Summer Stock Picks
There are two cycles to the Beat the Market investing/swing trade year.
Beat the Market Cycle 1 (October to May)
This is the meat of the investing season during most typical cyclical bull markets which run from October/November through to May in the US. There is a very simple adage to follow…
“Buy in September and remember, sell in May and go away.”
It works remarkably well although I like to start the meat of the year in November as opposed to September because that time period can historically be quite volatile. Waiting until November to make the majority of your purchases will help you avoid some major market corrections which tend to occur over that time. November also times well with the beginning of tax loss selling season so you can get some pretty good value at this time of year. Lastly, November is usually when the market gets direction.
The caveat to this rule is that in Canada this season usually ends around PDAC which is March/April. Although this year crude is on a tear which has the TSX and many energy stocks breaking out at what is normally a peculiar time of year for momentum in energy. Considering MARCH is when most commodities peak out and Canadian Stocks are commodities weighted, it is no surprise that the TSX tops out before US indexes, but the eve of WW3 and recent events this Sunday in Ukraine speak to the continued escalation of the conflict and not de-escalation in Eastern Europe.
Ukraine Conflict Continues to Escalate
Apparently some Kiev controlled ‘Right Sector’ militia gunned down an unarmed citizen controlled checkpoint in Eastern Ukraine. This is obviously going to increase tensions considering one of the men gunned down was an unarmed 53 year old bus driver father of 2. Several others were hit with bullets in the back fleeing the melee after the initial man was killed by an assailant. In spite of the recent de-escalation talks in Ukraine between Russia, US, EU ad Ukraine, I feel it necessary to include this conflict in my macro analysis. I see only lip service from both sides and Russia will protect its interests which include a major Russian population in Ukraine.
I really haven’t said much because I hate war and hope it will just go away, but it is clear that we are escalating towards a global conflict since Syria and Ukraine is the new front. Up next is Turkey and the Kurdish movement to organize in SE Turkey. A new power block of states is emerging including China and Russia forming a geopolitical and economic alliance that could bring the traditional Silk Road economic route back to major economic prominence. A part of this will be the establishment of Kurdistan by the Silk Road Alliance which will help stabilize the Middle East with a progressive nation that the west has refused to help establish.
War trade to help establish a bottom in POG
I am a nervous short on POG. I would be covering in the first few days of June, considering POG like oil, will carry a war trade. As much as WW3 is about the establishment of trade in USD in every country the US decides to destabilize called the Petro Dollar. Gold is going to play a major prominence in the WW3 as an assault on the USD will be part of the plan to cripple the US. The Eastern Financial block that is emerging is cash rich, resource rich, and has slowly bought up all the world’s physical gold the last few years. WW3 will be about establishing financial trade around the globe among money other things for Western powers because the Central Bankers have the ultimate monetary tool as long as the USD stays the Petro dollar.
So one way the Silk Road is going to do this is set up their own economic system and simply stop trading in USD. Recently a bock of countries announced they would no longer be trading oil in USD so we are on that route. The biggest thing you have to realize is that Western Powers represent a minority of the population so unless the West beats the East with its military might… the cash strapped western system will decline while the Eastern financial system backed by cash, gold, assets, above ground commodities and below ground natural resources will rise in prominence over the next century.
Like it or not… this is the beginning of the end of the USD as the Petro Dollar which in my opinion will at some point mark POG’s second leg up. Is the Ukraine conflict the catalyst that finally puts the bottom in gold? We are going to find out this summer. If things truly de-escalate then I expect gold to naturally track lower in anticipation of a fall correction and washout type action.
We are already shaping up to be somewhat of an atypical year which may mean the market continues to grind higher this summer with no May selloff. In addition to markets grinding higher is the extra cold winter which has delayed spring in North America. This could serve to be a launching pad for improving economic data the next few months as winter savers turn into summer spenders and boost retail economic spending.
Normally March/April/May is the time you want to be taking a profit on the investments you made back in October and November. Because this year might be atypical with markets thrashing about in a directionless manner, we may go higher this summer into a serious correction this summer fall.
Beat the Market Cycle 2 (May to October)
Typically the second part of the Beat the Market season happens when the general market sells off in May. You don’t want to be buying too much in May because it can mean you being under water in your investment for a long time, that is why the philosophy about Summer Stock Picks changes. If you happen to be under water on any stock… you want to be under water in the cream of the crop, so in the summer you plan out the best companies you can find.
And when I say best companies, I don’t mean Apple, or Google or even TSLA. Double digit returns suck!!! I mean the cream of the crop stories. The AAA of the group, the companies you don’t mind buying at 52 week highs or 52 week lows.
So unless you are extremely optimistic about a company’s future like in Poet Technologies PTK.V or are buying what you believe will be a “World Class’ company 50 years in the future like Plandai Biotechnology PLPL, you want to be at cash during this period for the most part.
The majority of stocks I picked way back in November… you probably should have cut the majority loose unless you are absolutely in love with the story… and in that case… the summer period is when you buy more and accumulate. In the worst case scenario… that is all it ends up being… an accumulation period if you are wrong and your pick doesn’t take off.
So what do PTK and PLPL have in common? Certainly not their charts!!! PTK I might be selling to buy PLPL. Since our last technical indication to get back in PTK.V it has nearly doubled while PLPL has dropped 50%. Not only that but PLPL has made a definitive turn at $0.50 and looks to bounce back to $1. The PTK.V chart on the other hand looks like it is topping out and probably one I would avoid until June.
What these two companies have in common is I feel these companies will be billion dollar market cap companies one day.
In PTK’s case… it could even be this year and a potential bidding war for the company once their expected prototype successfully tests on third party’s platforms. PTK is obviously closer to realization than PLPL, but within these two stocks you should be able to trade them back and forth and now I would be heavily weighted in PLPL and very light on PTK over the next month even though I am leading with PTK in my summer stock picks category.
Do you see the psychology I am getting at when I am looking for summer stock picks?
I am looking for ‘Balls to the Wall Buys’ that you can’t refuse in any season. That is why if in the doggiest dog days of summer you made a bad buy in the May June July season; at least you get to buy your favorite stock even cheaper.
That is when you want to average down… and about the only time. When you pre-ejaculate with a beautiful lady, you don’t turn tail and run away. Hell no. You try again. It’s a beautiful lady and you keep on trying until she kicks you to the curb or robbed you of your last dollar!
You were so attracted you couldn’t help yourself. The same goes with the best stocks. We all pre-ejaculate with them and buy them when we shouldn’t. The worst case scenario in Beat the Market Summer Stock Picks… is you end up accumulating the cream of the crop stories. It is generally these stories that will turn first if the market doesn’t go your way.
It’s all I really try and do in summer… look for the best stories. No hard thinking. No number crunching. Just look for a good read.
Poet Technologies PTK.V
Share Price… $2.54
Shares Out… 150M
Market Cap… $375M
So what has this stock pick flying?
When the company announced a patent March 31 around quantum computing, the stock has taken off and not looked back.
I have no idea what quantum computing is, but it sounds pretty cool and POET chips will allow quantum computing to happen. Actually I kind of do know what quantum computing is and it represents a major leap forward in technology allowing computers to theoretically break or decode any algorithm or encryption. NSA is going to love this technology but it also means the opening up of doors to science and technology allowing computers to perform functions and test theories that man could not possibly calculate even with the aid of today’s most powerful computers.
Quantum computing is definitely a major leap forward in tech and it makes PTK that much more desirable as a stock and why the company has nearly tripled in the last month.
Optical chips are almost here. Finally.
PTK has a pretty certain future locking up another patent and why this stock has flown past all my expectations and tapped on the $3 door in April. I hate telling you to buy stocks that have gone 500% in 4 months and then include it in my summer stock pick selection like PTK is going to keep on chugging along… but I cannot put any other rating on this company other than STRONG BUY.
Plandai Biotechnology PLPL
Share Price… $0.635
Shares Out… $125M
Market Cap… $71M
The marijuana boom is as over is a fast as it started. NOT!!! But the stocks have come back to the prices they were pre-pot boom. Well most of them anyway. This gives an excellent second chance for stragglers and investors caught unaware and it has also allowed me to review the sector and the companies that I want going forward. Undeniably PLPL after surging to $2.50 and back to $0.50 has me drooling all over this company. Unlike the rest of the companies with suspect management and pump and dump credentials, PLPL stands out above the rest as a premiere POT stock.
If you notice I have made major renovations to my Beat the Market Mock Portfolio so you might want to check out who I dropped and who I maintained and who I added to the list among Pot Stocks.
If I were to pick slam dunk billion dollar pot stocks I would pick Medbox MDBX, GW Pharma GWPH, Plandia Biotechnology PLPL and Tweed Marijuana TWD.V.
Why Plandai Biotechnology?
- Has a history with Diego Pellicer with branding power and instant recognisability
- Has management with Jamen Shively with investment connections including Microsoft
- Has recognizable products and formulas.
- Recognizes international importance as legalization of cannabis is a global issue setting up shop on the horn of Africa.
Why not Plandai? Is what you should be asking yourself.
This is a company that is beyond reproach and has already put in place the necessary arrangements to succeed on a global scale.
Tweed Marijuana Inc. TWD.V
Share Price… $3.15
Shares Out… 35M
Market Cap… $110M
Is Tweed Marijuana Inc. going
to be the best Canadian Marijuana company?
Probably not, but they are the first legitimate story in Canada.
Looking at Tweed has got my thinking and evaluating marijuana companies at a different level from investing and looking at the industry, where it’s going, and what MMJ patients’ need. Bottom line is in Canada there really are none when it comes to real medical opportunities as only MMPR can sell and they can only sell cannabis which I don’t consider medicine for the majority of MMJ applications. For me Tweed is a recreation stock under the guise of a medical program. Is weed medicine? It is. But when compared to concentrated products you get from marijuana like cannabis oil and tinctures and waxes. There is no comparison. And then there is one of the keys to Cannabinoid Therapy, that many diseases, including mine theoretically require massive doses of cannabinoids. Something I am still not on and just barely getting by on a minimal dose. For myself, I could take 5 to 10 grams of Cannabis Oil a day and live a great healthy life and never have a problem with HIV. One of my theories is that maybe just maybe if I take enough cannabinoids, I might even kill HIV like some people are doing with cancer once they get on massive doses of up to 5 grams of oil per day.
So speaking as a MMJ user who is still massively underserved bit being on a proper treatment of a minimum of 5 grams of oil per day… The vast medical needs of patients are not being met with the old or new programs. Especially when there is product that most people would benefit a lot more form taking orally than smoking a joint…. It frustrates me and makes me angry that everyone is scrambling to sell pot to the public and lost in whole thing is Medical Marijuana and the science behind it.
Cannabis Oil is a product at I would drop vaping shatter in a heartbeat to use. But I can’t get it and the amount 5 to 10 grams orally is ten to 20 time the amount I currently use and is beyond anything I could ever reasonably afford until after prohibition. I am mad. You got a bunch of filthy greedy dirt bags populating this industry that don’t have care about the patient or don’t even understand cannabinoid therapy, the endocannabinoid system, or even know how to make products from cannabis for MMJ patients.
They just want to sell Canadians POT. And it pisses me off even more when I see LOSERS AND DEADBEATS POPULATE THIS SPACE. People are going after the cash grab while ignoring patients.
I am designing a plan to develop a company that develops key concentrated cannabinoid products for people with HIV, cancer, and diabetes. That is it. I don’t want to sell pot. I want to help people get their lives back like cannabis has done for me. I have two products; Cannabis Oil (HIV and Cancer) and a unique diabetic Massive Dose Cannabinoid Therapy product I have designed for my JV partner with type 2 diabetes. Is Cannabis Oil unique? Nope. But Cannabis Oil will be the number one cannabis product aside from raw marijuana and the first movers will take over this niche market. First movers like myself who are using my status to take advantage of an injunction to get a 18 month head start on everyone else when it comes to making Cannabis Oil in Canada are going to establish a supplay chain in Canada that will hard to supplant.
No one else is doing Cannabis Oil... so why not me?
This is all I am going to say for now on this, but I leave you with a couple calculations why everyone is going gaga for marijuana….
From a study of 77 illegal grow ops in the Netherlands; a typical indoor growing system will yield 0.1 pounds per harvest per square foot. Assuming four harvests in a year, you are looking at (4) 1,000 pound crops from every 10,000 feet of growing space. Can you see why you should be GAGA over Tweed and why the first mover status is huge?
170,000 sq. ft is a massive facility which should be able to produce 68,000 pounds of cannabis a year which is $150M selling cannabis at $10 per gram. That is an average indoor illegal grow op and not a massive commercial grow-op where the company can take advantage of significant economies of scale to maximize yields and reduce costs. 68,000 lbs. of cannabis times 454 grams times averaging selling price of $10 per gram… $308.72M revenue per year once fully operational. What are the operating costs you say?
Maybe $100 per pound.
And again, I would fully expect TWEED to blow this number out of the water when it comes to production once they have fully utilized their capacity.
Even at wholesale prices of $1600 per pound… TWEED would do $110 with gross margins exceeding 80% to 90%. These huge gaps in profit are why prices will drop as legalization happens and competition enters the market. There is no way the prices will stay that high.
But until we have full legalization, Tweed has a licence to sell direct making them unique in the Canadian public company landscape. Tweed is not the only company who has or will have massive Canadian operations. Bedrocan plans on ipo’ing in Canada soon; Cen Biotech and Medican are also building massive marijuana grow op facilities as well.
Fission Uranium FCU.V
Share Price… $1.40
Shares Out… 332.4M
Market Cap… $465M
Fission has been a good pick. The SP hasn’t done anything lately, but the company has done so many spinoff your cost base on Fission should be negative or near negative over the last few years. The big problem with Fission in spite of having the greatest discovery in the Athabasca Basin; is that the shares outstanding has tripled over the last year. This is where most of the growth in the company has come from being valued at nearly half a billion market cap. That being said, Patterson Lake is undeniably shaping up to be the greatest discovery anywhere in Saskatchewan.
How big is big? Well let’s look at the meat of the zone from 495E to 1080E. If you can do math and understand mapping, that is about 600 meter strike length of the main zone which 150 meters to its widest to about 75 meters at its thinnest. The biggest significance of this winter’s drill program is two holes that extend the PLs to the east another 500 to 600 meters. There is big time potential to extend continuity to the east which will make PLS a true monster.
Let’s do a little math. Let’s say 100m average width by 100m of the mineralized zone plus times 600 meters in strike length times a 2.5 density and just in the meat of the PLS zone you have 15 million tonnes of open pit high grade uranium grading 2 to 5 percent.
Just with in this small zone which looks like it is expanding significantly to the east. Another 600 meters of similar resource to the east will bring PLS to 30 million tonne high grade deposit which is INSANE.
Just to give you an idea… 30Mt @ 5% U3O8 is 3 BILLION POUNDS of uranium. Not that I think PLS is 30Mt @ 5% U3O8.
That is the upside of PLS. So when you think of HAT being a relatively small resource and much deeper than PLS and the size of PLS will potentially dwarf Roughrider… Undoubtedly I believe a buyout of PLS will be in the billions and not hundreds of millions like Hathor.
My initial target for a PLS resource is 5Mt to 10Mt @ 2% to 3%. They announced these massive intervals but most of the resource grades are lower outside of the flashy high grade lengths. If I had time to throw all of PLS drill info into excel I could come up with a better number, but that is a project for the summer. Dumping PLS results into excel and analysing them.
At any rate…
FCU is a solid buy despite of the massive shares outstanding as I believe this deposit is a one of kind and will yield a massive open pit uranium mine. I cannot see this ever NOT getting the go ahead as this mine will be the lowest cost producer in the industry once in operation. Uranium sells off in March so May/June could be an opportunistic time to buy FCU as uranium is increasingly starting to come back into favor in spite of all the bad press.
FCU remains my top pick. The coming fall correction will be an excellent time to review uranium stocks in earnest, but for now, Fission is a top story transcending any specific sector. I will never ever be able to let go of materials completely as the gains are always breathtaking… I am always game for a world class discovery.
Haven’t seen too many in the Gold sector… but here is one from the Uranium sector.
3D Pioneer Systems DPSM
Share Price $0.60
Shares Out… 75.4M
Market Cap… 445.8M
DPSM is an early pick. Despite the rest of the 3D space continuing to consolidate, DPSM has shown some life so we will continue to go with it through the summer.
If it goes back to $0.40…YAY! Buy more.
That is the attitude you have with the summer stock picks, you are buying stocks you think have the best stories and 3D Pioneer Systems is a company I believe is on track to making major market penetration in roads in the consumer 3D printing market.
Since the recommendation, the company announced the build of ‘Appaloza’ which is a proprietary e-Commerce Cloud Marketplace and 3D Printing application. It will allow customers and designers a place to store, edit, buy, and sell original 3D designs. The site so far is not much more than a homepage, but the concept for consumer 3D printing is amazing and what I think is a big part of making 3D Printing a reality in the home. Bringing in the everyday developer to designs 3D prints like an APP developer for apple store of android would. It is brilliant because you are offloading everything to do with product offering and selection. If someone wants it, they will design it, upload load it and print it and sell reprints to others.