RE:Three of my Favorite SmallcapsNice, at the moment though, none of these companies appear to have nearly the same upside as KNR. I've thought about taking profits, but this stock is at 150m with a very good chance at 500 to 1b or more. I'm already diversified, for every dollar I take off the board I have to reinvest it elsewhere at lower probability and lower return. Usually when one of my holdings doubles or triples theres little upside left, if I take $1 of profit, I may be foregoing another $0.3 of upside. With knr, its still way too asymmetric an opportunity, for every dollar of profit taking I feel like I'm foregoing $2.5 to $4 or very possibly more. There aren't many opportunities out there where risk is compensated this well. I've talked myself out of taking any profits yet.
BCdude wrote: Hi all,
As we've been riding the KNR wave, I'm sure I'm not the only one who's been thinking about where to put some profits once this thing takes off. Depending on the news flow, I might sell a little bit of KNR around $10, but if things continue to look promising will likely ride the remainder of my shares into the $20+ range. Of course, things can always change.
In any event, here are my current three favorite smallcaps apart from KNR, for those of you who want to take a look.
1) UGE International (UGE): I actually liked this one better than KNR up until biocloud was announced. The company is a turnaround story that is rolling out a build-own-operate model in the commercial/community solar space. Tight share structure (29 million), 55% inside ownership, and
a ~$135 million CDN backlog compared to the company's ~$20 million CDN market cap.
Additionally, the ~$135 million of revenue is a NPV, meaning that the ACTUAL revenue will be over $200 million by 2022 as it becomes approx $13 million of high-margin annual recurring revenue spread over 20+ years.
The best part is that UGE has taken its ten years of industry experience and created a turnkey solution that allows them to service each project from conception to completion. For example, they might identify a warehouse with a roof they think will be perfect for solar, and they approach the owner and ask to rent the roof for, say, $100k annually. The owner can then purchase energy from them for reduced costs, or they take the rental revenue and UGE ties into the grid and sells the lower-cost energy to nearby businesses and residents.
They work with investment funds to fund each project using non-recourse debt, meaning that each project secures itself rather than the company as a whole being liable. And the investment funds get tax credits because of the ESG nature of the investment.
Here's a great overview on the commercial/community solar industry and why it's primed for takeoff thanks to innovators like UGE.
https://www.greentechmedia.com/articles/read/the-us-has-145-gigawatts-of-untapped-commercial-solar-potential
2) Goldspot Discoveries (SPOT): Despite the name, SPOT is a tech company that is upending the mineral exploration business using AI and machine learning. With about 10 PhDs on staff, the company consults with metals producers for cash, helping them to target the highest quality targets on their mineral properties. Vale, Yamana, Sprott, McEwan, and Hothschild have all used their services, and many have bought shares in the company.
The company also works with the best-in-class junior mining companies with large historical data sets that are simultaneously sitting on district-scale opportunities -- at least twelve of them at last count. In some cases Goldspot takes a royalty on the future discoveries, and they always invest money in the juniors so they can benefit on future large discoveries.
I like this model because they have low to zero cash burn rate. Their consulting business pays for R&D (future technologies) and exploration upside with the juniors.
3) EarthRenew (ERTH): This is a far more speculative play than the other two, which are undervalued compared to their current stock prices. ERTH hopes to disrupt the organic fertilizer business by taking manure from feedlots (which have the problem of disposing of the waste), leaching out the chemicals, and then turning it into high-value organic fertilizer that is serving a growing sector. And early trials show their fertilizer increases crop yields. Additionally, mainstream phosphate fertilizers contribute a great deal of greenhouse gas during manufacturing and use, while ERTH's fertilizers decrease greenhouse gases while regenerating damaged soild with organic matter. These are all pressing problems in the agri sector that ERTH is attempting to solve.
ERTH is quite speculative as it doesn't yet have revenues and won't until spring 2021, when they hope to restart their Strathmore, Alberta plant. And while they only have ~48 million shares fully diluted, there will almost assuredly be further dilution ahead -- perhaps significant dilution.
On a postitive note, once the plant has restarted production they have an off-take agreement for much of their product, and hopefully they can use that revenue to expand into two other key markets they are currently targeting -- California and the eastern US.
This one could be huge if they can avoid too much share dilution and the demand for their premium products is as large as it sounds.
As always, do your own due diligence.