Targeting tiny stocks in huge growth industries

Tuesday, 23 October 2018
Melbourne, Australia
By Bernd Struben

  • Inventories up…threats down
  • Beneath Russia’s bluster
  • ‘Storm Clouds Gather Over UK’s Theresa May’

In yesterday’s Port Phillip Insider we looked at a tiny stock with huge potential in Canada’s new billion-dollar marijuana market.

The Canadian-listed microcap is one of three tiny international companies Sam Volkering recommends in his new report, ‘Bubble-Boom Global Microcaps’.

It’s part of one of the most exciting new services Port Phillip Publishing has launched in years, Microcap Global Trader.

With roughly 2,100 stocks on the ASX, you may be wondering why Sam’s hunting for microcaps overseas.

The simple answer is greater opportunity.

Yes, there are some additional hurdles to buying tiny stocks in international markets. And considerations like currency fluctuations to take into account.

But there are over 45,000 public companies listed on stock exchanges around the world, according to the World Exchanges Federation. That opens the door to at least 20 times as many opportunities as you’ll get sticking solely with Aussie stocks.

Now you may also be wondering, what the heck are ‘bubble booms’?

As Sam explains these are booms that, ‘have been producing some utterly astounding gains from certain microcaps around the globe. We’re talking short-term bagger gains ranging from up to 2,000–6,000% in 2–4 years.’

Longer-term these gains can be much, much higher.

Take Indian electrical equipment company Havels India, for example.

Back in 2002 it was still firmly in microcap territory. But as you can see in the chart below, that’s no longer the case. Far from it…



chart image

Source: Bloomberg
Click to enlarge


A gain of 43,713% in 16 years! Good luck finding that from a blue chip company.

Of course, investing in tiny, little-known companies carries a lot more risk than investing in blue chips. Many of these upstarts can and will fail, taking their investors’ money down with them.

Identifying and investing in these bubble-up booms is no simple trick either.

You need to know the ins-and-outs of a company’s growth prospects. Part of that comes down to targeting companies bringing their niche ideas into high growth markets.

That’s why the second international microcap Sam recommends in his new report is tackling global cyber security.

With technology leaping forward at record pace, the cyber security business is booming. And investing in the right cyber security companies has never been more potentially profitable.

As reported by The Australian, 69% of Australians are more concerned about their online privacy than they were five years ago.

And with 88% of Aussies owning a smartphone in 2017, according to Deloitte, those concerns are well-founded.

We’re supposed to believe that retinal scans, motion identification, and facial and voice recognition will make our lives more secure. But to verify your identity, all of that personal data is broadcast across the internet.

It’s bad enough if a hacker manages to steal your PIN code or online passwords. But what if they steal your voice pattern or retinal prints? You can’t just come up with new ones.

Today many of our online transactions happen in the cloud. Not the fluffy white ones in the sky. But the thousands of warehouse sized data storage centres around the globe.

That’s what makes the tiny cyber security company Sam is recommending such a potential game changer. It can deploy its security within a company’s cloud environment or cloud account.

It’s in its early days yet. But if Sam’s right this Canadian-listed stock could soon be a household name.

You can get all the finer details here.

Now a look at the markets.

Markets

Overnight the Dow Jones Industrial Average closed down 126.93 points, or 0.50%.

The S&P 500 fell 11.90 points, or 0.43%. The NASDAQ bumped the trend, gaining 0.26%.

In Europe the Euro Stoxx 50 index finished down 20.73 points, or 0.65%. Meanwhile, the FTSE 100 lost 0.10%, and Germany’s DAX closed down 29.49 points, or 0.26%.

In Asian markets, Japan’s Nikkei 225 is down 520.34 points, or 2.30%. China’s CSI 300 is down 1.64%.

In Australia, the S&P/ASX 200 is down 48.33 points, or 0.82%.

On the commodities markets, West Texas Intermediate crude oil is US$69.17 per barrel. Brent crude is US$79.83 per barrel.

(More on oil below…)

Turning to gold, the yellow metal is trading for US$1,222.27 (AU$1,729.06) per troy ounce. Silver is US$14.55 (AU$20.58) per troy ounce.

One bitcoin is worth US$6,447.24. (Stay atop all the latest cryptocurrency investment advice here.)

The Aussie dollar is worth 70.69 US cents.

Inventories up…threats down

WTI crude at US$69.17.

That’s a far cry from the US$100 per barrel bullish analysts were predicting last month. But it’s still around 15% above where I expect oil prices to be as we head into November.

It’s a simple matter of supply and demand. In this case, supply growth is outstripping the growth in demand.

The US continues to produce oil at record levels. And oil bulls hoping the Saudis would follow through on their…erm…veiled threats to cut production over any fallout from the murder of journalist Jamal Khashoggi will be disappointed.

From Bloomberg:

Crude settled below $70 a barrel for a fourth straight session as Saudi Arabia backed away from using its oil wealth as a diplomatic hammer and American inventories expanded at the fastest pace in more than a year and a half…

The kingdom will raise output to 11 million barrels a day in the near future and has the ability to reach 12 million if the market requires it, he [Saudi Arabian Energy Minister Khalid Al-Falih] said.’

Then there’s Iraq, the world’s fourth largest oil producer. Also from Bloomberg:

While crude markets are preoccupied with Saudi Arabia’s ability to boost output as impending U.S. sanctions curb Iranian exports, Iraq has quietly increased shipments to Asia, Europe and the Mediterranean region to offset Iran’s missing barrels.

Iraq is producing a record 4.78 million barrels of oil a day, the country’s Oil Minister Jabbar Al-Luaibi said on Saturday. Output will rise to 5 million barrels a day in 2019 and 7.5 million in 2024, he said.

The global demand for oil remains strong. So I don’t foresee a repeat of early 2016, when WTI dropped below US$30 per barrel in January and February. But with plenty of new supply to tap, crude looks set for a decent tumble.

Turning to the world’s number three oil producer…

Beneath Russia’s bluster

The mainstream media continues to fuel global outrage over Trump’s decision to can the US-Russian 1987 Intermediate-Range Nuclear Forces Treaty (INF).

As a quick recap, the treaty prohibited the US and Russia from developing or holding intermediate range (500—5,500 kilometre) ground-launched cruise missiles.

That sounds fine on paper. Except the Russians are cheating and the Chinese aren’t even signatories.

From Bloomberg:

“China hasn’t signed the agreement and has been producing mid-range missiles and so-called carrier killers to asymmetrically increase the costs of an American-led naval containment strategy,” said Stephen Nagy, a senior associate professor at the International Christian University in Tokyo…

“China would have little choice but to spend more on the military — read less on the economy — or come to the negotiating table to come to an agreement about mid-range systems,” said Nagy.

Trump isn’t looking to rekindle an arms race. His preference rather, as he stated over the weekend, ‘Let’s really get smart and let’s none of us develop those weapons’.

The Chinese, yet again, appear wholly caught off guard by Trump’s latest move. But with their ‘miracle economy’ spluttering, the Communist Party will face mounting pressure to give ground on trade and defence issues.

The Russians, I suspect, were briefed beforehand. Though likely only at the highest levels.

Playing to the crowd, Russian officials responded forcefully in media statements, saying they would need to take action ‘to restore balance in this sphere’.

But the Russians don’t have the appetite, or the defence budget, to engage in a new arms race with the US. And Putin and Trump have made it clear they’d prefer to be friends over foes.

According to the Associated Press, Moscow is already signalling its willingness to give some ground, ‘with a senior official telling Trump’s national security adviser John Bolton that Russia is ready to address US concerns about how the 1987 Intermediate-Range Nuclear Forces Treaty is being implemented’.

I expect new rounds of negotiations will open the door to much warmer relations between the world’s two nuclear superpowers.

And Russia’s sanction-battered economy could be among the biggest winners.

Now before you sign off, here’s the latest on the floundering Brexit process from The Australian Tribune:

‘Storm Clouds Gather Over UK’s Theresa May’

The fate of Brexit looks more doubtful than ever. Negotiations remain stalled over the Irish border.

Any further delays in implementing Brexit could well open the door for a second referendum. One that would likely see the ‘remain’ voters victorious. Right up until the third referendum, that is.

Whatever the outcome, it’s looking increasingly likely that British Prime Minister Theresa May won’t…’

If you’re fed up with sanitised, politically correct dogma cut and pasted from one mainstream source to another then The Australian Tribune is for you.

And it’s absolutely free.

Sign up here to get The Australian Tribune delivered free to your inbox five days per week.

You can visit our website at https://www.theaustraliantribune.com.au/ to read the complete article above now.

Cheers,
Bernd