Wednesday, 13 May 2020

The Next Big Canadian COVID Stock

While the Coronavirus outbreak has been a tragedy for the markets and life in general, it has opened up an opportunity for very profitable trades. Small cap companies that were headed nowhere now have a shot of life as they try to use their technology or manufacturing capacity to help the health care system deal with COVID-19. We have been able to capture a few of these companies early for very profitable trades for us and our readers while others like MedMira (MIR.V) (MMIRF) and Datametrex AI (DM.V) (DTMXF) remain compelling swing trades.

On February 27, we issued an alert on Vaxil Bio (VXL.V) (VXLLF) as the next big Coronavirus play hidden on the TSX Venture. VXL rose from $0.08 to as as high as $0.34 in the days following our alert before settling at $0.12. On March 13, we issued an alert on Lattice Biologics Ltd. (LBL.V) (LBLTF) at $0.05. It rose as high as $0.21 in the days following our alert and sits at $0.065 now. We are up to 880 followers on our ValueTrades blog despite not giving out a lot of alerts, a fact that we think is indicative of a successful, diligent and prudent stock picking history. If you like our picks you can also follow this blog by clicking the follow button on the top of the left hand panel. You can follow us on Twitter @StockTradePicks which has over 4,000 followers.

The next potential major runner in Canada is Therma Bright Inc. (THRM.V). It released a very intriguing update on the manufacturing of personal protective equipment and hand sanitizers while applying for government grants on Tuesday. When we first alerted it this morning it was up 50% to $0.03 on 3.6 million volume. The buying continued throughout the day and it ended up 75% to $0.035 on over 5 million volume. It has just a $5.7 million market cap with 164 million shares outstanding which compares very favorably to other COVID plays like MIR at a $207 million market cap and DM at $34 million market cap.

We think THRM can move to the $0.05 to $0.10 range in the coming days and we expect more news to come as the COVID business develops. THRM already has experience with getting medical device approval from Health Canada. The company may do a financing but that will only occur with the arrival of a government grant. TSXV financings generally must take place above $0.05 unless specific exceptions are granted. THRM's CEO Rob Fia has extensive connections on Bay Street. He is also the CEO of City View Green Holdings (CVGR.CN). CVGR dipped to a low of $0.02 in early April. Despite that, CVGR managed to raise cash at $0.05 and complete an M&A transaction. This resulted in the stock tripling to $0.06 off of its lows. For these reasons, we feel that $0.05 is a good lower bound target in the near term for THRM.

The news release on THRM:

Toronto, Ontario--(Newsfile Corp. - May 11, 2020) -  Therma Bright Inc. (TSXV: THRM), ("Therma Bright" or the "Company"), a progressive medical device technology company, has initiated due diligence and has applied for government grants to manufacture personal protective equipment ("PPE") and hand sanitizers to combat the Covid-19 crisis. Several potential partners have approached Therma Bright to produce PPE and hand sanitizers for the Canadian and export markets. Therma Bright is ideally positioned to manufacture PPE leveraging the Company's quality management system ISO 13485 and recently approved MDSAP through SGS International. The Company also holds Health Canada & FDA approvals for its existing products and intends to utilize this regulatory expertise to apply to Health Canada for licenses related to PPE & hand sanitizers. Certain regulatory approvals are required to produce masks with specific claims such as filtering to N95 standards and hand sanitizers that claim to kill bacteria and viruses.
Therma Bright has applied for government grants from the Government of Ontario and the Federal Canadian Government for the start-up of this business line. These grants may be complemented with an equity offering to fast track our capability to enter this business line quickly. The Government of Ontario grant is available to companies in Ontario that intend to set up production of PPE for local use and to support Ontario healthcare organizations and businesses to protect its citizens from Covid-19. In addition, Therma Bright has applied for two Federal grants related to innovative mask material or designs. Therma Bright applied for the Federal grants to investigate the use of its existing expertise and technology that may potentially be used to create a new innovative mask.
Therma Bright has begun due diligence and has sourced surgical mask and N95 equipment and sourced the raw material related to manufacturing both types of masks from the U.S. Manufacturing would occur in Ontario. The inputs to manufacture hand sanitizers may initially be imported from the U.S. as the Company identifies local suppliers for bottles, labeling and hand sanitizer raw material sources in Ontario. Several locations have been identified that meet Health Canada requirements to manufacture PPE and hand sanitizers.
Therma Bright will report back to investors as information materializes.
Rob Fia, CEO, commented:
"Therma Bright is pleased to assist the Provincial and Canadian governments in this endeavour to combat the Covid-19 pandemic. Therma Bright has key components to enter this line of business such as quality management systems, regulatory licenses, innovative technology along with an expert advisory and consulting team. If successful at securing these grants the Company will donate a portion of the PPE and hand sanitizers to assist with the crisis to those that need it most. We feel this is a great way to give back to our country and its citizens. We also look forward to designing a new innovative mask to protect people around the world from this deadly virus."
Disclosure: We are long THRM.V


What's next for microcap stocks? TradeMiner identifies seasonal trends and market cycles, the Penny Stock Prophet and Microcap Millionaires finds the next big small cap plays in various industries while Addicted to Profits makes trades from a Canadian perspective.

There are also some good books available on microcap stocks and day trading such as:

Mastering Microcaps: Strategies, Trends, and Stock Selection (Bloomberg Professional Library)

The Little Black Book of Microcap Investing: Beat the Market with NASDAQ/AMEX Microcap Stocks, OTCBB Penny Stocks, and Pink Sheet Stocks

Microcap Magic: Why The Biggest Returns Are In Stocks You've Never Heard Of

How to Day Trade for a Living: A Beginner’s Guide to Trading Tools and Tactics, Money Management, Discipline and Trading Psychology

How to Day Trade: A Detailed Guide to Day Trading Strategies, Risk Management, and Trader Psychology

A Beginner's Guide to Day Trading Online (2nd edition)

Stock Investing for Beginners: Marijuana Stocks


Here are some other good stock market resources. This includes technical analysis and day trading, dividend stock investing, gold and commodities, sector rotation, options trading and microcap trading strategies:

The dividend stock report from dividendstocksonline.com

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