If the ongoing coronavirus pandemic has taught investors anything, it’s to take everything week by week in a volatile market.
Last week, the markets were trending up and the effects of the pandemic seemed to have been overestimated. Fast forward to the biggest ever crash in crude futures, lockdowns needing to be extended, and businesses starting to report the negative effects of the pandemic, and investors had to deal with a completely different ball game.
Yet again and again we’re finding companies that not only curb downwards trend, they defy it. On the Stockhouse Bullboards, which have seen spikes in traffic following the onset of the pandemic, investors have been focusing on stocks that have been impacted by the COVID-19 pandemic or benefiting from it. In this week’s Buzz, we highlight the stocks small-cap investors are keeping their eyes on, starting with a new and surprising king of the Bullboards.
You might have expected a healthcare spotlight, but the new most-viewed company on the Stockhouse Bullboards (by a longshot) is a technology play. As we’ve seen in past weeks, there are coronavirus-related gains to make in all sectors, and that’s how
DataMetrex AI Ltd. (
TSX-V:DM,
Forum) climbed to the top of the charts. The company had already seen positive momentum in April, but last week DM shares made a massive leap from $0.055 on Apr. 14 to $0.16 on Apr. 21.
The cause is as unlikely as they come. DataMetrex operates in the AI space, focusing on Big Data, yet out of nowhere on Apr. 16 the company announced it had obtained the rights
to import and sell COVID-19 test kits from South Korea, and on Apr. 21 it further announced that it had
applied for Health Canada fast-track approval and submitted an interim order request form. DataMetrex was tapping into strong connections with South Korea, exemplified by the Apr. 2 announcement that it had
partnered with conglomerate Lotte Corp on a
joint venture co-bid for data support to the South Korean Ministry of Health.
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It’s been an impressive turn of events for the DM Bullboards, especially since the company had already started climbing after helping agencies
uncover fake news during the pandemic. For new investors learning about DataMetrex, there’s been a lot of discussion on how long approval takes, how likely the company is to receive approval, and how large the need for testing kits really is. For those focused on the company’s long-term rise, such as Stockhouse Members
Poussin, the potential from COVID-19 test kits are simply the massive cherry on top.
“DM was progressing nicely over the last month with news releases related to Nexalogy AI ,fake news filters, etc. This news was an unexpected bonus. That it would provide a healthy cash flow over the shorter term while they land some long-term contracts that have been in the pipeline is a huge positive. Particularly when there is no capital investment required for participation.”
(Post: Let’s not forget that.)
One month ago, we
discussed the starting resurgence of
Aphria Inc. (
TSX:APHA,
Forum) and the cannabis sector after a disappointing start to the year. We highlighted the increased sales of cannabis in light of the pandemic, Aphria’s initially underwhelming quarterly earnings in January, and users forecasting a nice bounce back. Today, we can see that those users were on the money. Since it closed at $3.04 on Mar. 18, APHA has climbed steadily back up to $5.33 on Apr. 15, though it has since retreated.
At first the climb was in line with the cannabis sector, but the second leg was all on Aphria. On Apr. 14, the LP announced its
latest quarterly earnings, which impressed with increased net revenues, net income, and positive adjusted EBITDA. Despite the announcement coming with the caveat the ongoing pandemic uncertainties meant that fiscal guidance for the rest of fiscal 2020 had to be suspended, Aphria was impressing where the rest of the sector lagged.
If you’ve been reading Buzz on the Bullboards over the past year, the last sentence will have sounded eerily familiar to the position Aphria was in last fall. The APHA Bullboard was quick to notice as well, and even hammered on the company’s slide following otherwise good news. In the current market, it might seem like tough love, but for many like Stockhouse Member
onward1, it’s the same story of APHA being able to do well in spite of some glaring issues.
“While this stock/company has done better than most in this sector, there are some issues including excessive insider enrichment… The balance sheet does have a couple of issues so it is not as great as we like to think. Management hasn't quite earned market confidence, pulling the guidance for instance was bad idea...”
(Post: Moving to net short position in APHA)
And of course, it’s hard to talk about the past week in investing without mentioning the elephant-in-the-room of crashing oil prices. As with previous drops in crude prices, investors once again flocked to companies like
Crescent Point Energy Corp. (
TSX:CPG, Forum) and fresher faces like gas-producer
Nuvista Energy Ltd. (
TSX:NVA,
Forum) to discuss the fallout, though with Canadian companies having already been severely impacted by $20 crude and natural gas rallying at the same time, the crash landed more softly.
As NVA’s chart shows, the damage was done in March. Back in Mar. 16, Nuvista had announced
significantly reduced capital spending in 2020, and like most Canadian companies that had already scaled back, last week wasn’t a huge hit to share prices. NVA shares closed at $0.52 on Thursday Apr. 16, climbed to $0.65 the following day, and dropped only slightly to $0.61 on Monday Apr. 20.
One reason investors have been looking at NVA moving forward was that it had a large percentage of hedged sales, and so far, the consensus on the NVA Bullboard seems to be that the company is on track to make it through the storm. Yet the company didn’t partake in the positive swing for gas stocks and users debated what was holding it back, though Stockhouse Member
mrmomo pointed out the likely answer: unlike other pure-play gas companies, Nuvista’s diversification was now holding it back.
“Where natural gas was a hinderance in the past, it is now a net "desirable" asset. Since Birchcliff had much more, it had a discount attached to it, but not anymore and it's giving Birchcliff a premium compared to others [like Nuvista]. As it stands today, Birchcliff has 2X the Ng reserves compared to Nuvista has AND they're more of a pure gasser than Nuvista in terms of % production numbers with the same amount of debt…”
(Post: RE:BIR VS NVA)
No matter which sector you look at, investors have found plays to be excited about even during today’s more uncertain market. As each week has shifted the tide and favored some over others, we’ve started polling users on our homepage to see which sector Stockhouse investors are most interested in. So far, the results have put metals and mining, as well as healthcare, at the forefront.
But the changing tides means we can expect the focus of investors to shift as well, so our poll is going to stay open for another week. Make sure to add your voice as well by heading over to
Stockhouse homepage or clicking the image below to cast your vote!
(Click image to go to the poll)
Until then, we’re left with questions to ponder for next week. Will DataMetrex retain its grip on the top spot? Will the energy market bounce back? And as always, which small-caps are impressing investors on the Stockhouse Bullboards? Check with next week’s edition of Buzz on the Bullboards to find out. For previous editions:
click here.