Small Cap Strategist is published by Crystal Equity Research an independent research resource on small capitalization stocks. Follow along as we discuss the most recent trends in the small-cap sector, investigate interesting companies and pan a few not-so-promising stocks.
since British scientists worked a little magic with some scotch tape, the world
has been captivated their discovery of graphene, the single atom thick material
that can conduct electricity and is at once strong and bendable.Investors have been dreaming graphene could be
sprinkled across industry like pixie dust, creating valuable new products and
driving company valuations to lofty heights.Reality has been a bit less grand.
be clear, there have been successes.As
noted in the June 9th article, “Graphene
in the Oil Patch,” the wonder material has been found to be of benefit in water-based
drilling fluid by limiting dispersion of drilling fluids into surrounding
rocks.Graphene NanoChem Plc. already sells a
high performance drilling fluid branded as Plat
Drill, which has been enhanced by graphene nanomaterials.The article “Plasma for Graphene” published on June 12th, described
the conductive inks of Haydale
Graphene Industries, Plc. (HAYD:AIM).
Indeed, fluids and solutions appear to
be the easiest road to commercial products.
is not the only company to give investors a chance to capture some of that ‘lofty
3D Labs, Inc. (GPHBF:OTC or GGG: TSX)has developed three dimensional printing filaments that have
conductive properties.The company is marketing
the filaments for printing electronic circuitry with the brand name Black Magic 3D. According to the company’s most recent filing
with Canada’s SEDAR, there have been no sales yet.However, management apparently believes the
large and growing market for 3D printing is the ‘oyster’ for Graphene 3D
are numerous industry size and growth estimates.Canalys is typical with a prediction of growth from $2.5
billion in 2013 to $16.2 billion by 2018, implying a compound annual growth
rate of 45.7% in the forecast period.The installed base of 3D printers might be a better focus for investors.IDC predicts that worldwide 3D printer unit sales
and installed base will grow at a combined compound annual growth rate of 59%
through 2017, with the value of shipments attaining a 27% CAGR in the forecast
Like HAYD, the stock of Graphene 3D Labstrades
in small volumes at prices below USD$1.00.Such stocks can be viewed as an option on management’s ability to
execute on the strategic business plan. In the case of Graphene 3D Labs, a fast
growing and highly populated customer group using 3D printers is the target
market.Typically such fragmented
markets present an easier mark for a small, modestly capitalized company.
3D Labs reported over US$1.1 million in cash on its balance sheet at the end of
February 2015.The cash is primarily
from a private placement of common stock that was completed in August 2014,
raising US$1.6 million.The company has
been using about US$155,000 per month to support operations, suggest management
has about another six months before they need to raise more capital.Some investors might be worried about the
dilution. Others might see the capital raise as an opportunity to catch some ‘value
creating’ pixie dust.
Neither the author of the Small Cap
Strategist web log, Crystal Equity Research nor its affiliates have a
beneficial interest in the companies mentioned herein.