This time of year on the markets gives CEOs, investment fund managers and brokers the full-on heebie jeebies. As investors look to sell their loss-making stocks and lock in deficits for tax time, the always perilous junior market space begins to feel that sucking feeling as we all try to figure out what companies are down ‘because they suck’ and which are down simply because of the time of year.
Tax loss season is a thing. Deal with it.
But in dealing with it, it makes sense to look at what companies are oversold, what companies are bottoming out, and which companies may be looking forward to a big 2015.
The first in this series, featuring
nearly twenty interesting options, was posted a week ago and can be found here.
Today’s list is another collection of good junior stocks on the way up, bad junior stocks with gambling potential, and ‘meh’ junior stocks that are oversold. You can decide which is which.
They’re all Stockhouse Publishing marketing clients, which buys them consideration and exposure to our audience, not pumpage - so let’s get that out of the way ahead of things.
Engagement Labs (
TSX:V.EL,
Stock Forum): A great example of a company oversold on overlooked information. After a year the CEO of this social media analytics firm made no secret was all about ‘growth and market share’, daytraders saw recent
results showing a widening loss year-over-year as a sign of impending doom. The company, meanwhile,
added to its executive oomph with a new CEO (a former VP of sales at analytics giant Comscore), moved the former CEO to CIO, and created a Founders Steering Team, consisting of marketing and analytics giants from Miller Coors, Google, Cablevision, Omnicom, Aima and a President of the World Federation of Advertisers. An easy company for short sellers to trash while it’s focused on things other than revenue, but with a stock chart holding fairly well through the last month, the upside is potentially mammoth in 2015.
Elcora Resources (
TSX:V.ERA,
Stock Forum): If you believe, as I do, that the new glut of oil will see that commodity end as a must-have for the foreseeable future, and that batteries will be the new oil as solar and wind energy and hybrid automobiles take root going forward, then graphite should be a play on your radar. And in the graphite world, nobody has it coming out of the ground cheaper than Elcora. The stock is at an absolute low which has made it
tough to raise money needed to expand the Sri Lankan operations, but a focus on graphene (a wonder version of graphite that is rare but immensely profitable) could see some real value moving forward through 2015. If Elcora can make graphene happen, it’s to the moon.
Cortez Gold (
TSX:V.CUT,
Stock Forum): This mob should rename themselves Cortez Gold Processing, because the play here is servicing dozens of small Mexican mines that, traditionally, have to ship their ore and wait up to a month for payment. Cortez got themselves a nearly complete processing plant for pennies on the dollar that will change the industry in that region and
earn themselves a piece of everyone else’s deal. I called it an interesting play in October at $0.49, before it ran to $0.76 through early December. Tax loss season has since crimped it back to $0.60 despite the company announcing it has
completed construction of the plant and is now in the testing/calibration/dry run phase. Expect the place to be open for business mid-January, and with just 9m shares out and very few sellers judging by level II data, it’ll run on any good news.
First Growth Holdings (
TSX:V.FGH,
Stock Forum): A two-pronged approach to wine sales that has been slowly building through the last three months as hurdles are cleared. FGH wants to make its WineOnline.ca brand
Canada’s first truly national online wine delivery service. It has a way to go, especially in a country that boasts different booze rules for every province, and with many of those liquor laws having been on the books since decades before e-commerce was a glint in a California’s computer programmer’s eye. Ontario and Alberta are aboard, and it looks like maybe BC is coming. The company is having to be creative to fit under each province’s rules, such as
buying stand-alone liquor stores in
certain provinces, and is also spending considerable time and treasure lobbying for change. But it appears to be working. When that’s done, there’s inroads being made in the realm of China exports.. Now that’s a market worth getting into.
Mobio Technologies (
TSX:V.MBO,
Stock Forum): I really liked this company when it was at $0.50. It went over a buck before launch but has since slipped back… waaaaay back to just $0.035, as esteemed tech CEO Mike Edwards completes a deal that
sends the social media network that started it all to a UK tech firm. The deal will ease some financial hardship, grabbing a stake in the UK firm in the process, and allow him to focus on the Strutta social promotions platform and SailMail MailChimp-integrated promotions platform. With Mobio traded away, the upside on V.MBO stock is significantly lessened, but the chance the whole thing will go ass up (which is why the stock price is where it is) is also significantly lowered. It’s no secret Edwards hasn’t loved his time in the public markets, but with the stock charts flat for the last three months, as a bottom to build from, this is a nice starting spot and worth consideration in 2015.
Graphite One Resources (
TSX:V.GPH,
Stock Forum): I like graphite – we’ve established that. And Graphite One has released some
nice drill results in its Nome, Alaska ‘Graphite Creek Project’. That’s nice, but it’s not the big deal. The company also thinks it will be the premier large flake graphite supplier, which will help it get Tesla-happy. But that’s not the biggest part of the deal. To me, the biggest part of this deal is, in a crapped out market where raising money is like trying to convince a child with croup to play Beethoven’s 5
th on a Fisher Price piano as ravens peck at its head, Graphite One brought down $6m to secure its lifestyle going forward. And that’s good, because a PEA is coming, and with it should come the information needed to take this project closer to producing. Shorts are mauling the stock right now, which is unfortunate but eventually those bears will need to cover their positions. Ignore the spongy share structure – with a raise just completed, there’s no need for a rollback any time soon. And with a way-low share price unseen since 2013, when the project was way less developed than today, all the pieces are there for a potential run in the next 12 months.
Mezzi Holdings (
TSX:V.MZI,
Stock Forum): To believe in this stock you need to believe there’s a market for
celebrity-designed, US-produced, smartwear luxury bags and accessories.
I believe these things a lot, especially if the bare shelves at the wearable tech sections at Best Buy and Future Shop are anything to go by. Mezzi makes bags that, should you misplace them,
you can track on your phone. More tech is coming, and new designs are piling up (as are ‘
sold out’ notices, I see) but until a Mezzi bag is seen on the red carpet, or financials are released showing people have no problem paying $800+ for a smart-bag, the stock will continue to roll along quietly under the radar. It’s the next 12 months, however, that may see it spike like so many have in the US fashion industry over the last three years. CEO Keir Reynolds is no stranger to the celebrity-based stock play, having driven big increases on Mobio stock when he was with that company on the back of the likes of the Kardashians and Cristiano Ronaldo. Can he do it again? At a $4.6m market cap and with the chart headed north of late, I wouldn’t bet against it.
Whale Shark Environmental Technologies (
TSX:V.CFA.H,
Stock Forum): Never heard of it? You’re not alone. So the international shipping industry has a real conundrum to deal with in that, a ship’s bottom quickly gets covered in algae, barnacles, moss, gunk and assorted debris as it negotiates the oceans. This causes drag that can increase fuel costs by as much as 25%; that’s a big deal. In fact, just a 5% fuel saving could amount to $385k per ship. So I can hear you saying, “Just clean the ships,” but it’s not that simple. In essence, if you scrape the bottom of a ship from the Philippines while it’s in Vancouver’s harbour, you’re inviting invasive species to set up shop in new locales and, because of that, ship cleaning is pretty much banned almost everywhere. Whale Shark has tech that cleans the ship, retains the effluent, filters the water in five steps and releases it back clean and clear. Which means, “Hi Captain, scrub your boat for you while you’re in town? Don’t mind if I do.. Just wire cash to our account and enjoy yourself at Brandy’s for a few hours..” It’s
halted at the moment as the
RTO goes through but patents are pending and the market be huge. Heck, even the
government of Canada is chipping in to get the tech happening.
Great Lakes Graphite (
TSX:V.GLK,
Stock Forum): Another graphite play? Hells yes. New oil, man.
The strategy on this one: They want to zoom to production as quickly as possible, as cheaply as possible, with
strong drill results and
high purity and responsible cash burn. The reasoning is, if they debut before the other graphite plays, they can expand quickly and claim first mover market share. Lower risk than others, smaller upside (at least in the short term). Watch closely.
THE WEED PLAYS:
So I write about weedcos a lot and some of those are in good shape to take 2015 by storm. Let’s pile them all into one place.
Supreme Pharmaceuticals (
CSE:C.SL,
Stock Forum): A 340k sq. ft grow facility with a plan to offer inexpensive medical marijuana to a sector of the market that is used to growing their own and thus unlikely to spend more elsewhere. Supreme is
about an inch away from getting its MMPR approval which will kick it into revenue gear and, from there, it’s all about delivering on the promise. In a sector where many have watched their market cap erode of late, Supreme is holding share price pretty well in expectation of news.
Bedrocan Cannabis (
TSX:V.BED,
Stock Forum): Already making revenue selling dried product imported from its Dutch parent and nearing the zero hour on its final inspection for a local grow facility (which should enhance profitability significantly), Bedrocan is driving new patient signups and has an eye firmly placed on
international expansion and
clinical trials to take its product all pharma-like. If anyone should succeed in the weed space, Bedrocan is well equipped to do so. Shares are climbing. Long.
Wildflower Marijuana (
CSE:C.SUN,
Stock Forum): Hampered by a handful of Vancouver Island NIMBYs through 2014 on its Nanoose Bay medical marijuana grow facility appliction, Wildflower used adversity to its advantage and found itself with a
potential third MMPR application as the year closed out, pushing the share price up off the bottom as details come to hand. Whether the new site will bring a solution to Nanoose Bay by switching it to a new address or mean a whole new facility just a stone’s throw from the existing one (double the fun, neighbours!) is yet to be decided, but the company looks set to wallpaper the Regional District of Nanaimo with damages claims for getting in the way of its application to Health Canada, and surge into 2015 with a
new tech that could see it providing product to other LPs. Probably need to be another financing at some point in the next few months as things ramp up but, at a current stock low, it’s going to soon be the moment to pull the trigger on C.SUN.
GeoNovus Minerals (
CSE:C.GNM,
Stock Forum): What to say about this one? The company took some unwise risks (against a certain consultant’s advice) and the cannabis play has subsequently gone tits up. Consider it an empty shell for now with a $1m market cap and a strange collection of new plays being discussed, from
vertical growing technology to
fish farms to
music to
web content, not to mention
the existing mining plays. If you still hold it, might as well stick around and see what happens next as it’ll only take a stiff north wind to move the stock up a statistically significant amount – and there’s plenty of activity at Casa GeoNovus to suggest the New Year will bring something. I just have no idea what.
Chlormet Technologies (
CSE:C.PUF,
Stock Forum): If I had dollar for every time I’d got a tweet, comment, private message or email asking about this company, I’d have enough to buy 500 shares in the thing. Once on my top 5 list, Chlormet was walloped by the exchange in a long-winded change of business process that killed a real stock run and dumped investors out months later. Since then, the play has shrunk and shriveled amid a lack of news and/or investor relations as rumors have swirled. What I do know: They’re making a
Washington State weed play, and I don’t hate those at all. And at $1.5m market cap, it’s worth noting that’s about what it would cost to finance one grow – and they’re doing far more than that… in fact, the company is also hooked into the AAA Heidelberg Ontario MMPR application too. If management gets back in the game in the next month or so, with a tight share structure, solid assets and almost no market cap, there’s every chance you could ride this like a quarterhorse.
--Chris Parry
https://www.twitter.com/chrisparry