Smallcap Discoveries: Weekly Update: February 6

- Tweet0
- 0
- Pin It 0
- 0
- Subscribe to RSS
Subscribe

Subject: Smallcap Discoveries: Weekly Update: February 6 - 10

February 6 - 10

Market Commentary

Markets

North American equity markets took a pause from their strong up move since the start of the year. All three exchanges that we follow were down for the week led by Nasdaq which was lower by 2.4%, the TSX down 0.7% and the Dow lower by just 0.2%.

Nasdaq has gained over 11% since the start of the year which, if the year were to end right now, would be a better than average return for a full year. The strength and speed of this move has pushed most markets and many stocks into over-bought territory so some healthy profit taking is well in order. The question remains though, is this a new bull market or just a bear market rally?

Energy

Energy bulls had a slightly better week this past week as WTI oil traded higher and natural gas traded mostly flat.

WTI oil needs to find direction, it seems to be stick in a range between $70 and $80 per barrel right now.

And is natural gas bottoming? Natural gas stopped the weekly price dives and has, at least temporarily traded sideways which is somewhat of a relief to the gas bulls and many producers. Multi year low prices likely slows new production.

Baker Hughes reported a slight uptick in drill activity with 3 net new land drill rigs active in North America last week.

Commodities

The US dollar index held onto its recent gains.

Renewed demand for US dollars dampened prices for a variety of commodities, including precious metals.

After briefly trading above $500 lumber has retraced its way back closer to $400.

Stocks

With markets looking to be in an overbought condition I’ve decided to raise a little bit of extra cash and to wait patiently for some more obvious opportunities. It feels a bit too easy the last few weeks and with a lot of well known names having bounced a lot in the last few weeks I’m a bit fearful that we need a healthy pullback maybe even a scare to bring somethings a bit more in line with where we are in the current cycle.

We saw another industrial company take out last week. Montreal, Quebec based, Velan Inc. (VLN.T), a manufacturer of industrial valves, agreed to be acquired for US$245 million (approximately C$329 million). The purchase price of $13 is roughly a 100% premium to the previous day’s closing price.

This past week we also saw some action on shares of Zedcor Inc. (ZDC.V). Shares in the security surveillance and solution provider hit new multi year highs after some block trades mid week.

Volume like this is usually a precursor to further activity and likely signals a new sizable shareholder has taken a position. I was also made aware that the company is marketing to institutional funds this coming week. My guess is the company may want to see the $0.70 warrants in the money in an attempt to cash up through the exercise of these warrants.

As I mentioned, this past week I did a little bit of selling. I sold a few shares of Bri-Chem Corp. (BRY.T) and sold my trading position in Decibel Cannabis (DB.V). I’ll be looking to deploy in some of the names that haven’t taken part in the recent run up.

That’s it for this week. I’ll be waiting for news, catalysts or some tempting prices otherwise I’m sitting on my hands.

To your wealth,

Paul and Trevor

Buys and Sells This Week

Sold Decibel Cannabis (DB.V) @ $0.175

Sold Bri-Chem Corp. (BRY.T) @ $0.61

Smallcap Discoveries

Select Portfolio

Medexus Pharmaceuticals (TSX: MDP) Price - $1.67 Market Cap - $33.6M

Medexus Welcomes Two New Board Members
Reports Q3 Financials
Revenue of $28.7M
Gross profit of $15.9M
Operating income of $2.9M
Adj. EBITDA of $5.2M
Net loss of ($1.5M)

Renoworks Software (TSX.V: RW) Price - $0.19 Market Cap - $7.7M

Renoworks Launches Next Generation AI Image Recognition and Visualization Technology

Smallcap Discoveries

Select Watchlist

Char Technologies (TSX.V: YES) Price - $0.435 Market Cap - $36M

Decibel Cannabis Company (TSX.V: DB) Price - $0.17 Market Cap - $69M

Decibel Provides Preliminary Record Level Q4 2022 Results and 2023 Outlook

Gatekeeper Systems (TSX.V: GSI) Price - $0.225 Market Cap - $20.5M

Gatekeeper Launches "AI Dash Cam" with Video Analytics for Improved Safety

Level Jump Healthcare (TSX.V: JUMP) Price - $0.05 Market Cap - $4M

LevelJump Healthcare Corp. Establishes New Day Clinic Teleradiology Group: Revenue Growth

Thermal Energy International (TSX.V: TMG) Price - $0.11 Market Cap - $18M

Thermal Energy International Provides Half-Year Business Update

Firan Technology Group (TSX: FTG) Price - $2.76 Market Cap - $67.6M

Firan Technology Group Corporation (“FTG”) Announces Full Year and Fourth Quarter 2022 Financial Results
Q4 Revenue $23.75M
Q4 Gross profit of $5.73M
Q4 EBITDA of $2.39M
Q4 FCF of $1.31
Q4 Net income of $694K
FY Revenue of $89.2M
FY Gross profit of $21.3M
FY EBITDA of $8.58M
FY Net income of $768K