Will this ‘Unloved’ Sector Explode Soon?

My friends love to ask: what’s the next ‘hot’ sector?

It’s not easy forecasting the future.

You can lose a lot of money if you get it wrong. But, if you get it right, you can make a fortune.

There are millions of variables to consider ― and they can change at any moment.

It takes a while for an opportunity to become clear, as well.

And even longer for the market to recognise it…

I believe there’s a sector that could explode higher this year. But before sharing the details, it’s worth reviewing a few sectors that have taken off in the past few years. That should benefit your trading for the rest of the year.

Let’s get cracking…

Learn from history

It was a while ago in Resource Speculator (my former investment newsletter), when I tipped cobalt in June 2016 and vanadium in April 2017. But it’s a story worth revisiting. Examining the past helps you understand the future.

Both sectors were dead when I recommended them. People thought they were a joke. I remember there were three cobalt stocks on the ASX at the time. It was roughly the same for vanadium.

Both sectors ended making readers triple-digit profits.

Cobalt took six months to pay off.

The market took nine months to wake up to vanadium.

To understand what changed, check out a snipper of the April issue of Gold & Commodities Stock Trader:

Hot sectors — such as vanadium and cobalt — can still make you money today. But stock selection is absolutely critical. You need to buy stocks which haven’t run yet. That’s easier said than done. The best stocks have made punters lots of money. So if a stock hasn’t run in a hot sector, there’s a chance it will never perform.

‘Most punters jumping on the bandwagon hope the trend in motion will stay in motion. But that’s the quickest way to go broke.

It doesn’t matter whether it’s resources, technology, or cryptocurrencies. Sectors always go in and out of favour. So similar to Jim Rogers, you should learn to go against the herd. Become a contrarian investor today. Buy beaten-down stocks in sectors with massive potential, which no one cares about.

Most of that analysis remains true today, mind you. I still recommend buying beaten-down stocks in ‘unloved’ sectors with massive potential. That said, my view has changed with vanadium. Companies are still acquiring vanadium projects on the ASX, and their share prices are barely reacting to the news.

That suggests the good times are over.

Punters made money from the ‘hype’ surrounding the power of vanadium redux batteries earlier this year. It shouldn’t be a shock. It wasn’t to my readers ― vanadium prices were skyrocketing. Vanadium batteries offer multiple benefits in the ‘base-load’ energy storage space, which make them attractive compared to coal and nuclear energy.

Unfortunately, vanadium is too expensive to extract from the ground using modern-day technology. That will likely change one day. But unlike lithium companies, which offer a reasonable timeline to profitability today, vanadium companies don’t offer near-term production potential. 

It costs billions to get the product out of the ground.

Most vanadium stocks are pulling back or consolidating sideways, with the ‘hype’ dying down. I suspect they could fall to lower prices in the months ahead, especially if the market weakens into end of financial year.

A new ‘hot sector’ should emerge in the next financial year.

I’m talking about junior oil and gas…

A sector that could explode soon

Junior oil and gas companies are worth a look today, given the looming eastern gas shortage in Australia. Also, despite a sharp price drop in recent weeks, oil prices have performed well this year. If oil prices hold, and the eastern gas crisis builds in the months ahead, junior oil and gas stocks could outperform.

The market is divided when it comes to oil and gas.

But the mid-tier oilers are doing well…

$428 million-capped Canavan Energy [ASX:CVN] tapped the motherlode last week. Here’s what happened next:

Canavan Energy chart 25-07-18

Source: Commsec

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The share price doubled within a week!

$710 million-capped Far Ltd [ASX:FAR] ― a monster oil company we tipped in Resource Speculator near the low ― has attracted a fair bit of capital following the discovery:

Far Ltd chart 25-07-18

Source: Commsec

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The company has massive potential ― especially in a high-priced oil environment. But people forget about junior oil stocks, and they could be the next sector to run. The excitement with the mid-tiers could transition into the small-end of the market.

It’s a big call…

But the sector is ‘overlooked’ by the market. Remember, the majority of punters don’t like crude oil. That’s why junior oilers have seen little to no love yet. Junior oilers haven’t reacted to the positive crude price environment with the producers. Remember, the producers have outperformed over the past two years.

Now the mid-tiers are catching up…

Will the speculative oilers be next?

Don’t write it off!

If the crude price surges past US$80 per barrel, the story could change for the best. That’s why we’re sounding the warning bells today. If crude oil skyrockets, rest assured, I’ll recommend the best speculative stocks in Gold & Commodities Stock Trader. My sole goal is to make my readers triple digit profits this year, similar to cobalt and vanadium.

Junior oilers could be next sector to run.

If I’m right, you could make a fortune.

Regards,

Jason Stevenson,
Resources Analyst, Gold & Commodities Stock Trader


Jason Stevenson is Markets & Money’s resource analyst. He shares over a decade’s worth of investing and trading experience across resource stocks and commodity futures and options. He originally studied accounting and finance at Curtin University, where he was awarded a first-class honours degree. His professional background stems across high-net-worth, top tier accounting (corporate finance, tax and auditing), and sell-side equities research. Before joining the team at Markets and Money, Jason worked at boutique firms which advised fund managers and high-net-worth clients on where to invest. Whether it’s gold, crude oil, copper or an obscure metal like vanadium, you can rely on an in-depth analysis in Markets and Money. Jason also brings you extensive macro, political and geopolitical analysis from around the world. He leaves no stone unturned when it comes to telling the truth. Jason is also the lead analyst of Gold Stock Trader, a premium service for investors serious about precious metal stocks. Websites and financial e-letters Jason writes for:


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