Subject: Smallcap Discoveries: Weekly Update - March - 7 -11

March - 7 - 11

 

Market Commentary

0% and Nasdaq was down by 3.5%. Continued concerns over the conflict in Ukraine and more inflation data weighed heavily on financial markets.


The world is also rapidly coming to the realization of how cheap energy has been for the past decade. All energy. The growing focus has been on "green" or renewable energy and we've seen numerous governments encourage and fund many new forms of energy in hopes of speeding the transition away from fossil fuels but it's becoming very clear that reality and mathematics are making people realize that the time and resources needed to transition to a green energy future have a cost and that cost is higher fossil fuel and commodity prices. Here is what needs to be replaced....

To add to the recent volatility in commodities this week we saw a massive spike in the price of nickel. Nickel on the London Metal Exchange skyrocketed 82% to $100,000 per ton, it's largest single day move in history. 


Higher commodity prices have allready begun to effect a number of different industries and we can expect price increases in a very wide array of finished products. What some people are starting to be very concerned about is the rapid rise and potential for future shortages in food supplies. This is another longer term concern that we'll be following and expect will become an area of further capital allocation. 


Now, back to energy again. We can't stop talking about the opportunity in energy services. This past week the S&P Energy Services ETF (XES) spiked higher and broke out to a new 52 week high. Investors seem to finally be coming to grips with the notion that North America will need to increase domestic production of fossil fuels if it wants energy security let alone any resistance to much higher energy prices. While some may concider it a bit late to jump on the service company bandwagon I think the 2 charts below will give investors a better context of where we are in terms of longer term trends.

Here's the 1 year chart:

Here's the 10-year chart:

This sector has a long way to go before it comes anywhere close to where it was the last time oil prices were anywhere near where they are today. We continue to buy our favorites in the space.

One new name that popped onto our list this past week was Western Energy Services (WRG.T, WEEEF.Q). This stock is not for the faint of heart but we believe it is an extremely leveraged play on the sector. We'll follow up soon on why we think WRG.T is worth a look.


Other non-energy names worth looking at this week include Circa Enterprises, (CTO.V, CCETF) and Reko International Group (REKO.V, RKIGF) . Both companies reported solid financial numbers this past week and both are good examples of small manufacturers who have been able to take advantage of the "onshoring" trends in North America.

 

Buys and Sells This Week

Western Energy Service (WRG.T) @ $0.34 

 

Smallcap Discoveries


Select Portfolio

BeWhere Holdings (TSX.V: BEW) Price - $0.23 Market Cap - $20M


We like it when companies launch new products. The BeMini has been gaining momentum with BeWhere's established partners and we look forward to how this product contributes to revenues. We like the current price and believe it offers a very compelling buying opportunity for long term investors.


Geodrill (TSX: GEO) Price - $2.82 Market Cap - $128M

  • GEODRILL DELIVERS RECORD FINANCIAL RESULTS FOR 2021 FOURTH QUARTER AND YEAR END

  • Revenue of $115M

  • Gross profit of $30M

  • EBITDA of $29.5M

  • Net income of $14M

  • Delivered $0.02 in dividends

  • Press Release https://tinyurl.com/2p8jbw5j


Very solid numbers from GeoDrill. The company continues to grow revenues and is extremely well positioned for the coming commodity "supercycle". We continue to look to add on any dips in share price. 


ImmunoPrecise Antibodies (TSX.V: IPA) Price - $4.67 Market Cap - $92M


A few positive take aways for us. "The company reports positive data indicating its recent IND-enabling animal studies do not show any observable acute adverse events, data which supports a highly positive safety profile for TATX-03 as a clinical product. In addition, results from the Food and Drug Administration (FDA) reviewed and recommended animal study protocols demonstrate that the in vivo pharmacokinetic profiles of the individual antibodies show no aberrations, and each antibody demonstrates a characteristic human IgG1 pharmacokinetic profile."


It appears the company has an open dialogue with the FDA which should help IPA understand what needs to be done to fast track their IND application.


Medexus Pharmaceuticals (TSX: MDP) Price - $3.14 Market Cap - $62.6M


Spectra Products (TSX.V: SSA) Price - $0.04 Market Cap - $3M


We believe this is the proper use of their cash.


Route1 Inc (TSX.V: ROI) Price - $0.18 Market Cap - $7M


We found this update lacking in any material updates.

 

Smallcap Discoveries


Select Watchlist

Char Technologies (TSX.V: YES) Price - $0.53 Market Cap - $38M


GBLT Corp (TSX.V: GBLT) Price - $0.09 Market Cap - $10M


Smart Employee Benefits (TSX.V: SEB) Price - $0.215 Market Cap - $36.8M


Ceapro (TSX.V: CZO) Price - $0.445 Market Cap - $34.5M


Cipher Pharmaceuticals (TSX: CPH) Price - $2.00 Market Cap - $53M


Circa Enterprises (TSX.V: CTO) Price - $1.44 Market Cap - $15M

  • Circa Reports Sales and Operating Results for the Fourth Quarter and Fiscal Year Ended December 31, 2021

  • Q4 Revenue of $9.9M

  • Q4 Net income of $743K

  • Q4 EBITDA of $1.7M

  • FY Revenue of $36.5M

  • FY Net income of $2M

  • FY EBITDA of $5.1M

  • Press Release https://tinyurl.com/nhkd7yck


Deveron Corp (TSX.V: FARM) Price - $0.63 Market Cap - $67M


Gatekeeper Systems (TSX.V: GSI) Price - $0.325 Market Cap - $29M


Memex (TSX.V: OEE) Price - $0.025 Market Cap - $3.7M


Nova Leap Health (TSX.V: NLH) Price - $0.60 Market Cap - $47.5M

  • Nova Leap Health Corp. Posts Record Revenues for Fourth Quarter and 2021 Annual Financial Results

  • Q4 Revenue of $5.91M

  • Q4 Adj. EBITDA loss of ($58K)

  • Q4 Net loss of ($726K)

  • FY Revenue of $21M

  • FY Net income of $1.76M

  • Press Release https://tinyurl.com/msewfnh6


Reko International Group (TSX.V: REKO) Price - $4.90 Market Cap - $29.5M


Snipp Interactive (TSX.V: SPN) Price - $0.175 Market Cap - $45M

 

Company Interviews & Updates

Upcoming

Topic: Katipult Technologies (TSX.V: FUND) Update with CEO Gord Breese

Time: Mar 16, 2022 11:00 AM Vancouver


Join Zoom Meeting

https://us02web.zoom.us/j/89610738848?pwd=WEd4L1B3cXZ0c25uRmhsR2trSlZTQT09


Topic: Minerva Intelligence (TSX.V: MVAI) Interview with CEO Scott Tillman

Time: Mar 17, 2022 01:15 PM Vancouver


Join Zoom Meeting

https://us02web.zoom.us/j/83102852711?pwd=SlRDcXdzN1ZGZ0I4MGtIdzdjV0pRZz09

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