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Nasdaq Suffers Worst Week In 7 Months; Bonds, Gold, Crypto, & The Dollar Higher

Nasdaq Suffers Worst Week In 7 Months; Bonds, Gold, Crypto, & The Dollar Higher

Markets were weak overnight, extending yesterday’s ugliness…

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This article was originally published by Zero Hedge

Nasdaq Suffers Worst Week In 7 Months; Bonds, Gold, Crypto, & The Dollar Higher

Markets were weak overnight, extending yesterday’s ugliness to close the quarter, but the Merck headlines of a COVID ‘pill’ sent stocks surging into the green ahead of the open. Those gains were quickly removed when Fitch warned that political wrangling over the U.S. debt limit could hurt the country’s credit rating. That was quickly ignored and dip-buyes dived in to lift stocks green (and squeeze shorts)…

Today’s Month/Quarter-open flows ramped stocks pretty much all day and lifted Small Caps green for the week (but that euphoria faded and left it red too), Nasdaq was the biggest laggard still. This was Nasdaq’s worst week since February…

Quite a ride this week…

Small Caps surged lifted them up to the 50DMA (but failed to hold) after bouncing off the 200DMA…

An ugly week overall for the “most shorted” stocks but today’s big bounce was all squeeze-based…

Source: Bloomberg

An ugly week for growth stocks (worst week since February) but despite today’s broad market ramp, value stocks could not get back to even…

Source: Bloomberg

Treasuries were mixed on the week after a rollercoaster ride, offered into Wednesday and bid Thursday and Friday. By the end of the week, 2Y and 5Y yields were lower on the week while the long-end was up around 5bps…

Source: Bloomberg

The 10Y Yield ended back below 1.50%…

Source: Bloomberg

The Dollar ended the week higher (for the 4th straight week), but we note that the intraday regime shifted on Thursday – before that there had been active dollar buying during the European session, Thursday and Friday have seen that reverse with active dollar selling during that session…

Source: Bloomberg

Cryptos surged higher today to end the week notably higher, after an ugly start to the week. Bitcoin and Ethereum led the jump, both up around 12%

Source: Bloomberg

Bitcoin surged back above $48k today after grinding away at the ‘China Ban’ spike lows for a week or so…

Source: Bloomberg

On the week, copper was lower, crude outperformed and precious metals managed modest gains (which is impressive given the dollar’s surge)…

Source: Bloomberg

Finally, this can’t be good – US Sovereign risk at its highest since the 2015 debt ceiling debacle…

Source: Bloomberg

Catalyst anyone?

Source: Bloomberg

But hey, what could go wrong? Joe and Nancy have got this!

Tyler Durden
Fri, 10/01/2021 – 16:00

Author: Tyler Durden

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Economics

Exploration Companies Investors Should Take a Look at

Source: Adrian Day for Streetwise Reports   10/26/2021

Adrian Day of Global Analyst discusses recent developments at several exploration companies…

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Source: Adrian Day for Streetwise Reports   10/26/2021

Adrian Day of Global Analyst discusses recent developments at several exploration companies and explains why he believes share prices may be lower before the end of the year.

As gold approaches $1,800 again, the market increasingly doubts the Fed’s “transitory inflation” narrative. At the same time, as we approach the end of the year, investors are right to worry about potential tax-loss selling, given that gold stocks are about the only place investors have losses this year. So we want exposure, and new investors should certainly do some buying at these levels. But equally, it would be a good idea to preserve some purchasing power for year-end buys.

Lots of Activity at Well-Funded Midland

Midland Exploration Inc. (MD:TSX.V) (0.58) announced a new gold mineralization zone at its Casault property in the Detour Belt, under option to Wallbridge, located west of that company’s flagship Fenelon project. The companies have just completed a 5,000+ meter drill program, though assays have been released from only one hole so far. This was in a largely untested northern part of the property. Assays are awaited on the other 12 holes from this program. Drilling planned for 2022 is sure to follow up on this new zone.

Drilling is also underway in another property in Detour Belt, under option to Probe, and additional drilling is planned before the end of the year from different partners elsewhere in the Abitibi.

Drill programs on multiple properties with diverse partners

About $11 million of exploration has been undertaken during 2021 on Midland ground, both from Midland and partners, and already the exploration budget for next year is over $8 million. Partners include BHP, Agnico, Osisko and Soquem, as well as several smaller companies.

It has two strategic alliances, with BHP and Soquem, looking for nickel and copper. In addition there are two option agreements and six active joint ventures. Midland has several properties on which is is seeking new partners, including land it just acquired adjacent to a nickel-copper property Rio Tinto is working. Although it has property throughout Quebec, it is focusing on the Abitibi, James Bay and Labrador Trough areas.

Midland, with C$9 million in cash, multiple active projects and diverse partners, is my top pick for exploration. The stock has been soft all year, falling from 90 cents to as low as 52 cents last week. This is a great time to buy, though there may be additional weakness before year-end on tax-loss selling. If you do not own, though, you should buy now.

Almadex sells a royalty to fund exploration

Almadex Minerals Ltd. (DEX:TSX.V) (0.30) sold one of its long-time royalties, on the Elk Property, for C$10 million in cash plus shares and warrants valued at approximately $800,000, in the purchaser Starr Royalties. This takes Almadex’s cash balance to C$16.5 million; it also owns a share portfolio in juniors plus gold (incumbered under a loan to Almaden).

This will allow Almadex to advance some of the exploration properties in its portfolio, in western Canada, U.S., and Mexico. The team’s expertise is in generating exploration properties and undertaking exploration, which makes them more valuable when it brings in a partner. It has now commenced drilling at the Willow property in Nevada, currently under option to Abacus. And it has announced plans to drill at a second project, San Pedro in Mexico.

Company retains strong royalty portfolio

In addition to the early-stage property portfolio, it holds several royalties including on Almaden’s Ixtaca, Azucar’s El Cobre, and the adjoining Caballo Blanco project; Agnico Eagle recently increased its ownership in that property through a placement, owning just under 20% of the owner, Candelaria Mining.

Almadex, with a market cap of C$18 million is inexpensive, and the new cash will allow it to advance some properties that have been more-or-less dormant for a while. However, given the recent jump in the stock price, from 21 cents, to more-or-less a one-year high, we would look for a pullback to add to positions.

Progress slow at Azucar’s large property

Azucar Minerals Ltd. (AMZ:TSX.V; AXDDF:OTXQX) (CA$0.10) is exploring the large El Cobre project, in Veracruz, Mexico, which covers multiple copper-gold porphyry targets. It recently completed two holes and is currently planning its next drill program. Newcrest, the major Australian company, owns just under 20%.

Exploring the property has been a painfully long and slow process, and there has not been a lot of news recently; indeed, over the past year, there have been more news releases on new option grants to insiders than on actual exploration results. At a market cap of C$7.5 million, the company is undoubtedly inexpensive and could see much higher prices on any advance in the project. I see little downside from this level, and definite upside over time. However, I have better places with clearer near-term catalysts for new money. For this reason, Azucar is a hold.

Both Azucar and Almadex were spun off from Almaden, which we originally purchased but subsequently sold, continuing to hold the two spinoffs.

BEST BUYS NOW: In addition to above, Osisko Gold Royalties Ltd. (OR:TSX; OR:NYSE) (US$12.44); Wheaton Precious Metals Corp. (WPM:TSX; WPM:NYSE) (US$41.36); Altius Minerals Corp. (ALS:TSX.V) (16.26); Royal Gold Inc. (RGLD:NASDAQ; RGL:TSX) (US$99.15); Orogen Royalties Inc. (OGN:TSX.V) (0.345); Pan American Silver Corp. (PAAS:TSX; PAAS:NASDAQ) (US$26.03); and Barrick Gold Corp. (ABX:TSX; GOLD:NYSE) (US$19.48). These stocks have been on our “best buys now” lists for the past several months, usually at lower prices, so most of them (other than the last three on the list) are better buys for investors underinvested in the sector rather than strong buys for existing holders.

Originally published on Oct 24, 2021.

Adrian Day, London-born and a graduate of the London School of Economics, is editor of Adrian Day’s Global Analyst. His latest book is “Investing in Resources: How to Profit from the Outsized Potential and Avoid the Risks.”

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Disclosure:
1) Adrian Day: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: Midland Exploration, Altius Minerals, Royal gold and Orogen Royalties. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. Funds controlled by Adrian Day Asset Management hold shares of the following companies mentioned in this article: All. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Wheaton Precious Metals, Midland Exploration, Osisko Royalties, Wheaton Precious Metals, Altius Minerals, Royal Gold, Orogen Royalties, Pan American Silver and Barrick Gold, companies mentioned in this article.

Adrian Day’s Disclosures: Adrian Day’s Global Analyst is distributed by Investment Consultants International, Ltd., P.O. Box 6644, Annapolis, MD 21401. (410) 224-8885. Publisher: Adrian Day. Owner: Investment Consultants International Ltd. Staff may have positions in securities discussed herein. Adrian Day is also President of Global Strategic Management (GSM), a registered investment advisor, and a separate company from this service. In his capacity as GSM president, Adrian Day may be buying or selling for clients securities recommended herein concurrently, before or after recommendations herein, and may be acting for clients in a manner contrary to recommendations herein. This is not a solicitation for GSM. Views herein are the editor’s opinion and not fact. All information is believed to be correct, but its accuracy cannot be guaranteed. The owner and editor are not responsible for errors and omissions. ©2021. Adrian Day’s Global Analyst. Information and advice herein are intended purely for the subscriber’s own account. Under no circumstances may any part of a Global Analyst e-mail be copied or distributed without prior written permission of the editor. Given the nature of this service, we will pursue any violations aggressively.

( Companies Mentioned: DEX:TSX.V,
ALS:TSX.V,
AMZ:TSX.V; AXDDF:OTXQX,
ABX:TSX; GOLD:NYSE,
MD:TSX.V,
OGN:TSX.V,
OR:TSX; OR:NYSE,
PAAS:TSX; PAAS:NASDAQ,
RGLD:NASDAQ; RGL:TSX,
WPM:TSX; WPM:NYSE,
)














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Riley Gold Serving Up ‘Meat’ in Nevada Property Sandwich

Source: Streetwise Reports   10/26/2021

Streetwise Reports sat down with Riley Gold Corp.’s President and CEO Todd Hilditch to talk about…

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Source: Streetwise Reports   10/26/2021

Streetwise Reports sat down with Riley Gold Corp.’s President and CEO Todd Hilditch to talk about the progress of their Pipeline West/Clipper gold project in Nevada.

One of Riley Gold’s two gold projects in Nevada, Pipeline West/Clipper, sits between a massive open-pit gold mine/complex and a property that seems to sit above the carbonate host rocks of the Wenban formation — the geological home to all the major gold deposits in the region, while its other project, Tokop, has returned 17 g/t gold below where geologists have found surface samples at grades up to 34 g/t. It’s all very exciting but it’s still early stages.

Riley Gold Corp. (RLYG:TSX.V; RLYGF:OTCQB) President and CEO Todd Hilditch is happy to be the “meat” in a gold property “sandwich” in Nevada.  

 

One of the projects [Pipeline West] is very important not just because of what they have but because of who lives next door.

—Bob Moriarty, 321 Gold

 

 

 

 

 

Riley’s Pipeline West/Clipper gold project is conveniently wedged between the Ridgeline Minerals Corp. (RDG:TSX.V; RDGMF:OTCQB) Swift gold project and the Gold Acres/Gap/Pipeline/Crossroads/Cortez production, part of a 35 million ounce gold mining complex owned by Nevada Gold Mines JV (NGM), a joint venture between Barrick Gold Corp. (ABX:TSX; GOLD:NYSE) and Newmont Corp. (NEM:NYSE) in the prolific Cortez district of Nevada’s Battle Mountain-Eureka Trend.

NGM recently optioned the 75-sq.-km Swift project and must spend at least US$20 million on qualifying exploration work over the next five years to earn a 60% stake in the property, including US$4 million in the shorter term of the next 2 years. NGM will act as operator and could take its stake to 70% if it spends another US$10 million on further work by Dec. 31, 2029 and to 75% for arranging mine finance.

Just four weeks ago Ridgeline and NGM announced a $20 million USD deal where NGM can earn up to 75% of Ridgeline’s 75-km Swift project.

—Bob Moriarty, 321 Gold

 

“What that (option agreement) did was situate Nevada Gold Mines gold mines on each side of us. And so our project is the ‘meat’ in the sandwich. Whichever way you want to look at it, we are on trend and between both of the projects that NGM controls,” Hilditch tells Streetwise Reports.  

 

Nevada Gold Mines’ interest in Ridgeline was piqued when the junior’s 2020 drill program hit what are thought to be the carbonate host rocks of the Wenban formation at roughly 1,394 feet below surface. This 2,000-ft. thick carbonate sheet hosts all the major gold deposits in the area.

Hilditch adds, “You’ve got the Wenban formation on trend to the south/southeast, in the lower plate, that has been the host rock of gold that Nevada Gold Mines has been producing from for many years next door. And based on what Ridgeline has announced on our west/northwest side, they have intersected the same Wenban host, so it’s pretty cool that we’re in the middle of both companies and it is highly unlikely the Wenban gold host rock is not within our property, the dots will be connected.”

If NGM thinks the Swift project of Ridgeline is valuable, they also will want to do a deal with Riley before Riley starts to drill.

—Bob Moriarty, 321 Gold

 

The junior has yet to drill or conduct much exploration work on Pipeline West/Clipper, the border of which sits 1,800 ft. from the edge of the Gold Acres pit. Hilditch expects to complete a geophysical review and program this fall to help outline structures and other rock characteristics to help develop some drill targets, between roughly 1,000 ft to as much as 2,100 ft. deep or more.

About 5 Moz of gold are mined annually in Nevada or about 5% of all the gold mined worldwide.

Riley has spent most of its exploration time to date on its Tokop gold project, also in Nevada.

Tokop first underwent drilling about 11 years ago. Of the 20 or so drill holes conducted by the previous owner, Global Geoscience, the best result was about 2.5 grams per tonne gold (2.5 g/t gold) over 12 meters.

Should Riley drill a major hit, the price for Pipeline West will go up a lot. NGM can throw pennies at Riley now or they can throw hundred dollar bills at them next year.

—Bob Moriarty, 321 Gold

But soon after drilling the property, the junior, assumingly due to gold market conditions, moved into the lithium space (something Hilditch also knows something about but we’ll get to that later). That left Tokop sitting on a balance sheet until it was acquired, as part of a property consolidation, and folded into Riley Gold, along with Pipeline West/Clipper.

In late fall 2020, Riley started exploration work at Tokop, which is along the Walker Lane Trend. Riley has collected more than 300 rock chip samples in the 22.5 sq. km land package, of which a third have been released. Additionally, some chip channel samples returned up to 5 meters of 5.5 g/t gold and 3 meters running 6 g/t gold.

“We wanted to test the work (Global Geoscience) had completed and re-drill test some of the veins that we see over about a kilometer and a half stretch. And in our first three drill holes, we were able to get up to 17 grams per tonne gold subsurface,” Hilditch says. “We completed 12 drill holes and we’re waiting for the remaining essay results to come out.”

Riley also recently initiated geophysics (magnetics) and expects to complete gravity surveys as well at Tokop and Hilditch says the interpretation of that data will help decide where to drill next.

“We see the veins at surface, we’ve drilled them subsurface, we know they exist, but now let’s look at the next iteration of drilling information from our remaining nine drill holes, together with all the geophysics mapping and sampling results, and let’s go find the underlying deposit that these veins stem from,” Hilditch explains.

The company announced on Oct. 20 that it has discovered two new prospective zones at Tokop, one kilometer south and east of the main Tokop claim block, and the other 1km south and west of the site of its recent drilling. Soil geochemistry and mapping are currently underway at both areas.

Riley’s geologists believe the gold-bearing system at Tokop is akin to Kinross Gold Corp. (K:TSX; KGC:NYSE) Fort Knox gold mine near Fairbanks, Alaska, or Victoria Gold Corp. (VGCX:TSX; VITFF:OTCMKTS) Dublin Gulch mine in Yukon. They are intrusive-related systems with stacked gold veins. Riley is also seeing some geologic signatures similar to deposits closer to home in Nevada very near down the Walker Lane trend. This Beatty gold district has been very active recently and is well known with many major mining companies currently exploring and mining there including Coeur Mining Inc. (CDE:NYSE) and Anglo American Plc (AAUK:NASDAQ) as well as past production at the Bullfrog Mine, previously operated by Barrick Gold.

With two promising gold properties in Nevada, Hilditch might not be living the life of Riley for long. Hilditch has a track record of guiding publicly traded companies that have either merged with or were taken out by larger players.

Hilditch had served as the CEO and director of Salares Lithium for about 18 months when it merged with Talison Lithium in August 2010. Talison paid $1.25 per share for Salares, a 98% premium to the junior’s 20-day volume-weighted average share price before the deal or about CA$340 million. (Talison was acquired late in 2012 by China’s Chengdu Tianqi Industry Group for about CA$847 million.)

“The market went really quickly in the right direction,” Hilditch recalls. “They paid us a nice premium, and then they went on to sell it. So that was a bit of a purple unicorn.”

He was also chairman of URZ Energy before it was sold to Azarga Uranium Corp. (AZZ:TSX; AZZUF:OTCQB) in a 2-for-1, all-share deal in 2018. He remains on the Azarga board, which recently announced it will merge with enCore Energy Corp. (EU:TSX.V) in an all-share deal.

And in April 2019, Sailfish Royalty Corp. (FISH:TSX.V; OTC:SROYF) bought Hilditch’s Terraco Gold, a gold exploration and royalty company based in Nevada. Terraco shareholders ended up with 37.2% of Sailfish.

If that doesn’t paint a picture, perhaps a glance at the Riley Gold board might change your mind.

Director Cyndi Laval is a partner at Vancouver-based law firm Gowling WLG (Canada) LLP.  She specializes in mergers and acquisitions and was named mining “lawyer of the year” in the 2017 edition of an annual legal directory.

Another director, Richard Delong, is the chairman of the Nevada Commission on Mineral Resources, a position appointed by the governor. His bio says he specializes in the “assessment of properties to determine permit acquisition strategies and critical paths forward.”

And Chairman William Lamb helmed Lucara Diamond from inception until stepping aside in 2018. Lucara’s share price more than quintupled during his time guiding the precocious junior.

Management owns nearly 20% of the 32 million shares of Riley so their interests are certainly aligned with that of shareholders.

—Bob Moriarty, 321 Gold

“You put good people, good shareholders together with good projects, and eventually, if you stick to your guns, (a merger or takeover) can work. It’s happened three or four times now with us,” Hilditch says.

“We’re not knocking it out of the park with home runs every deal. We’re hitting singles, we’re hitting doubles, and in the odd case, a triple, but it’s just longevity in the business and trying do it right,” Hilditch concluded.

Riley Gold trades in a 52-week range of $0.23 and $0.74. It has 32.5 million shares outstanding, with management owning about 17%.

Note: Read Bob Moriarty’s full assessment of Riley Gold here.

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Disclosure:
1) Brian Sylvester compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He and members of his household are paid by the following companies mentioned in this article: None. His company has a financial relationship with the following companies referred to in this article: None.

2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.

3) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

4) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Riley Gold Corp., a company mentioned in this article.

( Companies Mentioned: RLYG:TSX.V; RLYGF:OTCQB,
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6 Canadian Penny Stocks That May Take off in November 2021

If you’re looking for some of the hottest Canadian penny stocks on the market today, you’ve come to the right place. We’ve got 6 of the best penny stocks…

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If you’re looking for some of the hottest Canadian penny stocks on the market today, you’ve come to the right place. We’ve got 6 of the best penny stocks to be looking at in 2021. Continue reading to find out what they are!

What is the definition of a penny stock?

The definition of a penny stock is quite broad. You’ll get varying answers from different investors, but the general consensus is that a penny stock is a stock that trades below $5.

However, it’s important to note that a lot of popular stocks, ones that don’t have the volatility or market capitalization of a penny stock trade below $5. So here is a few more guidelines to help you narrow down your search:

  • Penny stocks are typically smaller companies, and their shares are often illiquid (not easy to buy and sell)
  • They have a small following, and typically are not covered by major analysts
  • They usually trade OTC (over-the-counter, more on this later) or through pink sheets.

Canadians often confuse the term small-cap stock with penny stock. Unlike numerous small-cap stocks, you won’t find penny stocks trading on the TSX.

This is often because they are too small to meet the requirements needed to list on major exchanges, and don’t file the proper paperwork needed.

How do I buy penny stocks in Canada?

The first box you need to check off if you want to invest in penny stocks is the ability to handle significant volatility. If you don’t think you can stomach the risk, simply head to our how to buy stocks page to get started investing in the major exchanges.

What I like to tell investors looking to start trading the pink sheets, is to set aside an amount you would be completely comfortable losing. I wouldn’t recommend anyone invest their whole portfolio into penny stocks. But a designated amount, say 10% of your total portfolio, is completely reasonable.

Once you’ve allocated some capital towards what I like to call “fun investing”, you’ll need a brokerage account.

If you already have one, you’re ahead of the game. If not, feel free to check out our Questrade review. In my opinion, they are the best brokerage to start with if you’re looking to invest in penny stocks.

Take advantage of our exclusive offer for $50 in free trades with Questrade today.

Keep in mind, most brokerages charge more than their standard commission rates to buy penny stocks.

This is simply due to the fact that the stocks are traded over-the-counter, which is a little bit different than processing a transaction on a normal exchange.

Is it bad to invest in penny stocks?

If you’ve developed the proper strategy no, it isn’t bad to invest in penny stocks.

Where people go wrong, is investing money that they simply can’t afford to lose, and in the end it puts them in a very difficult position both emotionally and financially.

Penny stocks are, in the end, a gamble. We don’t have enough fundamental research to form any sort of concrete conclusion about the company’s future. So, our opinion is that you should be purchasing penny stocks with money you would be completely comfortable taking to a casino.

Why are penny stocks so cheap?

Penny stocks are often companies that do not meet the requirements or have the funding to list on major exchanges. As such, they typically have low market capitalizations and less stringent requirements.

One requirement to list on major exchanges is a higher share price. With penny stocks, there is no minimum and as such, stocks can trade extremely cheap, sometimes in fractions of a penny. The key to judging a size of a company is not its share price however, but it’s market cap. This is a very important concept.

Can you get rich off penny stocks?

It is possible to become rich investing in penny stocks yes. But, it’s very important you understand that for every success story, someone striking it rich and retiring early off a penny stock, there is a dozen, if not more, disasters of people risking way more than they were comfortable with and losing it all.

You are more likely to go broke than strike it rich with penny stocks. So, keep this in mind and invest solid, blue-chip stocks with the majority of your portfolio and spend expendable capital if you wish on Canadian penny stocks.

Can you buy penny stocks on Wealthsimple?

Unfortunately with a brokerage like Wealthsimple Trade, you won’t be able to buy Canadian Penny stocks. Why?

Well, when companies aren’t listed on a normal exchange like the NYSE,NASDAQ or TSX, they are traded via a broker-dealer network. Transactions take place via a bulletin board (the OTCBB) and Pink Sheet listing services.

These broker-dealer networks communicate with each other and act as market makers. They will locate shares available for purchase or sale, along with negotiate a price for a fee.

Although most of the stocks trading over-the-counter cannot make it on the major exchanges due to regulations, they still need to meet requirements to trade OTC.

It’s not only penny stocks that trade over-the-counter either. For example, companies may also issue bonds over-the-counter.

If you want to find a brokerage that will let you trade Canadian penny stocks, you’ll need to stick to one that deals with OTC transitions like Questrade.

Tips when buying penny stocks

Before you get started, I’m going to drop you a few quick pointers you will need to be successful with buying penny stocks here in Canada. This is by no means a complete list, however I feel they are some of the most, if not the most important things you need to know so you don’t lose your money.

  • When buying penny stocks, be aware that smaller sized entities may not be required to file documents with the Securities and Exchange Commission (SEC), something that bigger companies are required to do. This makes determining the financial health of a company nearly impossible, which is often why purchasing penny stocks is often thought of as nothing more than a gamble.
  • In order to reduce your risk, try investing in companies listed on the OTCQX or OTCQB exchanges. These are essentially the top and middle tiers in terms of penny stocks, and companies listed on these exchanges will more than likely have accurate financial information, and will file it in a timely manner.
  • If you’re looking for some of the highest returns, albeit highest risk, the OTC Pink is the lowest tier of penny stocks in terms of financial information provided. These stocks are the most volatile, so they bring with them highest potential profitability. Keep in mind though, the higher the reward, the higher the risk.
  • There are a ton of penny stocks out there, and I would highly suggest using a screener to identify and narrow down your potential list of suitable companies.
  • Knowledge in technical analysis is absolutely crucial when trading penny stocks. Because limited or inaccurate financial information is available to most investors, fundamental analysis almost plays no part in picking stocks.
  • Analyze the management team. More than anything, they will be responsible for the inevitable failure or success of the company. With startups in particular, there will be a lot of key decisions made by the management team that can make or break an over-the-counter company.

FP Newspapers (TSXV:FP)

Hot Penny Stocks On The TSX - FP Newspapers

Speaking of terrible liquidity, you’ll want to be careful trading Canadian penny stock FP Newspapers (TSXV:FP) shares. This $0.63 stock sometimes goes a whole day without trading and has average daily trading volume of just a few thousand shares.

I’m the first to admit a company that owns 49% of the distributable cash of several newspapers in Manitoba – most notably The Winnipeg Free Press – doesn’t sound like a very exciting penny stock opportunity in 2021. But this stock is insanely cheap, and it seems to be turning a corner.

It earned approximately $0.32 per share in 2020, while shares trade for less than 2x that much. It’ll get a nice journalism tax break from the Canadian government in 2021, too.

It also could sell its headquarters in Winnipeg for a nice gain as well. Shares could see another boost when an important loan gets extended.

The stock could also pay a substantial dividend in a year or two once it starts to earn a little more money and it gets its balance sheet more under control. If this happens, you’ll be very happy you got in today.

Kodiak Copper (TSXV:KDK)

Kodiak Copper Stock

 

Kodiak Copper (TSXV:KDK) is a newer player on this list of top Canadian penny stocks primarily because of the rising price of copper.

If you haven’t been paying attention, the price of copper has launched over the last year, going from lows of $2.10 in 2020 to touching highs of $3.70 just recently in 2021. Obviously, with this company being essentially a copper pure-play, it stands to benefit from this increase in price.

In fact, in September of 2020, resource giant Teck Resources invested $8 million into Kodiak Copper, representing a 9.9% stake in the company, and showing strong signs of confidence and outlook for the junior exploration company moving forward.

The company generates no revenue and is largely a play on its exploration efforts and asset base which is located in British Columbia, Arizona and Nunavut.

The company actually recently went through a transition, as it changed its name from Dunnedin Ventures to Kodiak Copper at the start of 2020, and is probably one of the higher risk plays on this list. However, there’s always large potential in exploration companies in the very early stages. Just be wise, and invest with expendable capital.

Namesilo Technologies (CSE:URL)

Top Canadian Penny stocks - Namesilo

 

Namesilo Technologies (CSE:URL) is an internet services company in Canada that registers domain names, provides hosting, offers email services, and provides various other needs for the owners of websites.

In 2021, having your own website is imperative. Customers don’t bother picking up the phone if they have a question or concern; they’re just going to go straight to your website. If you don’t have a digital advertising strategy, good luck.

Namesilo is delivering blistering growth of late, more than doubling its top line on a year-over-year basis in 2019. Net income before taxes, meanwhile, grew more than 1,000% compared to the same period last year. Profit margins expanded as well, and the company reported strong customer retention rates.

The question is whether Namesilo can continue its blistering growth. It should benefit from new businesses (and individuals) becoming serious about building an online presence, as well as taking customers from competitors. Its focus on giving great deals and providing excellent service is a winning combination.

And at just $0.25 per share, Namesilo certainly qualifies as a penny stock. The stock only has a market cap of just under $23 million, so big-time investors might struggle with its lack of liquidity.

Fobi AI (Formerly Loop Insights) (TSXV:MTRX)

Loop Insights Logo

 

Fobi AI (TSXV:MTRX) has surged in value recently, but prior to this the company had a market cap of just over $40 million. It now sits at just under $190 million, but I’d still firmly place this company in penny stock territory.

Fobi AI, which recently changed its name from Loop Insights, provides retail and marketing solutions for digital and physical landscapes. They’re primarily situated in the AI sector, and the company’s primary function is to enable brick and mortar companies to analyze critical customer data, including customer spending habits and trends.

The company works in the casino, sports, hospitality, retail and education sectors and has signed multiple critical contracts with some major players here in Canada, including Telus, Amazon and Shopify. Although the company does not generate any revenue at the time of writing, this is still a company you’ll want to keep a close eye on moving forward.

As of right now, it’s very difficult to value this company considering it has no form of revenue generation or any sort of earnings. And because of this, we can expect the company to be, like many Canadian penny stocks, extremely volatile around earnings time and on news releases. There is a lot of speculation and forward earnings priced in to Loop’s price right now, so we’d stress extreme caution if you’re considering taking a position.

Athabasca Oil (TSX:ATH)

Canadian Penny Stocks - Athabasca Oil

Athabasca Oil (TSX:ATH) is a classic penny stock conundrum. It has huge upside potential, but there’s also a real possibility the company could go bankrupt. It’s almost like flipping a coin, except if you win, you’ll likely do far better than just doubling your money.

The company has light oil production in both the Motney and Duvernay fields in Alberta Canada, as well as heavy oil production near Fort McMurray. The heavy oil assets have a long reserve life, but the company isn’t making much from any of its production because of low oil prices.

Athabasca projects it’ll start earning free cash flow in the next couple of years, but in the meantime, it’s forced to spend approximately $125 million each year on sustaining capital. It has cash on the balance sheet, but it must also contend with refinancing some US$450 million worth of debt coming due in 2022.

You could make a lot of money if oil recovers and Athabasca Oil shares shoot higher. But this $0.22 stock is cheap for a reason. You’re taking some significant risk buying today, especially with the demand in oil plummeting due to COVID-19.

However, a quick recovery in the industry could lead to a quick recovery in this stocks share price as well. Prior to COVID-19, Athabasca’s share price sat in the low $0.50 range.

Redishred (TSXV:KUT)

Top Canadian Penny Stocks - Redishred

One of our favorite Canadian penny stocks is Redishred Capital (TSXV:KUT), which owns and operates the Proshred brand.

Proshred has two separate business models – it both owns mobile paper shredding trucks and it franchises out locations to interested franchisees. The company has either corporate or franchised operations in 40 different U.S. cities.

The mobile paper shredding model has a few interesting advantages. It allows Redishred to easily acquire competitors and then rebrand them. It’s more secure – and convenient — than bringing documents to a central location. And the multi-city business model allows brand recognition in an industry that’s currently very fragmented.

It’s well poised to keep growing, thanks to its clean balance sheet with almost zero debt. Top managers are major shareholders with an ownership stake of more than 40% of the company.

And unlike many penny stocks, this company generates plenty of cash flow. Remember, this company has a share price of $0.61 and a market cap of just over $48 million. It doesn’t take much to really move the bottom line.

Redishred is one of our top penny stock picks in Canada because it’s in a good business with great growth potential. It’s the kind of stock you’ll want to stick in your portfolio and own for a very long time.

However as with any other penny stock, you’ll want to keep a close eye on it incase anything materially changes.












Author: Dan Kent

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