Stock Tips in Niche Markets

My investment strategy is to find niche trading opportunities that outperform the market. This blog explores stock investments in a variety of different niche markets. I will provide my research and analyses, as well as stock updates and relevant articles. By James "The Investor" Olofson

[jamestheinvestor]

WildBrain (WLDBF)

3rd Quarter Stock:

WildBrain produces children’s cartoons and television shows that are distributed across multiple platforms. They control several children’s franchises including Peanuts, Sonic, Strawberry Shortcake, Go Dog Go, Chip and Potato and Teletubbies among others. In 2021 WildBrain announced a partnership with Apple TV for its Peanuts franchise. The Snoopy in Space series was one of Apple‘s most viewed shows in 2021. They’ve also created the Snoopy Show and a series of holiday specials. This partnership will generate significant revenue for WildBrain. In 2021, WildBrain also announced they were partnering with Netflix and Sega to create a new series based on Sonic the Hedgedog. More recently WildBrain announced a partnership with HBO Max where they are producing Degrassi: The Next Generation. WildBrain also owns the WildBrain Spark network which is broadcast on YouTube. WildBrain Spark has over 200,000 videos under management and generates approximately 4 billion views per month. WildBrain is able to sell advertising on this network to companies that sell children’s products such as toy companies and cereal companies. In addition, other companies with children’s brands have hired WildBrain to partner with them to develop new content. For example, WildBrain partnered with Universal Studios to create content based on the Woody Woodpecker franchise. Finally, WildBrain is able to license the programming it creates to companies that create consumer products based on these franchises. These include toys, school supplies, food, clothing and other products. WildBrain announced third-quarter earnings in May. Revenue grew 27% over the prior year and they had net income of $21.3 million versus a loss of $26.5 million the prior year. Free cash flow was $8.1 million versus negative $3.3 million the prior year. WildBrain is currently trading at $2.29 per share. In February the stock was selling at close to $3 per share. I believe that WildBrain has significant momentum and will be able to continue to grow revenue with its valuable content and multiple revenue streams.

[jamestheinvestor]

Centrus Energy Corporation (LEU).

4th Quarter Stock:

Centrus provides nuclear fuel and services for the nuclear power industry. They provide utilities with reliable sources of fuel to help them meet the need for clean, carbon free electricity. Centrus is also advancing the next generation of centrifuge technologies. Centrus is a leader in producing high-assay low enriched uranium (HALEU) fuel. HALEU is a next generation form of nuclear power that is cleaner and more efficient than other types of nuclear fuel. It reduces the amount of nuclear waste by 80%. In November 2021 centrus stock was trading at almost $89 per share. Today it trades at $31 per share. The decline in the share price was due to the fact that Centris’s fourth quarter  earnings were inflated by a one time claim settlement as well as the fact that their supply of uranium might be disrupted due to the war between Russia and Ukraine. As the world shifts from reliance on fossil fuels toward green energy, nuclear power is going to gain in importance. The ability to create clean nuclear power will also enable countries to no longer be dependent on foreign energy sources. The Biden administration has said that it sees nuclear energy as an important source of carbon free power in the future. Centrus recently reported that in 2021 it strengthened its balance sheet by retiring all of its outstanding preferred stock, decreasing its liabilities and increasing its cash position to $194 million. Earnings increased 222% in 2021 versus 2020. As the world continues to focus on global warming, I believe that Centris will see significant growth as a provider of carbon free energy.

[jamestheinvestor]

SU (Suncor Energy)

Stock #4: SU: NYSE - Founded 1919; Initial Public Offering 1992 

2nd QUARTER 2022

Suncor Energy (SU) is a stock that has recently skyrocketed in value. When I first started investing in SU in late December 2021, it was valued at approximately $23 per share. It is now valued at a shocking $39.37 per share. This is impressive because Wall Street has been heading downhill in 2022, with global events like the war between Ukraine and Russia, continuing problems (especially in China) with the coronavirus, etc. This has raised concerns with inflation and interest rates, causing the S&P 500 to decrease 15.9% in 2022. 

SU has exceeded expectations and has not followed the trend of the global stock market due to the following:

1. The war in Ukraine. More gas and energy is needed and being used world wide, raising the oil prices to values significantly greater than previous years. 

2. SU owns the most gas stations in Canada and holds an expensive refinery in Colorado.

3. SU has been able to cooperate with other major gas and oil competitors, such as IMO, SHI and CNOOC, making the entire industry of gas and oil much stronger.

Also, it is arguable that, despite its growth, SU is still undervalued as a whole. For example, it has the same amount of growth as in 2018, but the stock price is less due to the interest rates that are trending higher and higher in 2022. 

Something that SU owners should fear is that SU is very vulnerable to the swing of oil prices in comparison to other companies. In 2020, SU had four net quarter losses due to the low oil prices that were in commission that year, thereby making it vulnerable in the future if the oil market prices decreased. This could very well happen overtime with governments trying to incentivize their citizens to use electric products in an attempt to lessen global warming. However, the demand for oil is very high currently and most likely will be for at least a few more years. 

Taking into consideration all of the factors of SU as a whole and the state of the global economy currently. I think that SU will continue to rise for a few more months due to its sustained growth as a business over the last six months. 

SUNCOR ENERGY STOCK PRICE (US $): PAST 5 YRS THROUGH JUNE 2022

PAST STOCK RECOMMENDATIONS THROUGH AUGUST 2021 - JUNE 2022:

                                    IBRX STOCK PRICE (US $)

                                       CVGI STOCK PRICE (US $)

                                    PLUG STOCK PRICE (US $)

[jamestheinvestor]

IMMUNITYBIO (IBRX)

Stock #3: IBRX: NASDAQ - Founded 2014 1st QUARTER 2022

ImmunityBio is a company that develops immunotherapy drugs to treat various cancers and infectious diseases. They also have a COVID-19 vaccine they are working on. IBRX has a pipeline of 13 different drugs that are in various stages of development. These drugs treat pancreatic cancer, lung cancer, bladder cancer, breast cancer and head and neck cancer. In addition, they are developing drugs to treat HIV. IBRX is working on several COVID-19 vaccine candidates that will be taken in pill form or as a nasal spray which will dramatically reduce the cost and logistics required for current vaccines that are given by injection allowing the vaccine to be given to people throughout the world. The vaccines are currently undergoing testing in the United States, South Africa and Botswana. IBRX appears to have a very promising treatment for bladder cancer that could be approved by the FDA next year. IBRX recently secured $300 million of new financing. This should allow them to stop issuing additional shares which has negatively affected the share price. IBRX has traded as high as $45 per share over the past year. It is currently trading at just over $6 per share. I believe that this stock is undervalued given the potential for its many drug candidates.

IBRX STOCK PRICE (US$): PAST 5 YEARS THROUGH MARCH 2022

PAST STOCK RECOMMENDATIONS (US$): AUGUST 2021 - MARCH 2022

CVGI STOCK PRICE (US$)

PLUG STOCK PRICE (US$)

[jamestheinvestor]

Commercial Vehicle Group Inc. (CVGI): Part 2

4th QUARTER 2021

In the 3rd quarter 2021, CVGI recorded revenues of almost $240 million, 27.7% higher than the 3rd quarter of 2020. EBITDA was up 7% over the prior year and net income increased from $4.2 million to $7.5 million. Because of supply chain issues and inflationary pressures, it was a challenging quarter for CVGI. These issues impacted their profit margin and their ability to manufacture trucks on a timely basis. Notwithstanding these challenges, CVGI performed well as they were able to control costs. They were also able to refinance their debt and lower their interest expense by $3.9 million. They have continued their transition from manufacturing for diesel trucks to electric vehicles. Revenue from its electrical segment increased 35.6%. They have 236 new programs with 33 new customers for electric vehicle manufacturing. Electric vehicles represent 68% of their new business. In addition, CVG’s warehouse automation business continues to grow and the company is projecting $150 million in sales for this group in 2021. There is a record backlog for trucks and other commercial vehicles which should allow CVG to continue to grow its earnings. In addition, the continued explosion of e-commerce will create increased demand for warehouse automation. It is expected that supply chain issues will moderate over the next 12 months. As a result, CVG should continue to perform well.

CVGI STOCK PRICE (US$): PAST 5 YEARS THROUGH DEC 2021

[jamestheinvestor]

Plug Power (PLUG): Part 2

4th QUARTER 2021

Since I last wrote about Plug Power in Q3 of this year, the stock price increased from $27/share to almost $45/share in November. Since then, it has fallen to just under $29/share. I believe some of this has to do with the Build Back Better legislation not being passed by Congress. However, as the world continues to move away from fossil fuels, I believe that Plug Power will benefit as it becomes a major producer of hydrogen energy. The attached interview with Colin Rush at Oppenheimer further discusses this. It is also worth noting that, in November 2021, Morgan Stanley increased its price target on Plug Power to $65 per share, saying it is “one of the best positioned companies in the hydrogen economy.” 

https://www.cnbc.com/video/2021/12/21/plug-power-execution-going-to-spur-growth-says-oppenheimers-rusch.html

https://www.thestreet.com/investing/plug-power-stock-surges-on-morgan-stanley-upgrade-to-overweight: PLUG stock climbed in mid-October after Morgan Stanley analysts upgraded the hydrogen-fuel-cell developer to overweight from equal weight and boosted their price target to $40 from $35.

PLUG STOCK PRICE (US$): PAST 5 YEARS THROUGH DEC 2021

[jamestheinvestor]

Commercial Vehicle Group (CVGI)

3rd QUARTER 2021

Stock #2: CVGI: NASDAQ - Founded 2000

Commercial Vehicle Group is “a leading supplier of warehouse automation and robotic assemblies.” They are a global provider of: (a) components and assemblies for global vehicle companies, (b) aftermarket products for vehicle fleet owners, and (c) mechanical assemblies for warehouse automation. They manufacture parts for various types of vehicles, installations, warehousing, and specialize in trucks.

CVGI’s business was hit hard in the first half of 2020, and improved in the second half of 2020. Overall revenue declined 20% in 2020.

Over the past year, CVGI’s share price has increased from about $4.50 to about $10.75 per share, despite the pandemic negatively affecting its business. The pandemic has had a major negative impact on this company because of a “severe disruption” in producing commercial vehicles.

What makes CVGI an interesting and upcoming stock?

CVGI has recognized that they need to adapt to the future by investing in higher return businesses. They have increased their focus on electronic vehicle manufacturing and warehouse automation, which results will benefit from the continued growth in ecommerce.

For Q2 2021, CVGI had record sales of $258 million. Warehouse automation increased 25% over the prior quarter. As a result of ecommerce deliveries, demand for trucks should grow and CVGI will likely gain more sales in this area in addition to warehouse automation. Also, with electric trucks now coming to the public, CVGI should look to make a jump since they specialize in truck manufacturing and are moving towards manufacturing electric vehicle components including electric trucks.

Cites: https://cvgrp.com/

CVGI STOCK PRICE (US$): PAST 5 YEARS THROUGH SEPT 2021

[jamestheinvestor]

PLUG POWER (PLUG)

3rd QUARTER 2021

Stock #1: PLUG: NASDAQ - Founded 1997

PLUG provides alternative energy technology, which focuses on the design, development, commercialization, and manufacture of hydrogen and fuel cell systems used primarily for the material handling and stationary power markets.

1.  PLUG is the leader in hydrogen power and they are positioning themselves to be a leader in Green hydrogen power, which is hydrogen power created from renewable sources. Green Hydrogen Energy is a natural form of energy coming from sources like wind or solar. Because of this, it is able to produce CLEAN energy that can provide enough power for major uses of power such as manufacturing or transportation.

2. They supply hydrogen power to major manufacturing companies and distribution companies like Amazon, Home Depot, BMW, and Walmart (their products move 30% of all retail food and groceries). They also manufacture hydrogen fuel cells that can be used in trucks and cars instead of batteries. As well as hydrogen fueling stations and generators.

3. Companies want their product because it helps them deal with climate change and allows them to meet sustainability goals. Hydrogen power is like electricity in that it doesn’t have any emissions.

4. Their stock was up 973% in 2020 trading as high as $73 in January 2021. It is currently trading at $27.

5. The stock took a huge fall because they had to restate their earnings for 2019 and 2018. They hadn’t properly recorded their revenues and other items.

6. They had previously given stock warrants to Walmart, but they had not properly accounted for the cost of those warrants.

7. As the world becomes more concerned with reducing carbon emissions, more companies and governments will look to green hydrogen power as a solution. Plug Power is well-positioned to take advantage of that.

8. Because the stock has declined so much it’s a great opportunity for investors to take advantage of the shift to green hydrogen power.

9. Green Hydrogen Energy is a natural form of energy coming from sources like wind or solar. Because of this, it is able to produce CLEAN energy that can provide enough power for major uses of power such as manufacturing or transportation.

10. RBC has a price target of $42 for the stock which would be a 62% increase and Citi has a $35 price target!

Most Important Fact: 

Green Hydrogen Energy is less expensive than solar wind or natural gas, and its cost is expected to decline over time while President Biden increases production.

PLUG mainly focuses in North America and Europe

PLUG offers Gen Drive, a liquid hydrogen PEM (Proton Exchange Membrane) fuel cell system that provides power to material handling electric vehicles.

Conclusion:

PLUG and its great technological advancements could become a very effective source of energy for manufacturing, distribution, and transportation. 

I see this company as a long-term investment or hold and as they slowly find their way into shaping the future. Also, this company will most likely be recognized when governments of nations across the globe understand how much of threat pollution and global warming are to our society. 

I would predict for this to start happening in anywhere from 4-7 years. 

https://news.climate.columbia.edu/2021/01/07/need-green-hydrogen/

PLUG STOCK PRICE (US$): PAST 5 YEARS THROUGH SEPTEMBER 2021