Month: January 2019

Water Is The New Gold (PHO)

Investors have been told to be patient before investing in this resource for a long time. Perhaps now investors should consider this sector ready to take off. The water infrastructure investment boom is here. The EPA estimated that over 1 trillion dollars will be needed over the next 30 years just to maintain the viability of basic water infrastructure. That sounds like a good long term investment.

John Gabriel wrote a Morningstar report in 2014 highlighting the need for prudence as the fund is not a “pure water” play – there is pipe and pumping manufacturing along with water treatment and 16% of the portfolio is invested in water utilities – which have significant industries outside the investable water complex.

That’s not to say the fund won’t participate in the upcoming water boom. With the recent crisis of Flint, Michigan, Americans are now more aware than ever that water treatment and filtering systems are an important process when providing water. As fresh water supplies tighten and government regulations become more onerous, that could be the catalyst that launches this sector into a long term bullish frenzy.

PHO is an interesting play in the water world. The Invesco ETF has about 750 million in assets spread over 28 different water stocks. One thing to keep in mind is that some of the bigger water players like GE and Dow Chemical are excluded because significant revenue is generated outside the sector. However, that means the stocks included can greatly benefit by providing customized solutions that larger companies might not be able to fulfill.

Emerging markets see water infrastructure demand growing at a 10% rate. That’s an attractive growth rate and between that and America’s needs, water might not be the slow and steady “boring” investment that past investors passed up for more lucrative plays. The world doesn’t only need water, it needs piping, pumping and filtration. That is why this sector is a lot more than just water. It’s an infrastructure play that has been dormant for far too long.

PHO is just one of many water options to invest in, but from a technical analysis perspective, there is something I like that tells me to start a position sooner than later. If you look at the chart below, the 200 ma is about to be breached and become support again. The last time this happened PHO went on a 25% bullish run. If you get in now, it’s possible this ETF could be raining profits in your portfolio for a long time to come.

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This Penny Stock Is About To Pop (MYMMF)

Mym Nutraceuticals (MYMMF) is an over the counter penny stock. These type of stocks are inherently riskier than traditional stocks traded over exchanges. However, this one deserve serious consideration. With the recent sell off in the sector, the buy conditions couldn’t be better.

Canadian recreational pot passed legislation in October and Canada is about to be open for business. The cannabis sector is poised for a comeback after a year long slump. Prices are near lows and the time to speculate might be now.

MYMMF has a very interesting project worthy of your attention and that is The Wheedon Project. Located in Quebec, this 1.5m square foot facility will be one of the largest greenhouses in Canada. The project owns 365 acres of land and plans to include a cannabis university with a cannabis museum. They were approved by the city of Wheedon and await licensing from Heath Canada. Their website is updated often with new construction photos and they predict project completion in 2020. As a test run, 30,000 sf of greenhouse will be dedicated to producing sometime in 2019. More information can be found here MYM Nutraceuticals

Penny stocks are notorious for having little or no use for technical analysis, the volume is thin, most price jumps rely on news, and they are easily manipulated. That being said, the 3 month chart below looks like a textbook double bottom. If the second pivot point is complete, a rebound of prices should be around the corner.

Another reason I think this stock is a decent play is they reported 1.9m in cash according to Google Financials. That seems healthy for a young start up with 20 employees. With two greenhouse facilities coming online next year and other cannabis related revenue streams in the works, perhaps it’s time to open a position.

In 2018, weed stocks took a beating. 2019 might be the year they start recovering. If you are looking for a speculative stock in a speculative sector, MYMMF will do the trick. Just be careful. You wouldn’t want to see your investment go up in smoke.

Freeport McMoRan Is A Buy (FCX)

If you follow these two rules, you will never have a losing trade. First? Buy low. Second? Sell high. Sounds easy, right? Well, here we are, hovering at nearly 5 year lows and after a long and bumpy ride, precious metal investors want to know, “Are we there yet?” Continue reading “Freeport McMoRan Is A Buy (FCX)”

Santa Clause Rally 2 Weeks Late.

The Santa Clause Rally came 2 weeks late (always BTFD!) According to MarketWatch, small-cap stocks, as gauged by the Russell 2000 index RUT, +1.04% , are off to their best start to any year in the past 32 years, boasting a gain of 8.8% (WOW) over the past 12 trading sessions, according to Dow Jones Market Data. That’s outpacing the large-cap S&P 500 SPX, +1.32% the U.S. stock-market benchmark, which is up 5.2% over the same stretch — a performance, however, that likewise is the strongest 12-day start to a calendar year in 32 years. You can think Central Banks and Powell being Trumps right hand man for that.

The Dow Jones Industrial Average DJIA, +1.38% is up 4.5% over the same period, while the Nasdaq Composite Index COMP, +1.03% has logged a 6.8% advance.

Is it a reason to cheer? Perhaps it would be if not for the fact that the gains are the strongest since 1987, when the Russell popped 11.87% over the first 12 trading days and the S&P rallied 11.22%. 1987 is a year that lives in infamy on Wall Street.

On Oct. 19, 1987, the Dow sank 22.6% in a single session, marking its steepest percentage drop ever. That is not at all to suggest that similar action will play out this time around but you can never be to sure.

However, a number of strategists have been warning that gains in small caps aren’t likely to be lasting. MarketWatch’s Chris Matthews writes that investors have been drawn to the relative bargains that small-cap stocks are trading at compared with their larger-cap brethren, but noted that analysts are advising caution in investing in the group (don’t listen).

Separately, MarketWatch’s Barbara Kollmeyer, citing Andrew Lapthorne, a quantitative analyst at Société Générale, warns that U.S. small caps will be in the center of the next storm for stocks because those companies tend to carry larger debt loads relative to their heftier peers and are sensitive to rising interest rates.

“U.S. small caps have been taking on a massive amount of leverage over the past few years,” particularly starting in 2013 during the [quantitative easing] years, wrote Lapthorne.

Although the Federal Reserve appears to be in pause mode, the central bank does want to eventually normalize interest-rate policy, which may add more friction for small-cap names.

Back in 2018, shares of those companies enjoyed a bounce because they were perceived as being more resilient than larger multinational companies amid trade disputes between the U.S. and its trade partners, namely China. However, after punching higher, that rally faded hard and fast as a resolution between Beijing and Washington failed to materialize.

Investors should hope that the same narrative, or an uglier one, doesn’t play out this year. If us at BTFDClub had to bet unless there is a recession buy all dips!

Fannie Mae and Freddie Mac Cash Cows Released?

Its amazing how history has a tendency to repeat itself, but this time around if we have no economic slowdown and the government does not have to issue bailouts this could be a great buying opportunity into a cash cow. Continue reading “Fannie Mae and Freddie Mac Cash Cows Released?”

TSLA needs to issue more debt, AKA stock going higher.

According to CNBC, Tesla has a billion dollar debt coming due, and it could wipe out nearly a third of the company’s cash if the stock price doesn’t improve.

About $920 million in convertible senior notes expires on March 1 at a conversion price of $359.87 per share. But Tesla’s stock hasn’t traded above $359 for weeks. If the shares are about $359.87, then Tesla’s debt converts into Tesla shares. If not, Tesla will have to pay the debt in cash. Maybe its time for Elon to do another cash offering and get another podcast going?

Tesla reported cash and cash equivalents of $3.37 billion at the end of its September quarter. The company continues to reveal pressure to maintain profitability, and announced Friday it would cut 7 percent of its full-time workforce.

Shares fell more than 11 percent Friday following the announcement to trade around $305 per share.

Musk said during the company’s third quarter earnings call that Tesla plans to honor the original maturation date.

“The current operating plan is to pay off our debts and not to refinance them but to pay them off and reduce the debt load and overall leverage of the company,” Musk said at the time.

I wonder if these guys are ready to buy some shares?