Earth Friendly Stocks for Earth Day (and beyond)

 

The first Earth Day, back in 1970, was the idea of Senator Gaylord Nelson as a way to force environmental issues into the national discussion. At the time, there was no EPA, no Clean Air Act, no Clean Water Act, and no smog or efficiency standards – the average car averaged 11.9 mpg on leaded gasoline.

Since that first Earth Day on April 22, 1970, each that has followed has been an occasion to celebrate past successes and recognize how much more can be done. From the perspective of an inhabitant of this planet, the progress benefits us now and preserves sustainability for the future; from purely an investor’s standpoint, cleaner environmental initiatives lead to the kind of change in spending that provides opportunity. The year 2021 is ushering in these opportunities with a number of objectives that will force transition in many businesses. High on the list in the U.S. is the re-signing of the Paris Agreement earlier this year. Additionally, President Biden has pledged that the country will work to slash America’s greenhouse gas emissions at least in half by 2030, with longer-term efforts to achieve a 100% clean energy economy and reach net-zero emissions no later than 2050. The U.S. president is hosting a virtual summit of 40 world leaders to discuss climate initiatives this week. During the summit, Biden is expected to ask for new commitments from the world’s biggest carbon emitters.

Earlier this year, Biden had proposed an infrastructure initiative, in which he expects to spend $2 trillion over eight years for infrastructure projects to curb the country’s greenhouse gas emissions. Portions of this corporate tax-funded spending will be used for clean-energy measures, including electric vehicle funding, research, and development, the addition of charging stations and retrofitting buildings and residences.

 

Five Earth-Friendly Stocks to Read Up On

An even greener red, white, and blue will make winners out of companies that were barely getting noticed a few of years ago. Environmental regulation and changing business attitudes focusing more on ESG will impact sectors such as manufacturing, fuel generation, metals and mining, utilities, and others. Below are five Earth-friendly stocks that could be worth checking in on.

 

GEVO Inc. (GEVO) is a renewable chemicals and biofuels company that develops and brings to market alternatives to petroleum-based products based on isobutanol produced from renewable feedstocks.

The “low carbon” fuel company has developed a breakthrough process that converts a high-octane fuel called isobutanol into clean, renewable diesel. The green diesel can also be made from fusel oils, a mixture of several alcohols produced as a by-product of fermentation.

 

Capstone
Turbine Corp. (CPST,
CS:CA) is a leading global producer of highly efficient, low emission, microturbine energy systems. Their microturbines serve multiple vertical markets throughout the world; they include natural resources, energy efficiency, renewable energy, critical power supply, transportation, and microgrids.

 

Comstock
Mining Inc. (LODE)  is an emerging leader in the sustainable extraction, valorization, and production of innovation-based, clean, renewable natural resources. Their focus is on high-value, cash-generating, strategic materials that are essential to meeting the rapidly increasing global demand for clean energy, carbon neutrality, and natural products.

 

Energy
Fuels (UUUU,
EFR:CA) is a leading U.S.-based uranium mining company supplying U308 to major utilities operating in the nuclear realm. The company also produces vanadium from certain projects as called for by market demand. Energy fuels expects to begin commercial production of rare earth element (REE) carbonate in 2021.

 

enCore
Energy (ENCUF,
TSX:V) is a uranium explorer and developer focused on growing its portfolio of ISR (in situ recovery) and conventional assets in the U.S. The experienced team of uranium experts have advanced large domestic growth
projects and successful sale of those projects.

 

Take-Away

As we recognize our 51^st Earth Day it’s good to remember that at that time there was very little regard for the impact of industry on the planet. While some countries now have a better record than others, and more service-related industries are naturally more green, the strides we’ve made over five decades have yielded measurable results. As the global push toward a “greener” environment accelerates, there will be winners; whether an investor considers themselves to be an “impact investor” or an investor that is following trends, Earth-friendly investments offer tremendous potential.

 

Suggested Videos:

 

enCore Energy C-Suite Interview	Capstone Turbine Virtual Road Show Replay

Comstock Mining Virtual Road Show Replay	Energy Fuels C-Suite Interview

 

 

 

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Making Sense of Non-Fungible Tokens – Living in a Digital World

 

Investing is becoming increasingly digital and, along with that trend, so are assets. Recent news of Twitter founder Jack Dorsey’s first tweet selling as an NFT (non-fungible token) spread across the internet by storm. Lindsay Lohan dropped her first single in years, titled “Lullaby,” as an NFT. But what is an NFT, why is it so valuable, and how does it relate to cryptocurrencies and digital asset trading?

 

A Beginners Guide to NFTs

An NFT, or non-fungible token, is a unique digital asset that cannot be exchanged or broken down. Essentially, it is the opposite of a currency, where one coin or bill is the same as another of equal value. It consists of unique lines of code that are used to create anything from digital art, digital fashion items, collectible sports cards, virtual real estate, video game skins and characters, music albums, and even ownership licenses.

NFTs have been around since 2017 when Canadian developers at Dapper Labs experimented with an Ethereum-based blockchain game. The game allowed players to adopt, raise and trade virtual cats in exchange for a breed fee paid in Ethereum. It eventually evolved into a marketplace for the CryptoKitties, which have become digital assets that rise and fall in value the same way as any other asset.

Essentially, the value of an NFT comes from its uniqueness. Each NFT is differentiated from the other to create its value, and its value comes from its scarcity.

For a buyer, NFTs provide a secure certificate of ownership over the asset, much like a certificate of authenticity for designer and luxury goods, jewelry, or vintage items.

For a seller, NFTs make it possible to sell something today that keeps earning value in the future. NFTs can be coded to allow the original creator to collect money each time the token moves hands. Because of this, artists, in particular, have an incentive to create NFTs to avoid exploitation of their creations and keep ownership and control over their pieces.

In the realm of gaming, popular video games such as Fortnite and Roblox have assets like digital weapons and character skins that cannot be traded within the game. The use of these assets is also limited to the game in which the asset is bought. With NFTs, coveted items can be easily transferable, solving one of the biggest complaints by avid gamers.

 

The Pros and Cons of NFTs

Most NFTs are created using one of the two Ethereum token standards, meaning that, for now, they can only be bought and sold using Ethereum. NFTs could introduce millions of people to cryptocurrencies for the very first time. However, enabling people to continue using cryptocurrencies easily requires a much more simplified version of NFTs and, perhaps, NFTs built using a variety of cryptocurrencies.

Non-fungible tokens have not been embraced as speedily as some advocates had hoped, partly because the Ethereum-based protocols around them are so new. Developing applications for the proper use of NFTs can also be tricky and time-consuming.

 

 

 

Take-Away

NFTs are redefining digital asset trading. They can make it possible to own everything from a digital asset to a real-world asset thousands of miles away. However, NFTs can also have a ”hot potato” effect where individuals might buy an asset in the hope of flipping it for a profit but may get caught as the scarcity of buyers when enthusiasm settles may cause large market swings.

 

About the Author:

Laila Jiwani is a freelance writer specializing in topics related to social finance
and international economic trends. Currently based in Dallas, Texas, she is an
Erasmus Mundus Joint Master’s Graduate and has worked for economic development
organizations in the U.S., Morocco, Kenya, Pakistan and Kyrgyzstan.

 

Suggested Reading:

Small-Cap Names in a Big Crypto Market	What’s the Timeline for a U.S. Digital Currency?

ESG Indicators and How Investors Use Them	Cord-Cutters, Advertisers, and Market Disruption

 

Graphic/Photo by Marco Verch

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Lifecycle of a Special Purpose Acquisition Company
(Part of a Channelchek Series on SPACs)

 

Special purpose acquisition companies (SPACs) are essentially shell companies. That is to say; they have no business activities, just a legal structure. On the path to becoming a SPAC, the shell company applies for a listing on a stock exchange to raise money with the intent to use the capital to acquire a business.  While there is a lot of information available to consume surrounding the magnitude of 2020s SPAC activity (up 400%), or the more accelerated level of deals in 2021, our readers have told us they would like more information regarding the structure of these opportunities, how they might become involved, where research might be found on acquisition targets, common terms used, and risks.

Lifecycle
of a SPAC is the first of what will be ongoing educational pieces published by Channelchek on the subject. From it, you should gain a better understanding of:

• How the initial SPAC comes into being and the risk and rewards of the SPAC founders
• Expectations, contractual and otherwise of all parties
• The fate of the minority SPAC shareholders that reject a target for acquisition of an upvoted company
• How SPACs differ from traditional IPOs

At its
Most Basic

All SPACs originate with an initial formation, which is then followed by its IPO. After there is a search for a target acquisition. Once found, there is a shareholder merger vote, with approval by shareholders, the acquisition is close upon. Should no identified target be acceptable to shareholders, after an agreed-upon time frame spelled out during the SPAC formation, proceeds are returned to the initial investors. 

Five Main Steps from SPAC to De-SPAC

 

Life Cycle

FORMATION
– Step One

 At the outset, when a SPAC is created, the sponsor and often its management team contribute a relatively small amount for a cash stake in the investment offering; this “skin-in-the-game” is referred to as “founders’ stock.”  The stock of these founding investors is generally 20 percent of the stock after the SPACs initial public offering.  This is their compensation for creating the shell company, identifying a suitable target, and closing the merger. The sponsor that is managing parts of the structure may lend use of the founder’s contribution to fund ongoing expenses. In addition, the SPAC selects legal counsel and underwriters and establishes its governing documents.

 

INITIAL
PUBLIC OFFERING (IPO) – Step Two

After the SPAC is created and all of the defining documents, including legal existence are in place, the shell corp begins the public offering process with the intent to find a suitable target.  This includes the SPAC filing with the SEC, an initial registration statement. The SPAC then typically raises capital by issuing units (these often consist of common shares and warrants); the proceeds raised are held in a trust and not released until a target is acquired or funds returned to investors.

After the offering, the units are separated into shares of common stock and tradable warrants. The warrants are designed to minimize dilution yet provide added compensation for the initial investors. They are often exercisable within a short time frame after a merger is completed.

 

TARGET
SEARCH – Step
Three

The search for a suitable acquisition includes the sponsors vetting potential businesses through a ramped-up financial and legal due diligence process. Historically, SPACs had been focused on companies with a positive EBITDA. More common targets since 2020 have been a pre-revenue “story-stock.” These are at times referred to as a “unicorn,” ie, it is so special that its apparent value creates enthusiasm.

There is a timeline defined prior to the SPAC IPO to close an acquisition, it depends on multiple factors. One factor is that dissenting SPAC shareholders have the right to redeem shares; this could create uncertainty regarding the amount of funding available to pay target shareholders and to cover months of operating expenses after closing. This often leads to SPACs, and the acquired to negotiate “minimum cash” on closing. For this reason, SPAC acquisitions often include a simultaneous Private Investment in Public Equity (PIPE) upon merging.

 

SHAREHOLDER
VOTE – Step Four

SEC proxy rules and approval of corporate bylaws typically require shareholder acceptance before the completion of the de-SPAC process. With this, the completion of a merger typically requires the entities to file a proxy with the SEC, obtain and respond to the SEC’s comments, mail the proxy to the SPAC’s shareholders, and hold a shareholder meeting. The sponsor and other founding shareholders committed as they founded the entity to vote their interest which is typically 20% in favor of a transaction, this decreases the number of additional common shares needed to vote in favor of the merger.

 

ACQUISITION
CLOSE – Step Five

If an affirmative majority vote is obtained from the proxy process, the target acquisition can close by merging into the SPAC, then the target company becomes a reorganized publicly traded entity. A Super 8-K must be filed within four days of the acquisition. It contains substantially the same information that would be required in a registration statement for companies that go through a traditional IPO. Further, the sponsor’s founders’ shares and warrants are locked up for a specified period (the “lock-up period”) starting from the date of the Super 8-K filing. The lock-up period is typically one year and was decided at the early stages of the SPAC.

Other
Information

The public offering steps of a SPAC differ from that of a traditional IPO in at least one very important way.  The target company, if it is eventually acquired, was not involved in the formation of the SPAC or the IPO. Instead, the terms of the offering in a SPAC IPO and the agreements the SPAC has with their management team, and sponsor, takes the lead role. They decide the value that the acquired company investors extract from any SPAC merger.

 

Related Channelchek
Articles:

Will 2020 go Down as the Year of the SPAC (July 27, 2020)	SPAC Activity Accelerating in 2020 (August 21, 2020)

 

 

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Seanergy Maritime Holdings Corp. Announces Loan Facility of $37.45 Million and Other Financing Updates Seanergy Maritime Holdings announced that the Company received a commitment letter from one of its existing lenders for a $37.45 million facility Research, News & Market Data on Seanergy Maritime Watch recent presentation from NobleCon17

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The Coinbase Nasdaq Listing Offers a Diversified Equity Investment in Crypto-Growth

 

Coinbase (COIN) is set to go public on the Nasdaq today as a direct listing. The company isn’t raising any new capital as a corporation would under a more common IPO. Instead, the privately held, U.S.-based cryptocurrency exchange has a price set at $250 per share which would provide it a valuation of $65 billion. This valuation would make it more valuable than Nasdaq ($NDAQ) and roughly even with the NYSE ($ICE).

The days leading to the public market availability of shares of Coinbase saw many cryptocurrencies, including the highly valued Bitcoin ($BTC), and the highly adored Dogecoin (DOGE) break new records as they continued to rise partly in anticipation of today’s market opening. The one triple-digit gainer over the past five trading days was Ripple (XRP), gaining 104.5%. Over the past week, the spike in cryptos demonstrates the expectation that bringing the largest crypto-exchange public further legitimizes digitally created money transactions.  

Investor Benefit

Coinbase could be a great diversifier for investors that believe the market for crypto transactions will grow. It allows them to take an equity stake in a company that benefits from the growth in crypto usage without direct exposure to any one currency (except $US or other base). Other methods equity investors have used to gain from the popularity and growth of digital currency is investing in the underlying technology that makes the invention possible, blockchain.

Blockchain is a non-direct involvement in digital currency investments, it allows participation in the growth of digital currencies as this market gains pervasiveness. Blockchain is the platform that serves as the backbone of cryptocurrency.  In the simplest terms, blockchain is a public electronic ledger.  Built around a peer-to-peer (P2P) system, multiple users create a series of records in the ledger.  These entries may be infinitely amended over time, but each entry is unchangeable. 

 

Data Source: Barchart.com

 

Other Non-Crypto Options

Companies involved in blockchain include Taal Distributed Information Technologies (TAALF). TAAL provides a wide range of Blockchain/Crypto-related services, including transaction processing, pool management, data storage solutions, and blockchain computing. Their primary focus is on the global adoption of Bitcoin SV (original Bitcoin). TAAL’s vision is ‘New Innovations for the New Economy.”

 Another non-currency company that stands to grow from crypto usage is DMG Blockchain Solutions  (DMGGF). Their business includes blockchain and the mining sectors of crypto, which makes DMG a diversified option.  They offer a permission-based blockchain technology focused on developing enterprise software for supply chain management.  Other company focus points are crypto-mining, hosting services for mining clients, transaction fees, and data analytics. 

RocketFuel Blockchain Inc (RKFL) is a development-stage company that is in the process of developing check-out systems based upon blockchain technology engineered to increase speed, security, and usability. The company’s cutting-edge check-out solution is being orchestrated to include a single-click functionality to invoke payment transfer while integrating the customer address. 

Shareholders of HIVE Blockchain Technologies, Ltd. (HVBTF) own a pure-play blockchain investment.  HIVE creates newly minted cryptocurrencies continuously on the cloud through their data center facilities in Canada, Sweden, and Iceland.

 

Away from blockchain, the cryptocurrency brokerage companies have inspired rocketship emojis on social media. One company in this crypto-related space that is experiencing exponential growth is Voyager Digital, Ltd. (VYGVF). Through its subsidiary, Voyager operates as a crypto-asset broker that provides retail and institutional investors with a turnkey product to trade crypto assets. In a little over a year, the VYGVF stock price has rewarded investors 15,300%. 

Take-Away

Coinbase (COIN) as a public company is a welcome addition for stock market investors who are looking to increase exposure to the adoption and surrounding enthusiasm surrounding digital currencies. The company is well-capitalized and offers diversification as business and transactions increase. The underlying value or competition among cryptos should have far less impact on their earnings.

Direct ownership of cryptocurrency is not the only way to gain exposure to what has been a  lucrative play among speculators. Technology companies that are involved in other ways, mining, blockchain services, or exchange services, allow an equity investment in companies that stand to benefit from the increased acceptance.   

The sectors and companies mentioned in this article represent a
small sample of the various investment opportunities in the world of
cryptocurrencies.  While recent results look positive, you should always
know the risk before investing.  No investment decision should be made
solely on this or any one article you read.  You are solely responsible
for deciding whether any investment or transaction is suitable for you based
upon your investment goals, financial situation, and tolerance for risk. You
must seek independent professional advice to ascertain the investment, legal,
tax, accounting, regulatory or other consequences before investing or
transacting.

 

Suggested Reading:

Cryptocurrency Gaining Acceptance by Banks	Small-Cap Names in a Big Crypto Market

The Fed and MIT are Experimenting with Digital Currency	Five Reasons Investors Increasingly Use ESG Standards

 

SOURCES:

https://www.macrotrends.net/stocks/charts/ICE/intercontinental-exchange/market-cap

https://www.wsj.com/articles/cryptocurrencies-soar-to-records-ahead-of-coinbase-listing-11618400809?mod=searchresults_pos1&page=1

Financial Ratios to Avoid Red Flag Stocks What takes a bit of thinking is understanding the message a particular ratio delivers.

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Financial Ratios to Avoid Red Flag Stocks

 

In a market that seems to have thrown out conventional wisdom, using old measures may leave you uninvested while others continue to enjoy gains in their positions. If you’re off the sidelines and deciding between two or three similar companies, using the most common ratios to orient yourself to reveal the company with more favorable ratios could help you place one stock above another. The ratios do little to determine the company with the better product, better brand, or superior marketing—those factors you can research separately.

More importantly, eyeballing a few easily calculable ratios could allow you to uncover a solid red flag of the companies ability to run the business. One nice thing is, the more useful financial ratios use arithmetic so basic, you don’t have to pull up the calculator app. What takes a bit more thinking is understanding the message a particular ratio delivers.

 

Ratios to Habitual Check and Compare

 Price-to-Earnings Ratio (P/E). This is the price of a share of stock divided by the earnings per share of stock. It’s the amount of money you’d be willing to pay for $1 of earnings.

 * If a share of a company’s stock is selling for $40 and the earnings are $2/share, the P/E would be 20. An investor willing to purchase this stock is willing to earn $1 for every $20 invested.

 

Debt-to-Equity Ratio. The debt-to-equity ratio reveals the debt capital used by the company to finance its operations compared to the equity capital being used. So, if the ratio were 1.0, that would mean that the company’s creditors theoretically have a claim to all of the company’s assets. Nothing
would be left for the shareholders.

 * Debt-to-Equity Ratio = (short term debt + long term debt) / shareholders’ equity

 

Return on Equity (ROE). ROE is the amount of income the company generates contrasted to the amount of shareholder investments. ROE measures how efficiently shareholder investments are used to generate income.

 * ROE = Net income / total shareholders’ equity

 

Return on Assets (ROA). ROA is net income divided by total assets. It’s a measure of how effectively a company can turn its assets into income. For example, a computer screen sitting in a closet is an asset, but it’s not generating income for the shareholders. The same can be said for unnecessary equipment, marble lobbies, and other luxuries.

 *Return on Assets = Net Income/Total Assets

 

The Current Ratio. This ratio is a measure of a company’s current assets versus its current liabilities. A high ratio suggests that a company has plenty of cash and liquid assets on hand to deal with any bills. Understanding why the current ratio is high is important. It could be misleading, for example, A warehouse full of dated inventory can raise the ratio and be a sign of trouble.

 * A low current ratio suggests that the company could struggle to meet its short-term liabilities and suffer from a shortage of cash.

 

Net Profit Margin.  Is calculated by dividing the net income by the net revenue. This is the amount of profit generated by each dollar of sales. Some companies make much more profit per $1 of sales than others. Real estate and health care are often mentioned as industries with high-profit margins. This is one place where comparison within the industry is even more critical.

 

Dividend Yield. It’s also called the dividend-price ratio, dividend payments can be viewed by investors as a cash flow to investors. Companies with a higher dividend yield have the potential to be more attractive to investors than those with lower yields.

 *Dividend Yield = = (dividend per share / price per share)

  

 

It’s the Extra Step that’s Worthwhile

Financial ratios are important for all investors to grasp, and at a minimum, develop favorites that you consistently check before making an investment. Most research reports on
companies will also post pertinent ratios covering the date of the reporting period. The results can uncover red flags and may place one investment option more favorably in your mind for decision-making. It’s not possible to successfully make investing decisions with financial ratios alone, but these ratios are an excellent part of a prudent process.

 

Suggested Reading:

 

How PPI Impacts CPI Numbers

Why Researching Investment Ideas is Important

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enCore Energy Corp Hosting Corporate Presentation with Noble Capital Markets enCore Energy Corp. announced the company will be hosting a corporate presentation, followed by a Q & A session moderated by Michael Heim, Noble Capital Market’s senior research analyst Research, News & Market Data on enCore Energy Watch recent presentation from enCore Energy

Aurania Reports Progress in Drilling Kuri-Yawi Target in Ecuador Aurania Resources announced that diamond drilling of the Kuri-Yawi target is well underway and proceeding as planned in the Company’s Lost Cities – Cutucu Project in southeastern Ecuador Research, News & Market Data on Aurania Resources Watch recent presentation from NobleCon17

Endeavour Silver Closes Sale of El Cubo Mine to VanGold Mining Endeavour Silver announced that it has now closed the sale of the El Cubo Mine in Guanajuato, Mexico to VanGold Mining Corp Research, News & Market Data on Endeavour Silver Watch recent presentation from NobleCon17

Genprex Collaborators Report Positive Preclinical Data for REQORSA™ Immunogene Therapy Genprex, Inc. announced that its collaborators presented positive preclinical data for the combination of TUSC2 immunogene therapy in combination with chemotherapy and immunotherapies for the treatment of non-small cell lung cancer Research, News & Market Data on Genprex Watch recent presentation from NobleCon17

Capstone Turbine Reports Certain Preliminary Unaudited 4th Quarter Results Capstone Turbine announced its unaudited preliminary financial results for the fourth quarter ended March 31, 2021 Research, News & Market Data on Capstone Turbine Watch recent presentation from Capstone Turbine

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