Three reasons NOT to invest in Abattis Bioceuticals Corp. stock (ATTBF)

What does Abattis Bioceuticals Corp. (ATTBF) do?

Abattis Bioceuticals Corp. originally sought to be a vertically-integrated company serving the medical marijuana and natural health products industries. They’ve slowly evolved away from that model to reduce overhead. The company’s now focused on generating revenue from its natural tonics, elixirs and blends, many of which contain its proprietary botanical blend ingredient PhytoNOS. The company’s also seeking a Controlled Substance License (CSL) with Health Canada via subsidiary Northern Vine Labs so it can possess and produce cannabis.

Three reasons NOT to invest in Abattis Bioceuticals Corp. stock (ATTBF)

1) Red ink. ATTBF lost $1.5 million (CAD) during the nine months ended June 30, 2016. That’s better than the prior year’s same nine months when the company lost $2.4 million (CAD). Unfortunately, the biggest reason for the smaller loss was cost-cutting (not revenue growth).

The one bright spot? Sales grew from $7,720 (CAD) in 2014 to $91,940 (CAD). That’s a gain of more than 1,000 percent. Yes, it’s fairly easy to grow when you’re only doing $7,000 (CAD) in sales per year, but their numbers are at least moving in the right direction. 2016 could be a defining year for Abattis. “As at June 30, 2016, the Company had a cash balance of $338 (September 30, 2015 – $157,758) and a working capital deficiency of $674,518 (September 30, 2015 – $787,857).” Money is tight, and the need for revenue has never been greater. All told, Abattis has lost $15,105,400 since inception. That’s a lot of cheese.

2) Stock dilution. Between April and June of 2016 (the latest time period available), Abattis issued nearly 13 million shares of ATTBF. That adds up to nearly $600,000 (CAD) worth of stock. If all those shares ended up for sale in short order, ATTBF’s stock could tumble – especially since average daily volume is a tiny fraction (229,000) of the number of shares the company issued.

Look for even more shares to be issued in the coming months. “In order to fund the Company’s ongoing operational needs, the Company will need additional funding through equity or debt financing, joint venture arrangements or a combination thereof,” Abattis writes. “The Company’s operations to date have been financed by the issuance of its common shares and debt instruments. The Company continues to seek capital through various means including the issuance of equity and debt. While the Company has been successful in raising funds in the past, there is no assurance that it will continue to do so in the future or that it will be available on a timely basis or on terms acceptable to the Company.”

3) Not enough focus? Abattis has its hands in a lot of pots (so to speak). Altogether, the company lists ten subsidiaries:

  • Abattis Bioceuticals International Inc.
  • Animo Wellness Corporation
  • BioCell Labs Inc.
  • Biocube Green Grow Systems Corp.
  • iJuana Cannabis Inc.
  • Instant Payment Systems LLC
  • National Access Pharmacy Corp.
  • North American BioExtracts Inc.
  • Northern Vine Canada Inc.
  • Phytalytics LLC

To raise capital, Abattis has started selling off some core technologies from its subsidiaries. “On August 21, 2015, Abattis sold the tangible asset, the flash freeze extractor prototype (FFE) and the intangible asset, the poultry avian flu patent, for $100,000 and 2.1 million free-trading shares of Abattis stock,” the company wrote in a recent MD&A. Those sales booked a loss of $393k (CAD).

Additionally, Abattis suspended operations at Phytalytics, a marijuana testing company in Washington state, in October of 2015. Despite capturing some 9 percent of the state’s testing marketshare, the business proved unprofitable.

One promising subsidiary is Northern Vine Labs. The Canadian company is seeking a Controlled Substance License (CSL) with Health Canada. The process is slow and costly, though. “Northern Vine’s first inspection in support of obtaining this License was completed on January 29, 2016,” the company wrote in a recent MD&A. If Northern Vine Labs acquires a license, it’s unclear how long it might take for it to start generating revenue from the venture. A license in hand might be enough to raise some capital from investors, though.

The bottom line on Abattis Bioceuticals Corp. stock (ATTBF)?

Should the three reasons listed above scare you off Abattis Bioceuticals stock? Probably. The company grew its sales last year by some 1,000 percent, but it still only generated $91,940 (CAD) in sales. It spent more than that in advertising alone (C$129,758). It also burnt through $420,309 (CAD) in legal fees and $1.1 million (CAD) in management and consulting fees.

Abattis does seem serious about cutting costs and generating revenue. Last month, they announced a partnership with China’s Jaingsu to export Abattis’ line of Phtnos Superfruit tonics and VitaGum to mainland China. It’s hard to say whether that’s too little too late. As I mentioned above, a cannabis license is pending for Northern Vine Labs. A positive result might buy the company more time, but they need to show they can generate some cash, and they need to do it soon. I’d stay away from the stock until they can prove that.

Nano-cap stocks are stocks with a market capitalization of $50 million or less. Check out more of my write-ups on nano-cap stocks here and marijuana stocks here. Full disclosure: I do not own a position in ATTBF, and I do not plan to initiate one in the next 72 hours.

Three reasons to invest in Abattis Bioceuticals Corp. stock (ATTBF)

What does Abattis Bioceuticals Corp. (ATTBF) do?

Abattis Bioceuticals Corp. originally sought to be a vertically-integrated company serving the medical marijuana and natural health products industries. They’ve slowly evolved away from that model to reduce overhead. The company’s now focused on generating revenue from its natural tonics, elixirs and blends, many of which contain its proprietary botanical blend ingredient PhytoNOS. The company’s also seeking a Controlled Substance License (CSL) with Health Canada via subsidiary Northern Vine Labs so it can possess and produce cannabis.

Three reasons to invest in Abattis Bioceuticals Corp. stock (ATTBF)

1) Rapid sales growth. ATTBF’s sales grew from $7,720 (CAD) in 2014 to $91,940 (CAD). That’s a gain of more than 1,000 percent. Yes, it’s fairly easy to grow when you’re only doing $7,000 (CAD) in sales per year, but their numbers are at least moving in the right direction. 2016 could be a defining year for the company.

2) China bound. Last month, Abattis announced a partnership with China’s Jaingsu to export Abattis’ line of Phtnos Superfruit tonics and VitaGum to mainland China. From their MD&A:

On August 10, 2016, Abattis announced that it has entered into an exclusive distribution agreement with the Jiangsu Regent Granary Trading Co., Ltd. (“Jaingsu”). Jaingsu is one of a select few that is exporting Canadian beef to China They also export canola, dried fruit and will also include Abattis’ line of Phtnos Superfruit tonics and VitaGum in mainland China. Jaingsu will utilize its network and sales experience to cultivate a market for Abattis offering. Jaingsu has certain sales revenue targets under the agreement; failure to achieve such targets will allow Abattis to terminate the Agreement.

The report continues:

“For the 2016 fiscal year, Abattis will continue with its focus as a bioceutical production and sales company, with projected launches of an extended Saskatoon Berry-based tonic range, an expanded Botanical Blends elixir line, as well as sales of the proprietary botanical blend ingredient PhytoNOS. The Company expects a pipeline of products to be deployed into retail and professional channels as well as the direct sales channel and wholesale distribution markets and to focus on further enhancing its international associations and trade.”

3) Diversification. Abattis has its hands in a lot of pots (so to speak). Altogether, the company lists ten subsidiaries:

  • Abattis Bioceuticals International Inc.
  • Animo Wellness Corporation
  • BioCell Labs Inc.
  • Biocube Green Grow Systems Corp.
  • iJuana Cannabis Inc.
  • Instant Payment Systems LLC
  • National Access Pharmacy Corp.
  • North American BioExtracts Inc.
  • Northern Vine Canada Inc.
  • Phytalytics LLC

There are pros and cons to this approach. Too many subsidiaries can be the sign of a company that doesn’t have one core strength. Most of Abattis’s acquisitions/subsidiaries stay true to the company’s core focuses, though: medical marijuana and natural health products.

Abattis seems to do a good job of cutting off businesses that don’t prove profitable. In 2014, one of their subsidiaries, Phytalytics, sought and received an analytics laboratory testing license in Washington state. Despite capturing some 9 percent of the state’s testing market share, the business proved unprofitable and operations were suspended in October of 2015.

Northern Vine Labs is seeking a Controlled Substance License (CSL) with Health Canada. “Northern Vine’s first inspection in support of obtaining this License was completed on January 29, 2016,” the company wrote in a recent MD&A. It sounds like they’re headed in the right direction.

The bottom line on Abattis Bioceuticals Corp. stock (ATTBF)?

Are the three reasons listed above good enough to invest in Abattis Bioceuticals stock? Sales growth is impressive, but you have to keep in mind ATTBF is still in the red. The company generated $91,940 (CAD) in sales last year, but it spent more than that in advertising alone (C$129,758). It also burnt through $420,309 (CAD) in legal fees and $1.1 million (CAD) in management and consulting fees. All told, the company lost nearly $6 million (CAD) in 2015. Without ongoing and significant cash infusions (or another spike in revenue), ATTBF could face a cash crunch. As of Sept. 20, 2015, the company had just $157,758 (CAD) on hand. I’d hold out until their revenue grows even more.

Nano-cap stocks are stocks with a market capitalization of $50 million or less. Check out more of my write-ups on nano-cap stocks here and marijuana stocks here. Full disclosure: I do not own a position in ATTBF, and I do not plan to initiate one in the next 72 hours.

Should I invest in American Cannabis Company, Inc. stock (AMMJ)?

Here are three reasons to invest in American Cannabis Company, Inc. stock (AMMJ) and three reasons to avoid it.

What does American Cannabis Company, Inc. (AMMJ) do?

Founded in 2013 in Denver, Colo., American Cannabis Company helps new companies in the marijuana industry get their footing. That means they work as advisers on everything from licensing to staffing to giving advice on growing and even assisting with branding and the purchasing of products. In addition, AMMJ also markets and sells its own industry-related goods.

Three reasons NOT to invest in American Cannabis Company, Inc. stock (AMMJ)

1) Trending down. Revenue at AMMJ peaked in 2013 when the company generated more than $7 million. That makes sense as legalization in Colorado was approved in 2012 with a kickoff in 2014. Even after generating $7 million, though, the company lost more than $4 million. In 2015, AMMJ generated $2.8 million in revenue. Those numbers need to be going the other direction for bigger investors to move into the stock. Year-to-date AMMJ is down more than 30 percent.

2) Competition. There is no clear-cut advisory firm that’s got a lock-down on the marijuana industry. A quick Google search turned up Canna Advisors, a private Colorado company that – as of July – has helped 15 companies earn licenses in the space. There’s plenty of opportunity here, but companies like AMMJ are going to have to be aggressive to stay in the lead.

3) Thin trading. American Cannabis Company, Inc. is a penny stock that trades over-the-counter. That means it’s not held to the same stringent reporting requirements that NASDAQ stocks are. On top of that, it’s thinly traded. Average trading volume is 135,000 shares a day. Low trading volume means prices can swing violently on any industry or company news or even on the whims of one big investor.

Three reasons to invest in American Cannabis Company, Inc. stock (AMMJ)

1) Radical growth. American Cannabis Company claims 98 percent growth over the past two years. They’ve helped 13 clients earn cannabis licenses in seven states, and they’ve helped build more than 560,000 square feet of cannabis cultivation space.

2) Cash on hand. Unlike most of the companies I’ve written about in the space, American Cannabis Corporation actually has a fair amount of cash on hand ($228K) per the company’s latest 10-Q filing. They have total current assets of $505,381 against total liabilities of $398,208.

3) Unique products. AMMJ sells a range of cultivation, extraction and retail supplies for the marijuana industry, from pot washing stations to a patented child-resistant cannabis container dubbed The Satchel. The company also offers a “plug-and-play” cultivation unit called the Cultivation Cube that growers can begin using the moment their cultivation license is approved.

AMMJ is also a “pure play” for the pot industry. There aren’t a whole lot of stocks that give investors direct exposure to the medical and recreational marijuana industry. American Cannabis Company fits the bill, and it does it in a wide array of ways: from consulting to retail products to growing expertise.

Should I buy American Cannabis Company, Inc. stock (AMMJ)?

I’m on the fence here. Some of their products sound exciting. The Cultivation Cube for instance could be a big seller if a new state approves medical marijuana. That said, AMMJ’s revenue growth isn’t all that impressive. I look for stocks with consistent quarterly gains in growth. Of course, nano-cap stocks are far from predictable and steady. Landing a single client could be the difference between a great quarter and a lackluster one. All that said, I think AMMJ would definitely be a candidate for inclusion in a marijuana ETF. It’s not at the top of my list, but it ranks higher than most of the industry’s stocks.

Nano-cap stocks are stocks with a market capitalization of $50 million or less. Check out more of my write-ups on nano-cap stocks here and marijuana stocks here. Full disclosure: I do not own a position in AMMJ, and I do not plan to initiate one in the next 72 hours.

Should I invest in Agritek Holdings Inc. (AGTK) stock?

Here are three reasons to invest in Agritek Holdings Inc. stock (AGTK) and three reasons to avoid it.

What does Agritek Holdings Inc. (AGTK) do?

Agritek Holdings has its hand in a lot of pots. It markets vapes under the Mont Blunt label. It also operates two subsidiaries: Agritek Venture Holdings, Inc., which holds pot-related land acquisitions and leases and The American Hemp Trading, Inc., which aims to produce “hemp-based beverages and products.” In general, the company’s aiming to become “a leader in compassionate care technology for the medical marijuana industry.” According to investor relations literature, “the company presently owns 80 acres of agricultural land in Colorado as well as acreage in Florida and plans to be the first Company to truly provide managed agricultural facilities, infrastructure, and greenhouse technology to licensed and regulated growers within the sector in both states.”

Three reasons NOT to invest in Agritek Holdings Inc. stock (AGTK)

1) Dead websites. As of this writing, I get an “account suspended” warning when I try to visit Agritek’s website at www.agritekholdings.com. The website for Mont Blunt is dead as well. That means one of two things: 1) the company has suspended operations; 2) the company’s behind on its hosting payment (a fact that doesn’t bode particularly well for the company’s operations).

2) Going concern? As of March 31, 2016, AGTK had total assets of $97,855 against total liabilities of $1.4 million. Cash on hand (and equivalents) was a mere $5,700. Worse yet, the company’s total stockholders’ deficit is just shy of $14 million! Per Agritek’s latest 10Q filing: “The Company had an accumulated deficit at March 31, 2016, a net loss and net cash used in operating activities for the reporting period then ended. These conditions raise substantial doubt about its ability to continue as a going concern. The Company is attempting to produce sufficient revenue; however, the Company’s cash position may not be sufficient to support its daily operations. While the Company believes in the viability of its strategy to produce sufficient revenue and in its ability to raise additional funds, there can be no assurances to that effect.”

3) Penny stock. Agritek Holdings Inc. is a penny stock. Most penny stocks are thinly traded, and Agritek’s no exception. Some 3 million shares of AGTK trade hands every day. That sounds like a lot until you consider the stock’s price at $0.0025. Even if 3 million shares of AGTK trade hands in a given day, that’s only $7,500 worth of stock!

Three reasons to invest in Agritek Holdings Inc. stock (AGTK)

1) A new direction? Last month, AGTK announced a partnership with WoahStork.com – an online marketplace where patients and recreational users can place online marijuana orders with local disensaries. “The parties have agreed on a 30% revenue share on a $3.75 transaction fee with additional revenues to be shared through advertising models, non-cannabis product sales and doctor’s appointment setting and record management fees.” Depending on volumes at WoahStork, this could be the source of revenue AGTK needs to stay afloat. “It is about time we get back to our original roots as being one of the first public Companies within the cannabis sector focusing on technology, storage of patient records and financial transactions within the industry,” CEO B. Michael Friedman said at the time. “We chose to partner with WoahStork creating a partnership with a high barrier of entry on the technology side as they have created technology far more advanced than a social media forum for cannabis or a delivery service.”

2) A “pure play” on pot. There aren’t a whole lot of stocks that give investors direct exposure to the medical and recreational marijuana industry. AGTK fits the bill, and it does it in a wide array of ways: from land holdings to an online cannabis-ordering platform.

3) Monetary damages on the way? In April (on 4/20/16, of course), Agritek Holdings announced a cease and desist and pending law suit against former CEO Justin Braune (now of Vape Holdings). Agritek alleges “the present vaporizer device and cartridge being sold as Vape Holding’s ‘Revival Vape’s’ product line was designed and developed during Mr. Braune’s tenure as Chief Executive Officer of Agritek Holdings under the Company’s wholly owned subsidiary Prohibition Products Inc. with Mr. Braune as President of Prohibition Products.” Agritek was preparing a law suit against Vape Holdings and Mr. Braune for “intellectual property infringement and violation of Mr. Braune’s employment agreement under non-compete clauses.” It’s unclear whether that lawsuit was filed. If so, there’s a chance (however slim) that Agritek could collect some monetary damages down the road.

Should I buy Agritek Holdings Inc. stock (AGTK)?

Getting in on Agritek’s real estate holdings and its partnership with WoahStork.com is tempting, but the company’s financial position looks too tenuous. Couple that with a pending lawsuit against the company’s former CEO, an offline website and no proven revenue streams, and AGTK looks like the longest of long shots. I’d stay clear until they prove they can generate some revenue.

Nano-cap stocks are stocks with a market capitalization of $50 million or less. Check out more of my write-ups on nano-cap stocks here and marijuana stocks here. Full disclosure: I do not own a position in AGTK, and I do not plan to initiate one in the next 72 hours.

Should I invest in American Riviera Bank stock (ARBV)?

Here are three reasons to invest in American Riviera Bank stock (ARBV) and three reasons to avoid it.

What does American Riviera Bank (ARBV) do?

A small bank in Santa Barbara, Calif., American Riviera opened in July of 2006. It’s done well, too, recently recently merging with The Bank of Santa Barbara. That gives ARBV two community branches, both of which are focused on growing their deposit bases and expanding lending.

Three reasons NOT to invest in American Riviera Bank stock (ARBV)

1) Under-performance. Year-to-date, ARBV is underperforming the S&P 500. Shares are up 3 percent while the broader market is up north of 5 percent. Still, that’s better than some of the nation’s largest banks. Bank of America (BAC), for example, is down more than 7 percent this year, and JPMorgan Chase (JPM) is down half a percent.

2) Merger woes. ARBV recently merged with The Bank of Santa Barbara. Unexpected costs or difficulties with the merger could impact the bank’s ability to make a profit. Mergers that look great on paper can sometimes result in culture clashes that negatively impact a business.

3) Over-the-counter shares. ARBV trades over-the-counter – not on a national securities exchange like the NASDAQ. That means ARBV isn’t held to the same stringent reporting requirements as companies on the NASDAQ. We know less about ARBV than we do other banks that trade on the NYSE.

Three reasons to invest in American Riviera Bank stock (ARBV)

1) Strong growth. 2015 saw significant growth for the bank. According to ARBV’s 2015 annual report, the company grew its average total loans by 14 percent to $179 million. The bank also grew its average assets by 12 percent to $232,000. All told, the bank had net income of $1,303,000 in 2015 (unadjusted for non-recurring merger-related costs). That worked out to $0.48 per share. “Our bank finished the year with a record $249 million in assets and 18% higher pre-tax income over 2014 excluding merger related costs,” the company wrote.

At the end of 2015, ARBV had a book value of $10.56. Today, shares are trading at $11.65. Over the past five years, ARBV shares have appreciated more than 124 percent. That’s well above the S&P 500’s return of 84 percent. “Our goal is to reach a $1 per share earnings run rate by year end,” ARBV wrote early in 2016.

2) Great track record. American Riviera Bank celebrated its 10th anniversary on July 18, 2016. The finance industry is one of the most heavily regulated industries on the planet. Staying in business and growing over the course of a decade (particularly through the housing and financial collapse of 2007-2008) is impressive.

3) Merger time. American Riviera Bank merged with The Bank of Santa Barbara effective January 1, 2016. While this is adding significant merger-related costs to the company’s books, ARBV believes the “merger has positive financial synergies.” If you’re looking for growth, two branches are better than one.

Should I buy American Riviera Bank stock (ARBV)?

ARBV’s shares look appealing so long as interest rates begin to normalize. Artificially-low interest rates make it difficult for banks to generate big profits as the spread between their borrowing rate and the rate they lend to customers is small. If ARBV can continue to grow, it will do so by capturing more of the Santa Barbara County market – an area with a median household income of $63,409. Santa Barbara County is the 17th-wealthiest county in California. Right now, ARBV controls 2.77 percent of the market there (by deposits).

Nano-cap stocks are stocks with a market capitalization of $50 million or less. Check out more of my write-ups on nano-cap stocks here. Full disclosure: I do not own a position in ARBV, and I do not plan to initiate one in the next 72 hours.

Should I invest in NZCH Corp. stock (ZPCM)?

Here are three reasons to invest in NZCH Corp. stock (ZPCM) and three reasons to avoid it.

What does NZCH Corp. (ZPCM) do?

NZCH was formed in Nevada in 1999 with the goal of “creating and operating a global network of independently owned websites.” As of last year, HRG Group owned approximately 97.9% of the company’s outstanding common shares. NZCH Corp.’s stock is currently classified as a penny stock.

Three reasons NOT to invest in NZCH Corp. stock (ZPCM)

1) No revenue, no focus. Formerly Zap.Com Corporation, NZCH Corp. owns a portfolio of domain names. Their dotcoms include nine names: betacenter.com, betaworld.com, buybid.com, eatfood.com, instantwinner.com, netcentralbank.com, paranoid.com, thefed.net and zap.com. Unfortunately, NZCH Corp. hasn’t figured out what to do with its portfolio of names. “The Company has not identified a specific industry to focus on,” NZCH writes. “As of June 30, 2016, the Company had not generated any revenues.”

2) Shedding cash. Over the past two years (2014-2015), NZCH Corp. lost about $150,000 a year. That loss was attributed to SG&A (Selling, General and Administrative Expenses) with $50,000 per year going to auditing. As of Dec. 31, 2015, the company had $595,514 on hand. At the NZCH’s current burn rate, it’ll be out of money in four years.

3) Thin trading. NZCH is a penny stock, but it’s thinly traded even for a penny stock. Average trading volume is 27 shares a day! Shares often go weeks without a single trade. That means if you buy some ZPCM and want to offload it, it could be weeks or months before you find a buyer.

Three reasons to invest in NZCH Corp. stock (ZPCM)

1) Leadership. The company’s president and CEO, Omar M. Asali, has an impressive resume. He currently heads up HRG Group Inc., a $3.2 billion company that trades on the NYSE under ticker HRG. HRG owns and operates NZCH Corp. Before joining HRG, Mr. Asali was Head of Global Strategy at Harbinger Capital Partners, LLC. “Before joining Harbinger Capital in 2009, Mr. Asali was the co-head of Goldman Sachs Hedge Fund Strategies (‘Goldman Sachs HFS’) where he helped manage approximately $25 billion of capital allocated to external managers,” per HRG Group. Over the past five years, HRG’s stock is up more than 500 percent. If Mr. Asali can’t figure out a business strategy for NZCH Corp. it’s probably because he doesn’t have time to devote to it.

2) Domain names. As stated above, NZCH does own the rights to nine domain names: betacenter.com, betaworld.com, buybid.com, eatfood.com, instantwinner.com, netcentralbank.com, paranoid.com, thefed.net and zap.com. Domain names are like real estate on the internet. NZCH could build whatever they want on any of their domains, and domains do have some intrinsic value. Insurance.com, for example, set an international record when it sold for more than $35 million in 2010. Zap.com is a memorable, three-letter domain, which gives it some value. That said, I’m not particularly impressed with NZCH’s other domains. If they build a thriving business out of any of their domains, it will be because of the underlying businesses – not the domain names.

3) Upward trend? ZPCM shares recently hit a 52-week high at $1.75.

Should I buy NZCH Corp. stock (ZPCM)?

Put it on the back burner. If and when they come up with a business strategy, it might be worth taking another look. My best guess is HRG will eventually sell their domains and shut down NZCH.

Nano-cap stocks are stocks with a market capitalization of $50 million or less. Check out more of my write-ups on nano-cap stocks here. Full disclosure: I do not own a position in ZPCM, and I do not plan to initiate one in the next 72 hours.

Adventure Gold Inc. (PINK:AGONF, CVE:AGE) stock forecast

Adventure Gold Inc. holds rights to more than two dozen potential gold properties in the Abitibi Greenstone Belt located in north-western Quebec and north-eastern Ontario.

This post is part of series where we’re checking in on the Top 500 junior gold and silver mining stocks profiled in our book Top 500 Gold and Silver Mining Stocks: Metalproofing Your Portfolio from the Coming Inflation Shock.

Performance: First, let’s compare Adventure Gold’s performance against the AMEX Gold Bugs Index (HUI) – a basket of industry-leading gold stocks.

Time Span AGONF Performance HUI Performance
1 Month +61% +13%
3 Month +44% +3%
YTD -15% -12%

Adventure Gold’s following the usual trend: it’s more volatile than larger equities. When times are good, they’re really good for small cap miners. When times are bad, the declines are steeper. Still, AGONF’s performance over the past three months has been particularly impressive.

Profile: Adventure Gold Inc. holds rights to more than two dozen potential gold properties in the Abitibi Greenstone Belt located in north-western Quebec and north-eastern Ontario. The company plans to spend $14 million on exploration over the next five years. Most recently, Phase 2 drilling has begun on the Lapaska Property in Quebec. Highlights from previous drilling there showed 1.0 g/t gold over 103.4m including 10.3 g/t gold over 3.8m. http://www.adventure-gold.com/

Risks: Volume on AGONF is extremely low. Some days no shares trade hands. That means that even if you want to sell your shares, there might not be a buyer out there. If there is a buyer, they probably want a discount to the current quote. Volume currently averages 2,500 shares per day.

Recent News: Phase III drilling has kicked off on the company’s 100%-owned Pascalis-Colombiere gold property in the Val-d’Or mining camp in Quebec. The most promising hole showed 3.1 g/t Au over 27.0 metres. Click for more drilling results. Pascalis-Colombiere is a proven property. It yielded just over 200,000 ounces of gold for Cambior Inc. (now IAMGOLD) between 1989 and 1993. That’s a plus over more speculative explorers with unproven plots of land.

Adventure Gold had $5 million on hand as of April, and they have partnerships with two major mining companies in Agnico Eagle (Dubuisson in Val d’Or) and Lake Shore Gold and RT Minerals (Meunier-144 in Timmins West). They’re planning $2 million in drilling through next April with additional work commitments of $10 million over the next 5 years. Promising results would be a boon to the company’s shares.

Check out our book Top 500 Gold and Silver Mining Stocks: Metalproofing Your Portfolio from the Coming Inflation Shock (pictured above) to uncover more undiscovered gold and silver mining stocks.

How to invest in lithium stocks

As with any emerging industry, investing in lithium stocks requires a lot of homework. Here are three ways to bet on the industry including several lithium stock picks.

Looking at investing from a macroeconomic view, it’s difficult to find arguments against the future of lithium. In the words of Forbes, “The gas engine made petroleum the world’s biggest commodity. The electric car could do the same for (lithium).”

When Tesla Motors Inc. (NASDAQ:TSLA) unveiled the company’s luxury electric car, the Roadster, it took the rest of the car industry by surprise. Chevy and Nissan had banked on enormous lithium batteries in their respective electric cars (the Volt and the Leaf), while the Roadster linked together thousands of small lithium-ion batteries (not unlike what you’ll find in your laptop). The net effect was lower costs and higher performance.

No matter what the end battery looks like though, most of the world’s top electric vehicles rely on lithium battery technology to store and deliver energy. And the demand for lithium carbonate and lithium metal should climb rapidly alongside demand for electric cars and mobile gadgets with long battery lives.

As with any emerging industry, investing in lithium stocks requires a lot of homework. Here are three ways to bet on the industry:

1) Invest in a lithium ETF. There are currently two lithium-related ETFs that trade on the New York Stock Exchange (see my post ETFs explained in pictures for information on ETFs). The first, Global X Lithium ETF (NYSE:LIT) is a pure-play on lithium stocks. It seeks to replicate the yield of the Solactive Global Lithium Index – an index composed of “companies active in exploration and/or mining of Lithium or the production of Lithium batteries.” Buying shares in LIT is like investing in each of the 20+ companies that comprise the Solactive Global Lithium Index.

The second lithium ETF on the NYSE is the Market Vectors Rare Earth/Strategic Metals ETF (NYSE:REMX). REMX invests in companies engaged in the mining of lithium, but also 48 other rare earth and strategic metals companies. That makes REMX far less of a pure play on lithium, but it does distribute risk across several other elements that are increasingly used in high-tech products including wind turbines and hybrid vehicles.

2) Invest directly in lithium stocks. There are a number of companies that are engaged in the mining and production of lithium. The biggest beyond a doubt, though, is Sociedad Quimica y Minera (NYSE:SQM). Based in Chile, SQM produces nearly 30 percent of the world’s lithium carbonate. The company holds rights to huge swaths of the Salar de Atacama – a Chilean lake bed that’s purported to hold 27 percent of the world’s lithium. Here’s a list of the world’s top five biggest lithium stocks (including SQM) and their stock performance year-to-date:

Stock YTD Gain
Sociedad Quimica y Minera (NYSE:SQM) -19.25%
FMC Corporation (NYSE:FMC) -13.8%
Rockwood Holdings, Inc. (NYSE:ROC) +.64%
GS Yuasa Corporation (TYO:6674) -34.7%
Saft Groupe SA (EPA:SAFT) -28%
Galaxy Resources Limited (ASX:GXY) -56.9%

As you can see, it hasn’t exactly been a banner year for lithium stocks, but that could change quickly if and when the global economic gloom starts to lift (or if we suffer through higher crude oil prices). If that happens, you can expect penny lithium stocks to outperform their larger rivals (see my post Top five penny lithium stocks).

3) Invest in car companies that harness lithium technology. The most promising area in lithium technology is the electric vehicle industry. Several companies in the space stand out including:

  • Tesla Motors Inc. (NASDAQ:TSLA): Manufacturer of the all-electric Tesla Roadster
  • General Motors Company (NYSE:GM): Manufacturer of the hybrid Chevy Volt
  • Nissan Motor Co., Ltd. (PINK:NSANY): Manufacturer of the all-electric Nissan Leaf
  • BYD Company Limited (HKG:1211): Manufacturer of the all-electric E6 (see my post BYD Auto IPO: Is the battered Chinese battery and car maker stock a buy?)

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Is Lyric Jeans Inc. (PINK:LYJN) stock a buy?

Shares in penny stock Lyric Jeans Inc. (PINK:LYJN) rocketed up more than 300 percent after the company announced a jewelry collection that will debut at Wal-Mart. Does LYJN have more room to run?

Within three hours of the publication of a press release yesterday, shares in penny stock Lyric Jeans Inc. (PINK:LYJN) rocketed up more than 300 percent from $0.006 to $0.0237. That pushed up the company’s market cap nearly $15 million in just 180 minutes. The move came on the announcement that Lyric will soon launch a new jewelry collection under the brand name Lyric Nation at nearly 1,500 Wal-Mart (NYSE:WMT) stores.

Does that make shares in Lyric Jeans a buy? As is the case with most penny stocks – no one really knows for sure. Financial terms of the deal were not disclosed, and the company hasn’t released any financial data since the quarter ended March 31, 2010. Still, here’s what we do know: As of March 31, 2010, Lyric Jeans had sales of $170,317 and expenses of $237,693. Total net loss for the period was $164,410.

Since March 31, 2010, we haven’t gotten any financial data from Lyric Jeans, which makes it difficult to determine the effect of the Wal-Mart deal. If the jewelry line will be sold in 1,500 outlets, each Wal-Mart location will need to buy more than $11,000 in merchandise in order for the deal to be worth more than $17 million in sales. Of course, that’s not a good measurement when trying to determine whether the stock still has room to run as market caps almost always outstrip annual sales. Investors, after all, buy shares in a company to capitalize on future growth.

The question now is, how sustainable is Lyric’s growth? Is the Wal-Mart deal a one-off or could it lead to more deals moving forward? There are more than 2,500 Wal-Mart locations in the U.S. Should the retailer see encouraging sales of the Lyric Nation jewelry line, more orders will almost certainly flow in.

Lyric also claims its products have long lined the shelves at other well-known retailers including Bloomingdale’s, Nordstrom and Target, and in March the company announced it was unveiling a LYRIX brand jewelry line targeted at girls ages 13 to 17 at nearly 800 Claire’s Stores, Inc. Should the jewelry line do well, Claire’s has more than 3,000 locations worldwide Lyric might be able to tap. Both deals are signs the company’s moving in the right direction. And it just might breath some longer-term life into a stock many investors had written off.

Until we start getting actual financial reports from Lyric, though, the announcements probably won’t lead to a long-term uptrend in shares. They might, however, convince Lyric to start publishing regular financial results, and – pending the numbers in those reports – that might turn Lyric into a long-term buy.

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Gold price flirts with all-time record highs

With the dollar tumbling to a 15-month low, gold spot prices have risen more than $30 over the past five trading days. That’s pushed the yellow metal less than $10 shy of its all-time record high of $1,444.40 an ounce.

With the dollar tumbling to a 15-month low, gold spot prices have risen more than $30 over the past five trading days. That’s pushed the yellow metal toward its all-time record high of $1,444.40 an ounce – a record that was set on March 7.

Investors have shown a preference for precious metals as a safe haven in the face of turmoil in the MENA region and the devastation in Japan. Traditionally, the dollar has served as a refuge of last resort, but analysts argue that the Fed’s quantitative easing program has encouraged investors to look elsewhere.

“The dollar is not currently a safe haven in times of macroeconomic uncertainty because any downward revision in global and U.S. growth automatically means a higher risk of QE3,” Beat Siegenthaler, senior currency strategist at UBS, wrote in a note to clients (per MarketWatch).

The Fed’s policies are making it more difficult to maintain investor confidence in the dollar, but an unexpected rise in interest rates or a premature halt to QE2 would likely spook the markets as the U.S. recovery looks promising but is far from a sure bet. The end result is a move into gold, silver and other precious metals as investors look for ways to protect their assets.

Gold spot prices spiked as high as $1,435 an ounce in early trading yesterday; less $10 shy of all-time record high prices. It’s a trend that will likely continue so long as the threat of QE3 hovers over currency markets.

Yesterday’s top-performing gold mining stocks (mostly microcaps) all rose more than 10 percent with Vista Gold Corp. (AMEX:VGZ) sprinting up 19.1 percent. Here’s a look yesterday’s other winning precious metals stocks:

  •  Mines Management, Inc. (AMEX:MGN) +18.2%

  •  Alexco Resource Corp. (AMEX:AXU) +12.3%

  •  Kobex Minerals Inc. (AMEX:KXM) +11.3%

  •  Kimber Resources, Inc. (AMEX:KBX) +10.3%

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