Category Archives: Investing

Stock Market Outlook: March Forecast

After big corona plays in March The Golden Investor continues to analyze the market to stay ahead of other investors. The Lakeland Industry (+100%) and Alpha Pro Tech (+750%) gains of last month provided some great back-up for other losses last week. Even gold stocks tanked after several stock markets saw their biggest losses in history. In today’s monthly outlook we discuss the current catalysts and developments on stock markets.

The first thing investors need to know is that the corona problems are just starting now. The biggest risk of the COVID-19 outbreak is not the sickness itself, but the impact it has on supply chains, especially out of China and South-East Asia. Companies all around the world are dependent of Chinese production and this production has been stopped or at least significantly decreased the last two months. Full production out of China is believed to still take a while. The damage is done already, inventories around the USA and Europe are starting to get empty. Many manufacturers face the problem that if they miss one part of their product, their whole manufacturing process faces a slowdown or even a stop. This is something we already saw in South Korea two weeks ago, where Hyundai closed a factory simply because of the lack of car parts coming out of China. This together with a threat of uncontrolled spread across the western world poses a huge problem for many companies. Airlines across the globe have seen sales go down tremendously. These same airlines provide many companies around the world with cargo. So if these airlines foresee big losses up ahead, the whole global economy faces losses.

The Trade War of Donald Trump has had one positive effect on the economy: many American companies already investigated and differentiated their supply chain and are slightly prepared on a Chinese extraction out of their supply chain. However, a standstill of Chinese production is not something companies are prepared on and many companies around the world will start to see disruptions in their manufacturing processes. Also tourism-dependent countries like Italy face a huge drop in tourism revenue which will severely hurt their economy.

Tuesday the FED made their biggest rate cut since 2008 to prevent the markets from tumbling down even further. Normally this would boost stock markets, but this time investors see it as sign that worse is up ahead. The Hong-Kong and Singaporean central bank already started to hand out so called “helicopter money”. The central bank of Hong-Kong handed out $1200 US-dollar to each person above 18-years old to salvage their economy. Furthermore, after the FED cut their interest rates from 1,5-1,75 percent to 1-1,25 percent the Hong-Kong central bank did the exact same thing. Both countries face the same downward trend, Hong-Kong was hit by the monthly long protests and now the coronavirus, while the USA saw manufacturing indices drop six months in a row and now face supply chain disruptions.

The Golden Investor thinks that worse is yet to come. A second wave of sell-offs is coming and nothing is safe, as investors seek liquidity and face margin calls even safe-haven assets like gold and silver aren’t safe. Last week gold dropped a big three percent after the Dow Jones lost more then 11 percent. The Golden Investors thinks a second sell-off in March is very likely and a financial crisis is inevitable. Many companies don’t even know where exactly all their supply comes from due to the very limited information they get from their suppliers. This is the exact same reason why companies and investors will be surprised by the impact this disruption will have. Along with the continuous spread of corona and empty guns of central banks a sell-off is inevitable and very likely the coming weeks. On the short term The Golden Investor stays bullish on Flow Traders (FLOW) which benefits from the increased volatility and big stock market drops. After this second sell-off it will become clear that nothing can be done by central banks. Gold will see a slight drop as stock markets plunge, before it exponentially increases in value as the best safe-haven on central bank policies. For now it is important to take a look at the gold price, if markets drop and gold starts to rally, it is time to step back in. For now gold is an as dangerous asset as other financial assets. The Golden Investor thinks that, starting from the end of March/beginning of April it will be time to go all-in on gold stocks.

Disclaimer: The Golden Investor is not a fortune-teller, be sure to make the right decisions in accordance to your own financial situation, this is not investment advise or anything like that.

Flow Traders (AEX:FLOW): Making Money On Volatility

Using high-frequency trading computers, the company carries out a huge number of transactions in milliseconds based on algorithms that are continuously calculated by computers. Flow Traders earns only a fraction per transaction, but with very large numbers this is very lucrative. Flow Traders portrays itself as a market maker and liquidity provider in the Exchange Traded Products market. In this way Flow Trader ensures that investors can always buy ETP’s, also when spread is high. That means that they continuously issue bid and ask prices. Flow Traders earns money in various ways. It benefits from the price differences between bid and ask prices, which investors are willing to trade in ETP’s or other financial instruments. Secondly, it makes a profit on the underlying or related financial instruments on which they hedge the resulting exposures. This results in a business plan which is highly benefiting from volatile times like we are currently in.

The company with a market cap of one billion euros is one of the biggest of its kind in Europe. The company has grown rapidly in the US in recent years and achieves an increasing share of its sales in that region. In addition, it is also active in Asia.

The corona virus has led financial markets to drop to yearly lows and is only expected to drop further. And remember: the higher the spike or the drop, the bigger the profit for Flow Traders. So either way Flow Traders is going to profit from the current trading environment. Only a slowly changing market is bad for Flow Traders, but several things will be huge catalyst in the nearby future which will result in volatility: Either further interference by central banks, or a corona vaccine will boost stock upwards again, or the corona spread will deteriorate and fear will increase at such rates that a financial crisis is upon us, but both scenarios are beneficial for Flow Traders.

The Golden Investor parks his wealth temporarily in their hands to stay safe, when gold stops dropping The Golden Investor will step into some low floating gold miners again. In this way The Golden Investor will benefit the best from the corona crisis and its aftermath. Right now investors sell all their assets, including gold for liquidity, but as the disastrous damage of this outbreak will come to light gold will gain again. For now it’s better to stay safe and step in later. Eventually gold will show a great safe haven on the long term, the current sell-off only shows how gold is a great liquid currency. It is very natural for a currency to drop in value as the economic engine slows down. But as investors will see, the decade long bad central bank policies will drive down the value of currencies, including the dollar. The debt based economy is only lasting because of quantitative easing measures, but it seems as if this phenomenon won’t last. For now The Golden Investor transfers part of its wealth to Flow Traders. The 1000% percent increase of Alpha Pro Tech the recent week provided a great step up for The Golden Investor to continue to make big plays.

Disclaimer: The writer of this article holds Flow Traders (FLOW.AS) stock, this article should not be interpreted as investment advice or anything like that.

Lakeland Industries Inc. (LAKE): Safe-Haven Corona Virus Hedge

Several countries have announced an export ban on medical face masks in the last few weeks. In this way they protect themselves for a potential spread between their own borders. To ensure an adequate domestic supply countries like Thailand, Taiwan, Kazakhstan, Iran and Jordan have banned the export of medical face masks. India has done the same thing, but removed some masks and gloves off the banned export list this week. However seeing the magnitude of the current acceleration of new cases across the globe this story seems far from over. Iran has gone from no cases to several deaths and a potential countrywide spread. Along with local spread in South-Korea, Italy and Japan it seems that demand for face masks will only increase in the coming months. Interesting note: today it was announced that an Israeli citizen who recently traveled to Iran got the virus, this suggest that at this moment human to human transmission has reached a point where the virus always is at least three steps ahead. Even the CDC raised their level of awareness and are afraid for local spread in the US soon.

“We’re not seeing community spread here in the United States, yet, but it’s very possible, even likely, that it may eventually happen”

CDC Director Immunization And Respiratory Diseases

Lakeland Industries is a perfect hedge for investors who want to play it safe the coming months. Lakeland Industries (LAKE) stock is actually relatively cheap at current prices, if an outbreak will occur in the USA this stock will soar while all others tank. This reverse effect is as big of risk if nothing occurs, as it is a great safe haven when hell breaks loose in Wall-Street. It seems that last week investor turned their scope to normal stocks and just wanted to gain on the latest all-time high rallies. This overshadowed the huge potential threat the corona outbreak still poses for the global economy. This week Apple announced it will miss its revenue forecast for the current quarter. This ended the optimistic view of investors after months of gains. The Golden Investor thinks this is only the beginning and investors need to be cautious for much more loses on regular stocks and need to start focusing on safe haven assets. Today gold went to 7-year highs hitting $1650 dollars, this is $150 dollars above the gold price in December, all gold stocks soared. This is exactly the reason The Golden Investor holds gold, to be safe against downturns like this. And with a decade of bad central bank policies this downturn could initiate a huge implosion on markets across the globe. A combination of gold and corona safe-haven assets like Lakeland Industries stock is the perfect hedge for investors to stay safe the coming months, and will potentially be very lucrative if this outbreak worsens.

Disclaimer: The writer of this article does not own Lakeland Industries Inc. (LAKE) stock, this article should not be interpreted as investment advice or anything like that.

Alpha Pro Tech (APT) Update: $10.4 Million Dollar In N-95 Face Masks Sales

Alpha Pro Tech is one of the few companies in the USA that produces face masks and protective gear against infections. In earlier reports The Golden Investor already emphasized that Alpha Pro Tech could see a surge in sales due to the COVID-19 outbreak, and unlike many other dubbed corona stocks Alpha Pro Tech actually sees an increase in revenue. The CEO of Alpha Pro Tech reported a huge increase in sales in the last two weeks. A further increase in production capacity will only further increase the number of sales coming weeks and months as the corona virus continues to spread. Alpha Pro Tech reported having a big backlog in orders as sales are continuously coming in everyday.

“Since January 27th, we have received orders for our proprietary N-95 Particulate Respirator face mask representing roughly 24 times the revenue that we have recorded from sales of this product for each year since 2016.”

Alpha Pro Tech CEO Llyod Hoffman

The Golden Investor reached out to Alpha Pro Tech for an update on their sales yesterday, this press release answered our questions and confirmed our expectations. Furthermore, The Golden Investor learned that a common stock offering is currently not on the mind of Alpha Pro Tech: “We are not raising any capital or doing a stock offering at this time.”. In combination with their buy backs and good relationship with investors recent years this seems to look very good for investors. With a lower volume on the stock market higher gains than at the H1N1 outbreak in 2009 are very much a possibility. All-time highs could be reached as the virus found itself a new place to spread, Japan reported 4 new cases with unknown source of infection today, of which one died already and one taxi driver in the biggest city of the world, Tokyo. In the coming months Alpha Pro Tech stock will soar like never before, be safe and add some Alpha Pro Tech stock to your portfolio and stay ahead of the news.

Disclaimer: The writer of this article holds Alpha Pro Tech (APT) stock, this article should not be interpreted as investment advice or anything like that.

Gold Update: Investing On Further Rate Cuts By Central Banks And Possible Chinese Implosion

The European Central Bank (ECB) monitors whether the new corona virus is damaging the European economy, said ECB President Christine Lagarde on Wednesday. In doing so, she seems to indicate that the ECB is now looking at the situation, and is willing to respond with monetary steps if the situation so requires. Several Asian central banks have made similar statements or even announced measures. The FED is also expected to cut rates again this year if the corona slowdown hurts the American economy, even though they announced no more rate cuts in 2020 after the last FED meeting back in January. The Golden Investor expects a rate cut of the FED if the outbreak is not contained. The Golden Investor is long on gold and suggest buying mid and low cap gold miners stock to speculate on a global slowdown of the economy and further Central Bank expansions.

“Although the threat of a trade war between the United States and China seems to have disappeared, the corona virus creates new uncertainty”

Head of ECB – Christine Lagarde

Corona Outbreak Is Hurting Companies Around The World

Many companies report a stop in new orders from their Chinese companies and are facing troubles exporting their goods to China. While several countries and airlines have been cutting passenger flights to China since the outbreak of the virus, consequently also the amount of cargo that normally goes along with those flights is cut. With this bottleneck being tightened by every cut of flights to China trade is tightened too. In comparison, the SARS outbreak in 2002/2003 caused a GDP slowdown of -1 percent of Chinese GDP, the difference is that since then China’s GDP quadrupled to a stunning 17% of the world GDP. The current slowdown has already trammeled Hyundai’s car production in South Korea due to a shortage of Chinese produced car parts. And Hyundai is not the only company facing huge consequences of the Chinese slowdown, many companies are reliant on Chinese manufactured products and materials. In response to a possible dangerous slowdown of the Chinese economy the Chinese government has already pumped $173 billion US dollars in their financial systems to avert a crisis. Furthermore they will cut tariffs imposed on US goods with 50% lowering the tariffs with $75 billion US dollars. If this will be enough is not sure, further developments of the outbreak will tell us more.

With Tianjin starting to restrict the entry and exit of people from residential compounds and villages, Beijing taking measures and a whole providence on lockdown, the economic burden deepens for China. And as seconds, minutes and hours pass, the number of infected people increases and the amount of critical cases soars everyday to concerning heights. Moreover several new cases show that people contract the virus locally in other countries in South-East Asia, like Thailand and Singapore. Along with this there are multiple reports of people showing symptoms and initially testing negative only to be tested positive for the virus as symptoms worsen or even worse, after being sent home. The Golden Investor knows this was the case in the third Philippine case and several similar reports show the current inaccuracy of corona testing kits.

Unhappy Chinese Citizens

Today one of the first doctors, Dr Li Wenliang who raised concerns about the new corona virus has sadly passed away. This fueled the growing anger among Chinese citizens with the current Chinese government. Beijing’s worst fears are slowly becoming true, while WeChat is full of people using the hashtag: “# 我想要言论自由” or in English “I want freedom of speech”. This growing anger can possibly lead to civil unrest at least and hopefully will lead to a more transparent China in the future. China has tried to make the virus look as bad as is possible, but many Chinese are pointing their anger at the lack of control and transparency by the Chinese government. With the worsening of the outbreak every day Xi Jinping’s power over its citizens seems to flow away, although he currently still has enough power to be able to avert a crisis. A Chinese recession following the outbreak could potentially worsen the anger and create unrest among residents who are unhappy about the Chinese legislation. The Golden Investor continues to revise its portfolio to be able to endure a major global slowdown.

Disclaimer: The writer of this article owns gold stock, this article shouldn’t be interpreted as investment advice or anything like that.

Stock Market Outlook: February Forecast

In volatile times it is extremely hard and not wise to give forecasts. The Golden Investor will brush the condensed goggles of investors to look at the most important factors determining the outlook for this month. The problem with the recent Tesla’s skyrocketing is that the fundamental base for profit outlook just isn’t there. Add the current slowdown in China, where Tesla (TSLA) has a megafactory in Shanghai, and the outlook for Tesla (TSLA) is looking not that bright at all. Stay away from Tesla stock at current levels.

While China’s corona numbers start to look growing at a lower pace. The most corona fears in the US have declined immensely this week, investors seem not to care about the worsening situation in China. China, the country with tens of thousands of Uighurs in holocaust-like work camps, the country which steals IP-idea’s across the globe, the country which is known for its silencing of whistle-blowers, you get the idea. The Golden Investor thinks the corona spread is far worse than the Chinese authorities are reporting. Today the first inter-country infection without a link to China was reported, a woman who traveled to Thailand and returned to South Korea contracted the corona virus. More concerning: this morning a case in Japan was confirmed, after getting the chills this thirty women from Wuhan got tested and was tested negative. Three days later her symptoms got worse and she returned to the hospital, this time she was tested positive. Today a WHO expert told that wearing face masks is not as effective as washing your hands, so The Golden Investor suggests a more broad corona portfolio with medical equipment suppliers (Lakeland Industries & Allied Healthcare Products) and pharma stocks doing research on corona (Inovio Pharmaceuticals).

On the short term oil prices will further decline as corona spreads among the world. That’s why it is smart to temporarily stay off gold related stocks and wait until corona worsens until we reach a point where a significant global slowdown is certain. The Golden Investor has taken some hits after this weeks cooldown of corona related stocks, but as the disease spreads among the world it is time to wait on the first China-unrelated death in the US for investors to get their fear back. Note that corona has been spreading since December and only recently became a global disease, moreover healthcare and disease-experts are almost sure a pandemic is just around the corner. If the situation worsens and corona stocks will skyrocket again corona investors should transfer their assets to more defensive and gold intensive portfolios to be safe against the downturn the global economy will see in the corona aftermath.

Next week FDA approval will likely occur for Agile Therapeutics (AGRX) so be sure to hold some Agile stocks. Agile has seen a rise in stock price since their approval date was shifted to next week. At the latest on February 16th the Agile approval or denial for Twirla will take place. The company is heavily dependent on the approval of this new contraceptive adhesive plaster, an approval would mean extremely high gains, if approval is not given by the FDA then investors will be hit hard. This is the high risk, high reward kind of decision investors need to make.

Disclaimer: The Golden Investor is not a fortune-teller, be sure to make the right decisions in accordance to your own financial situation, this is not investment advise or anything like that.

Agile Therapeutics (AGRX): Twirla® FDA-Approval Will Boost Stock Upwards

AG200-15 or Twirla®, Agile’s lead product candidate, is an once-a-week hormonal contraceptive patch. It contains the hormones levonorgestrel and ethinyl estradiol. These ingredients have a well-understood efficacy and safety profile in oral contraceptives. Twirla is designed to deliver both hormones over a seven-day period. The patch is applied once weekly for three weeks, followed by a week without a patch. This once-weekly application makes it very convenient for women, daily options like contraceptive pill tend to be forgotten with the known consequences as a result. The contraceptive patch keeps the target levels of active ingredients flow steadily through the skin. The proprietary patch design consists of 5 unique layers and is less than 1 mm thin.

Figure 1 – Skinfusion Technology

The innermost layer of the patch contains the active ingredients, adhesives, and inactive ingredients that improve delivery of the active ingredients. This is called the Active Matrix. Two outer layers cover the Active Matrix and contain additional adhesives, but no other active or inactive ingredients. These layers, called the Peripheral Adhesive System, create a ring of adhesive around the edge of the patch. The outer adhesive ring is designed to prevent accumulation of dirt from coming under the patch. A barrier layer separates the Active Matrix from the Peripheral Adhesive System, preventing migration of ingredients. The outermost layer of the patch is a soft, flexible fabric designed to provide maximum comfort.¹

The Golden Investor thinks this product will be a really good alternative to other more radical contraceptives. If Agile Therapeutics will get Twirla approval it will be able to grow the company and start producing in Q4 of 2020. FDA approval is very likely since the Advisory Committee voted 14-1 for approval of the drug. Main concerns were reduced effectiveness in overweight women. So the FDA could put a side note on the approval which would mean a smaller potential client base. And while most approvals with an extended approval date get this approval, there’s still a potentially disastrous possibility of denial. This would slash the stock down to penny range again. However since the BRUDAC agreed that that the benefits of Twirla in the prevention of pregnancy outweigh the risks to support approval, The Golden Investor is bullish on this stock, approval could come as soon as the 14th of February so make sure to outweigh the risks and get on the Agile train or stay behind.

Disclaimer: The writer of this article holds Agile Therapeutics (AGRX) stock, this article should not be interpreted as investment advice or anything like that.

Bibliography

1) https://agiletherapeutics.com/skinfusion/

Gold Safe-Haven Hedge Investment To Chinese and Global Economic Aftermath Of The Wuhan Chaos

Although The Golden Investor is known for its preference of holding gold stock due to bad central bank policy for last decade. Gold is the perfect hedge against volatility on the stock market coming weeks. At the start of this Wuhan epidemic oil prices tumbled, investors reacted on a possible setback of demand by China. As oil prices drop, inflation tends to drop too, and since gold is used as hedge against inflation gold prices dropped too. But after it became clear that this situation would last longer than was clear at first sight, a comparable or even worse SARS scenario is likely to happen. In the graph below by the Institute of Medicine (US) shows the economic impact of the 2002 SARS outbreak.

The Golden Investor is expecting a major outbreak with more than 100.000 infected people occurring within weeks. Looking at the current trend this is inevitable, stock markets are fearful but underestimate the explosive bomb which this outbreak lays under the already slowing down economy. The current trade war tariffs were already pressuring the Chinese economy and with China being more important than ever in the global economy a setback like this means serious trouble for the global economy.

Before the outbreak influential and big investors like Ray Dalio were already pointing at a possible setback due to central bank policy last decade. His advice, hold a part of your assets in gold. Since mid-december gold has risen almost $100 dollars from $1480 to $1580 with a spike at $1611 due to the Middle East attack and its aftermath. This all adds up to a list of things which will only boost gold prices and stocks in the coming months. E.g.:Trade War tarrifs, possible further Iran actions on oil targets (or worse), ultra low interest rates, central banks without ammunition, temporary Chinese economic (and possible global) setback, high real estate prices and its consequences on consumer demand, Deutsche Bank troubles, this all has a boosting effect on gold prices. The greater the fear, the greater the gold bull case.

Bibliography

1) Knobler S, Mahmoud A, Lemon S, et al. (2004). Learning from SARS: Preparing for the Next Disease Outbreak: Workshop Summary. Institute of Medicine (US) Forum on Microbial Threats; Washington (DC). National Academies Press (US).

Alpha Pro Tech (APT): Wuhan Virus Money Making Stock, Investing In Further Corona Spread

Where at first the spread of the corona virus looked minor, the virus has now reached all provinces of China. The amount of people infected continues to rise and is most certainly higher than the reports suggest. In Wuhan not even all sick people can get tested anymore and only patients with the most need of care get help. And even if all sick people could get tested, several reports suggest the virus can already be spread during the incubation period. This very alarming message means that people can unknowingly infect others without being sick yet. New reports based on the first infections suggest an incubation period of 4-7 days. The Imperial College London estimates that, on average, each case infected 2.6 others with uncertainty ranging from 1.5 to 3.5. This implies that control measures need to block well over 60% of transmission to be effective in controlling the outbreak.

The Golden Investor is very critical on the way China is governed, but a totalitarian state like China does not have western bureaucracy problems when taking measures. Hospitals are being built, multiple cities are on full lockdown and people stay away from the streets, however it looks like further spread is inevitable. The Chinese New Year gatherings will only accelerate the spread and it will be very interesting to see how many people will become infected the coming days. A Hong-Kong expert even says that the amount of people infected is going to double every six days. The graph below based on early estimates by the Imperial College London doesn’t look very comforting.

Figure 1 – Potential exponential spread of the corona virus

Several biotech stocks have been thriving on the news. The Golden Investor does not like these kind of speculative investments on biotech stocks. Some of these stocks have not even started human clinical trials on their products yet but still have been skyrocketing. Investing in these kind of biotech stocks now is a very risky investment, because those stocks don’t have intrinsic value beyond speculations. Manufacturers of protective gear against the spread of infections have also been thriving, although these stocks are undoubtedly overbought too at the moment, these stocks do have physical sales increasing at an unknown rate. Chinese people are very used to wear protective gear, even when having normal fevers and colds Chinese wear face masks. With the spread accelerating and officials suggesting a possible mutation of the virus the sales of these caps will rise. Online prices of protective gear have gone through the roof. At current levels the stock price of these manufacturers is still far below to the prices when MERS and Ebola hit the news.

Alpha Pro Tech Ltd (APT) is one of these manufacturers and a relatively small cap stock of around thirty million dollars before the corona virus spread, this stock has risen over 150% at the time of writing. Previous virus spreads suggest a potential further rise of the stock could throw this stock as high as 500% higher. Now it seems this spread is bigger than other outbreaks ever suggesting even higher price could be reached. The Golden Investor normally does not do these kind of speculative trades but looking at the numbers and predictions the continuing spread is imminent. According to several reports the Chinese government has starting buying up protective gear in other countries at high rates to prevent the virus from spreading, this will only boost Alpha Pro Tech stock up more. Alpha Pro Tech’s balance sheet looks decent, so no sudden public offerings diluting the stock price can be expected soon. And with other investments diving in the red, this is a perfect short term speculative hedge.

Disclaimer: The writer of this article holds Alpha Pro Tech (APT) stock, this article should not be interpreted as investment advice or anything like that.

Bibliography

1) Imai, N., Cori, A., Dorigatti, I., Baguelin, M., Donnelly, C. A., Riley, S., & Neil, M. (2019). Report 3 : Transmissibility of 2019-nCoV. 2–6.

NanoXplore (CVE:GRA): Graphene Manufacturer Scaling Up Production

With a market capitalization of around $120 million Canadian dollars NanoXplore is a relatively big graphene company, but with a lot of potential. Their products can be used in pipes for increasing durability and strength, in tires as replacement for carbon black leading to weight reduction and costs savings. And there are many more applications for their sustainable products including in textiles, packaging, electronics, coatings and several other goods and equipment.

High Levels Of R&D-Spending Make It A Risky But Rewarding Stock

With game-changing production methods in this highly R&D-intensive sector NanoXplore is one of the first companies to scale up their production of graphene to industrial scales. This year NanoXplore started with the installation and set-up of their new high scale graphene production facility with the expectation to start producing in the second quarter of this year. NanoXplore’s main share holder is Martinrea, a fellow Canadian auto part manufacturer with whom NanoXplore has an intense working relationship. This will create a precedent for potential future buyers to physically see the improvement graphene enhanced products can bring. With a revenue of four billion Canadian dollars a year Martinrea is a significant catalyst for further growth of NanoXplore.

Graphene Products Are The Future

The widely-ranged possible applications of graphene will make it easy for NanoXplore to attract attention of potential buyers for their products. Most applications of GrapheneBlack and other NanoXplore products involve adding a small amount of this material as additive or mixture to improve certain characteristics of other materials. From extra strength, weight reduction, increasing durability, to improvement of resistance and shielding, graphene can do it all. And with NanoXplore’s main product GrapheneBlack in combination with their new high scale and low costs production facility NanoXplore will challenge carbon fiber and carbon black producers with a much better product. The introduction of NanoXplore’s new facility causes an interesting shift in manufacturing possibilities and with ongoing R&D more graphene-enhanced products and applications will presumably be added in their product portfolio. The biggest challenge for first mover NanoXplore will be competition of other graphene suppliers. But as the first industry scale supplier of graphene products NanoXplore makes an important step ahead of others.

NanoXplore Could See Large Growth On The Short Term

If the new facility will run accordingly The Golden Investor expects the business to grow exponentially in the next decade. With the potential to become a billion dollar company, the only thing NanoXplore has to do is staying more efficient than others, while continuing to increase supply where demand is created. With an exceptionally smart and well-educated team, several PhD-graduates and a motivated workforce, NanoXplore holds great growth potential to create and dominate a market created by themselves.

Disclaimer: The writer of this article holds NanoXplore (CVE:GRA) stock, this article should not be interpreted as investment advice or anything like that.

Cellnex Telecom (BME:CLNX): Endogenous Growth Faster Than 5G

Many companies benefit from having the fastest internet, from flash-traders to data centers and media companies. Not only is 5G much faster than 4G networks, it has potential to offer a network for smart solutions of the future. Where the world seems to steer into a path of full interconnection between humans and devices, the Internet of Things seems not far away with the introduction of 5G. Humans are driven by their urge of efficiency to lose less time possible living life at the fullest. This drive to efficiency in combination with the proceeds by being the fastest leads to the ultimate cocktail for the networking business to be profitable for many years. The internet becomes more important for society every year, just think of a week in which you can’t use the internet at all. Our internet dependence is greater than ever and Cellnex Telecom is profiting from this dependence.

Since their IPO in 2015 the company has grown to a leader on the Europese operator market, with an aggressive take-over strategy Cellnex is very aware of the fact that being the main operator on the market is a extremely powerful position. Recent months it has been very actively acquiring tower facilities and sites. Cellnex is the leading operator in many Europese countries. The company is now based Italy, Netherlands, United Kingdom, France, Switzerland, Ireland, Portugal and Spain. They are likely to try to enter many more countries seeing their aggressive crusade on the telecom market lately.

Figure 1 – Cellnex Telecom’s Aggressive Strategy

With a rise in share-price of almost 100 percent last year the company continues to grow in 2020. It reminds us strongly of the M&A-strategy of Valeant Pharmaceuticals a couple of years ago which resulted in a big deception due to their naive business model. However this acquiring-spree by Cellnex will be valuable for decades, since the communication market grows at an accelerating pace. A monopolistic position, which Cellnex Telecom seems to be heading to will provide ongoing cash flows for many years and beyond.

Disclaimer: The writer of this article does not own Cellnex Telecom (BME: CLNX) stock, this article should not be interpreted as investment advice or anything like that.

AIXTRON SE (ETR:AIXA): A High-Tech Company Weighed Down By The Trade War

AIXTRON makes very specialized and high-tech equipment for the production of other high-tech products: AIXTRON lasers are used in 3D sensing for virtual and augmented reality in modern consumer electronics or as light sources for optical data transfer in IT and telecommunications. Developments such as autonomous driving will not be possible without laser, chips and LED’s which can be made with AIXTRON equipment. Moreover AIXTRON equipment is also used to make components for the power electrics industry, think of electric vehicles, charging stations and wind turbines.

However their main driver of revenue is the production of equipment for the metalorganic chemical vapor deposition of materials (MOCVD), which is used for the production of thin films which are needed in semiconductors. Semiconductors can have greater electrical conductivity than insulators but less than normal conductors, and are mostly used as a base material for microchips and other electronic devices. This is the main reason why Frits van Hout, Executive Vice President of ASML, is a member of the supervisory board of AIXTRON SE. While ASML has been thriving and has seen an increase in growth, AIXTRON has had troubles to really take off. Their stock has been slightly volatile last year, although contained by support around a price of 7.5 and resistance at 10.5, their share price is not a steady factor.

OLED Opportunity

In 2017 Aixtron spun-off its OLED division to a new daughter-company named APEVA. With OVPD technology, AIXTRON has a process that can be used to produce OLED’s.

The OLED-market is emerging and is being boosted by multi-billion dollar players such as LG and Samsung. The display division of Samsung will invest $11 billion in QD-OLED facilities, to drastically reduce OLED panel production costs. This will offer a great opportunity for AIXTRON to gain even more market share in particularly Asia. With 70% of their revenue coming from Asia in the first nine months of 2019 (see figure 1), AIXTRON saw their European and American revenue drop drastically and seems particularly vulnerable for troubles in Asia. The Golden Investor is timorous on investing in Asia-dependent companies; where the financial crisis was partly resolved by an increase in orders from emerging markets in (South-Eastern) Asia. Now for the first time ever Asians take on significantly more debt, in emerging markets too. With increasing global trade uncertainty this could be a possible Achilles-heel for companies like AIXTRON.

Figure 1 – Revenue by Region – 9-Months-Report 2019, AIXTRON SE

With the trade war still not resolved the global economy and especially the Chinese economy has shown signs of slight weakness. And since China is the main driver of the world economy, this trade war can hurt the growth of new innovative technologies and thus hurt AIXTRON. However AIXTRON has good fundamentals to overcome possible setbacks. With a good cash position and a relatively low debt level AIXTRON stock seems a safe investment. N.B. AIXTRON is not known for paying dividends over their stock. While there finally seems to be a Phase I deal in the making The Golden Investor remains skeptical on further deals and with most tariffs still not off the table the manufacturing industry will need to take possible setbacks into account. Lets hope for the best in the upcoming elections, for now AIXTRON can be a good diversification for every portfolio with their future-proof and R&D-intense technologies.

Disclaimer: The writer of this article does not own AIXTRON SE (ETR:AIXA) stock, this article should not be interpreted as investment advice or anything like that.