company in the world behind Apple Inc. to hit the $1-trillion market cap threshold.

Since that milestone Sept. 4, Amazon’s stock is down 26.2 percent, and there’s reason to believe Apple will remain alone atop the $1 trillion mountain for the foreseeable future — although the stock narrowly held the distinction when it closed down 6.63 percent Friday at $207.48 following a post-earnings sell-off….CLICK for complete article

FANGs Freefall Into Bear Market As Dip-Buyers Evaporate

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But, but, but… it’s different this time…CLICK for complete article

Markets Open Flat After Last Week’s Dip

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Stocks continued their downtrend on Friday, as investors reacted to Thursday’s big cap tech stocks’ quarterly earnings releases. The releases were quite good, but the weak future guidance mattered the most. The S&P 500 index fell below its Wednesday’s local low. However, it was gaining at the end of the day. Was it a short-term bottom? CLICK for complete article

Live Post-Show Webinar

TEN CORE PRINCIPLES FOR TRADING THE STOCK MARKET

  • · Saturday, Oct 27, 2018

  • · 10:15 AM Pacific

  • · Presenter: Tyler Bollhorn

Trading stocks is simple, but not easy. During this one hour free webinar, Stockscores.com founder Tyler Bollhorn will take you through 10 simple principles to guide your stock trading. Whether you are a short term active trader or a long term investor in stocks, these principles will help you achieve better returns and avoid painful losses.

Only 500 registrants allowed – CLICK HERE to register

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Why Invest in a company looking for ‘pencil lead’?

There are times that investments look odd on the surface but make a lot more sense once you perform due diligence.  With debate circulating over the production of oil and pipelines in Canada, pencil lead might just be what we need to help move Canada to a ‘green economy’.

Graphite pencil lead is only one form of a very common substance – carbon.  Coal, another form of carbon shaped our modern Industrial Revolution and the coal-bearing areas of Ozark mountains made America an Industrial giant in the early 20th century.  Another form of carbon creates diamonds, one of the hardest and most beautiful gemstones in the world.  The picture below does not show diamonds, but its cousin flake graphite, taken as samples from Lomiko’s La Loutre property in Quebec.

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Graphite is best known as pencil lead, but it has an incredible array of new uses that make it a miracle material.  A primary use for graphite is to create refractories, which are heat-resistant materials used in manufacturing steel, molds and as insulating bricks in steel foundries.  In addition, graphite is useful as a dry lubricant in area liquids can’t be used, heat sinks in outdoor and stadium lighting, vehicle brakes, and as an additive in manufacturing.

However, graphite’s primary use and the reason it is considered a critical element by both the European Union and America is its crucial role in the green economy.  Demand for graphite is shown in the chart below as compared to other ‘green materials’.

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It exceeds copper in the ability to handle electrical current, and to conduct and contain heat.  Further, it is much easier to combine into 3d printing materials – a bright future in additive manufacturing.  However, the most exciting use is as an anode in a Lithium-ion battery, the most prevalent power system for Electric Vehicles.

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Electric vehicles will be 50% of the cars on the road by 2040.  The current EV technology depends on the Lithium-ion battery.   There is 15 times more graphite than lithium in these batteries.  Lithium has increased 4-fold in price due to demand.  The demand for graphite is now increasing as the price for battery grade graphite materials has doubled in the last 3 years and is slated to move higher.

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In 2012, China supplied 90% of the world’s graphite but that percentage has been dropping every year until. In 2018 the number was 70%.  More graphite is being consumed by the Chinese lithium-ion battery manufacturing boom led by e-bikes, EVs and cellular phones and tablets.  Both the European Union and the United States have declared graphite a critical mineral which indicates there is no economic alternative.  This is good news for graphite companies in Canada.  Canada has a good reputation as a country which is able to supplant Chinese supply of graphite and provide secure supplies.  Quebec is especially important due to the proximity to Eastern American industrial centers and Quebec’s long-term and stable approach to mining industry.

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Graphite prices have increased 100% in the last 3 years to over $2,000/tonne.  If this were the gold markets, investors would be dancing in the streets.  However, in the battery materials space, we must see a multi-year, sustainable run to call it a bull market.  This will likely occur, as it did in the lithium market, as demand outstrips supply.  Speculative interest in the graphite market is already beginning to take off and this should help attract major customers or partners to Lomiko’s La Loutre Project.

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From the Editor

A. Paul Gill is the CEO of Lomiko Metals Inc. a Canada-based, exploration-stage company. The Company is engaged in the acquisition, exploration and development of resource properties that contain minerals for the new green economy.

Lomiko’s La Loutre is situated in the heart of Quebec’s graphite area with neighbours like Northern Graphite TSXV: NGC, Nouveau Monde TSXV: NOU and Imerys Carbon and Graphite, which has the only operating mine in North America.  Infrastructure is excellent as the project is 1.5 hours from the International Seaport of Montreal along a paved highway.  They are ready to drill their second resource in a high grade (10%+ Cg).  At present, the project is one of the most promising in the world.  The La Loutre Flake Graphite Property of 18.4 million Tonnes of 3.19% in the indicated category and 16.7 million tonnes at 3.75% Flake Graphite Inferred with a cut-off of 1.5% at the Graphene-Battery Zone. 

In 2018, Lomiko signed a deal to increase the ownership of the La Loutre Property to 100%.  Further, it was able to raise $ 1.5 million for development of the project and, in addition, launched several technology initiatives which will be going to the public markets in 2019.  

Lomiko plan’s to complete drilling at the Refractory Zone of the La Loutre Property concentrating on an area that produced 135 m of 7.74 metres and 110 metres of 14.56% to create a second resource, complete metallurgy and a 3D model of the property and by the end of the year 2019, a Pre-Economic Assessment (PEA) which will establish a book value for the project.