Markets Equity markets continue to push higher even through the backdrop of higher bond yields this past week. Nasdaq led the way with a move higher by 2.3% carried by large tech and the Mag7 that everyone can’t stop talking about. Is there anyone left in big cap land that doesn’t own NVDA? |
|
Nasdaq reached new 52 week highs while the Dow ended the week basically unchanged and the TSX was lower by -0.4%. |
|
Investors will be keeping a close eye on US inflation data this coming week. Financials |
|
|
Commodities Oil prices were slightly higher by the end of the week with WTI getting back above $75. Trading continues to react up and down to Middle East tensions and concern over Chinese economic slowing. Just more of the same. |
|
Baker Hughes drill rig reports show a gain of 4 rigs in action this past week and no change in rig activity in Canada. Gold was slightly lower and continues to stay mostly flat. Higher bond yields and stronger US dollar continues to keep the gold price in check. |
|
Copper is the metal that has been getting a fair bit of attention lately. Copper, usually a good barometer of global economic activity, has taken a sharp turn lower in the past two weeks. Slowing demand from China is the current culprit. |
|
|
|
Sometimes it feels like deja vu all over again. Big markets continue higher, big tech (Magnificent 7) keeps climbing to the sky, small stocks indexes are flat or lower and yet, a few more profitable and growing obscure nanocaps catch a strong bid and pop higher. Well that’s exactly what we saw again this past week. |
|
Lots of the same names hitting 52 week highs this past week. Cematrix (CVX.V) were in Vancouver marketing to investors and hit a new 52 week high. |
|
Enterprise Group (E.T) hit a new 52-week high along with McCoy Global (MCB.T) and Firan Technology (FTG.T). Gatekeeper Systems (GSI.V), Biorem Inc (BRM.V), McCoy Global (MCB.T) and ADF Group (DRX.T) all saw new 52 week highs. Once again we saw Thermal Energy (TMG.V) hitting a new 52 week high before pulling back slightly by week’s end. VitalHub (VHI.T) was another company out on the street marketing and hit a new 52 week high. The company has quickly turned into a bit of a market darling. |
|
We saw great numbers out of Firan Technology Group (FTG.T). This well run business saw revenues jump 51% on the year, partially helped by an acquisition. Adjusted earnings per share, the measurement most important to shareholders doubled to $0.10 in Q4 and was up 625% to $0.29 per share for the full year. |
|
I’ve become aware of a growing number of our kind of companies, small, profitable and growing, that are being marketed to institutions and high net worth investors. I think it’s a further signal that capital is coming down-market. Most of these companies are not looking for money, not marketing for financing's and yet investment bankers are showcasing them to some of their best clients, and these clients are biting. Both of the charts above are indications that interest is building and as this becomes more obvious we likely see a flywheel effect as other fund managers and investors not willing to miss the boat start spending more time looking for the next microcap winner. I also wanted to highlight the move in shares of Atlas Engineered (AEP.V)*. I’m sure you’re tired of hearing me go on about the housing deficit in Canada and how I feel it’s one of the most obvious investment themes available to investors. The two small players that I’ve mentioned and even highlighted in a number of our free-for-all's were AEP.V and Fab-Form (FBF.V). Both were strong performers this past week and I think as pressures continue to build and the opportunity becomes more obvious, attention to these two companies is likely to continue. |
|
It’s becoming more impossible to ignore as headlines continue to highlight the housing concerns in Canada as well as the US. And when you have charts like this to look to in the US it can’t help but drive investors both here in Canada as well as in the US to look north and see where the opportunities lie. Builders FirstSource (BLDR) an aggregator of truss facilities and pre-fabricated construction components has seen its share price more than double in the past 12 months and is up almost 18 fold since its lows less than 4 years ago. Who wouldn’t want to own the next BLDR? |
|
I continue to raise a bit of cash in this environment. I continue to feel we can use a healthy pullback (profit taking) in the winners whether that be the Mag7 which has been driving the big markets or the big movers in the nanocap/microcap space. I would love to add to some of my favourites but I’ll wait for some of the upward pressure to subside. Other Stuff Here’s a chat I had with Kyle Grieve from the “We Study Billionaires” podcast. https://link.chtbl.com/WSB607 *Paul Andreola is a director of Atlas Engineered Products (AEP.V) To your wealth, Paul and Trevor |
