Blockmate: Hivello Is The Billion Dollar Idea On Its Way To Billion Dollar Execution

We have been extremely bullish on Blockmate Ventures Inc. (MATE.V) (MATEF). The stock's pullback back under $0.10 after running to $0.13 from $0.03 represents an ideal level to buy while others chase expensive pumps like Bluesky Digital Assets Corp. (BTC.CN) (BTCWF). As we have explained before, MATE offers the superior business model and is unambiguously cheaper as it is trading at half the price it should be based on its majority stake in Hivello. If you like our picks you can follow this blog by clicking the follow button on the top of the left hand panel. We have 1016 followers on here as well as 120 followers on our Canadian blog. You can also follow us on X @StockTradePicks which has over 5,000 followers.

For those who aren't familiar with DePin, it can be summed up as allowing others to use your computer's resources for a larger project or purpose. Some examples include data storage, using your IP address as a VPN or using your computing power to develop and test out AI models. Hivello has started with its marketing campaign and we decided to download and use the public beta to see for ourselves how it works. After one day of use, these are the earnings generated so far:

A couple of pennies plus 350 points which are to convert into HVLO tokens. That's the wild card until we know the conversion rate of points into HVLO and demand for the HVLO token once it starts trading. Our goal is to accumulate a good amount of these tokens, just in case. We will continue to try this out to see how earnings improve as our network remains online long enough to start to generate traffic from the more lucrative coins:

The main issue for us was proving out that this platform was functional, and it is. That's already more than what most penny stock vaporware can say. We are experimenting primarily with an old laptop purchased in 2014 and out of commission since 2019 which would otherwise be too slow and frustrating to be functional for anything else. Laptops are not built for crypto mining, especially not useless junk from 2014. The fact that it hasn't conked out yet is already a good sign. This is where we think Hivello has a moat. The idea of bringing DePin mining to the masses with an easy to use and self-managed platform. For instance, it isn't that difficult to set up a Mysterium node by yourself. However, that old laptop would not be able to handle the multiple nodes and platforms needed to duplicate what Hivello offers. It downloaded and operated Hivello with no issue. There must be hundreds of thousands of old and outdated computers hung onto by people which can now be put to good use. Even if it's only $20 per month net of higher utility costs, it'll be worth it to a good amount of people. Especially those in low income regions of the world or where it's difficult or preferable to get your hands on US Dollars. 

No matter how much Mysterium tries to portray itself as a kind of heroic VPN service that allows citizen journalists from North Korea a place to get their voice out, the reality is the platform is being used to do some amount of illegal activity. Read the Reddit forum to get a sense of the issues, but it's not that hard to imagine what type of web searches might be run on an advanced VPN service that makes the end user difficult to trace. If you don't want cops knocking on your door, you absolutely cannot let public networks from myst.exe through your firewall. As Mysterium has tried to crack down on the bad behavior, now it looks like demand is sporadic from the private networks. The MYST token has tanked in value since inception and people are now complaining they are making hardly any money with inconsistent traffic. For someone who created their own Mysterium node, that's going to be a problem. They have to manage the new reality and in the meantime their earnings go down and their computer resources are used inefficiently until they find an alternate DePin:

 

The point of having passive income through DePin mining is kind of self-defeating if you have to manage it all the time. If someone who was ahead of the curve on DePin mining to the point that they set up their own node and they post on Reddit about it is having issues, imagine the thousands of people who aren't ahead of this curve who would be that much more frustrated, cynical or confused about it. That is Hivello's target market. If something like Mysterium falls off a cliff, the AI in the Hivello system will adjust the DePin mining targets to optimize the user's earning potential based on the computing resources they have and current demand for their resources. Right now with six of them available on Hivello, it isn't that much of an advantage. But once Hivello gets dozens then hundreds of these DePin tokens on its platform, we can't imagine anyone being able to manually duplicate what Hivello can do for them. Every user is going to have a different maximum earnings potential based on their individual location and computer resources. It's not like someone can go on YouTube and find "How to maximize earnings with DePin" follow the instructions and get the best result. Even experienced miners will be willing to share some of the revenue with Hivello in exchange for a system that allows them to operate to maximum efficiency. If they are currently earning $1,000 a month but can use Hivello to increase that to $1,100 a month net of Hivello's take, they'll do it. 

This is where we think our reviews help as well. Hivello/Blockmate Chairman Domenic Carosa is touting the benefits of Hivello as "AirBnB for your computer" and he's going to continue with a positive message. Crypto mining has pitfalls and risks. Risks of depreciating your machine from overuse and risks of bad actors using your computing resources to mask their activity at your expense. As different tokens deal with these bad actors like a whack-a-mole game, the lucrative nature of mining their tokens will ebb and flow and miners will have to adjust. Hivello can manage that adjustment for you.  

Now that we did a product review, we can talk about the near-term potential of the stock. We previously estimated a price target of $0.50 on MATE and still think that is a realistic near term target. But after getting familiar with the platform and its potential, the sky is much higher than that. MATE's value proposition can be broken into two components:

1. The value of the Hivello token (55% owned by MATE)

2. The earnings power of the Hivello platform.

The current capital raise is being undertaken at a $30 million valuation and the token FDV is proposed to be at $45 million. After accounting for the 55% ownership stake and USD to CAD conversion, MATE would have $0.20 to $0.30 per share of value just from its ownership stake in Hivello. The beautiful part to the investment thesis is that it's already covered off on the balance sheet side of things while the revenue potential works its way out. Eventually the tokens will be earned by people who are on the Hivello network, but that process only occurs by generating revenue for Hivello. 

There are three main components to figuring out Hivello's revenue potential:

1. Active users on the platform

2. Revenue per user

3. Percent of revenue share taken by Hivello

The first component is the biggest driver of extremely high potential here. The company has stated that there were 30,000 people on the waitlist for the beta launch. More than 50,000 were watching the AMA with Domenic Carosa yesterday. This was all before any serious attempt at marketing. As long as the system can handle it, there is not going to be an issue onboarding a ton of people. The message is simple and compelling to people new to crypto and active miners. Earn extra money from sharing computer resources and mining crypto on an easy-to-use platform for the new people. For the experienced ones, the pitch will be the aforementioned AI-generated peak earnings potential and ability to handle a bunch of DePin tokens on one platform. 

Revenue per user is another wild card, but with a more defined ceiling. Carosa stated yesterday in the AMA that the upper limit of earnings potential with a GPU and the latest equipment should be $200 to $300 per month per device/location. $20 to $30 on the lower end with older equipment. Based on our early stage use, the system is functional but so far not driving anywhere near the rates needed to hit the lower target. We are on pace for about $1 a month so far. If people don't see earnings potential that is material to them, they won't last long on Hivello. The ability to download and use Hivello is a great advantage to shareholders. This is a level of due diligence rarely given to investors. If the platform does result in the returns promised by Carosa, investors who use it will be the first to know. 

The revenue share rate will be at least 10% given that the investor presentation states that Hivello users can stake the Hivello tokens for up to 90% of the rewards. We will make a relatively conservative assumption of 15%. 

Assuming the average user earns $50 gross a month and a revenue share is 15%, Hivello's ARPU would be $7.50. The total addressable market is a big question. There is an estimated 560 million people who own some form of crypto. An estimated one million have mined Bitcoin. While it's unknown how many people have mined DePin. All of these numbers will only increase with time. With think one billion is a reasonable estimate of an addressable market when considering the amount of people who own crypto and the populations of places like Africa and India which stand to benefit a disproportionately high amount from being able to earn a few dollars a month while having decent internet access. 

Out of one billion people, should Hivello attain 1% penetration, or 10 million, that would be $75 million in monthly revenue, or $900 million a year. It's of course much easier said than done, which is why we are keeping our much more reasonable $0.50 target on MATE for now. But it's an illustration of the potential here. It's a lot easier to convince people to make money off of a free platform like Hivello in a relatively hands-off way than it is to acquire users who have to pay for a platform (or even join for free but don't make any money). That's why 10 million might not be nearly as far-fetched as it seems. As long as people find Hivello worth it - so the monthly payout has to be high enough to keep their interest. 

This billion dollar idea is on its way to becoming a billion dollar execution. So far Hivello is active and functional. That is a significant first step. If the company is able to do the following, the stock and the platform will be a success:

• Have a successful token launch and ensure that HVLO's valuation remains strong. 
• Ensure that Hivello can handle increased traffic from a growing user base.
• Effective marketing of Hivello, while also relying heavily on word of mouth.
• Increase the variety of DePin tokens available on the platform.
• Make sure users reach the estimated $20 to $300 per month in revenue.
• Ensure its AI models result in optimal use of each user's spare computing resources.

Disclosure: We are long MATE.V

If You Like Bluesky, You Should Absolutely Love Blockmate

If there is one thing to learn about Canadian penny stock traders, it's that they love to chase stocks high after the best money has already been made. Even more than U.S. traders. That has become apparent when looking at Bluesky Digital Assets Corp. (BTC.CN) (BTCWF). In ran from $0.05 to over $0.80 in Canada last week before pulling back into the $0.30's. It's currently in the $0.60's at just after 11am Eastern on Monday, leaving it with a market cap of around $17 million. There were rumors that it ran based on some confusion around the growing popularity of the social media platform also named Bluesky. But it's main bread and butter is BlueskyIntel, a business intelligence and web engagement platform for businesses looking to get into AI and blockchain technologies. It's expected to launch in January. To simplify it, we feel that it's kind of like a Wix for AI and blockchain based on Bluesky's corporate presentation, and will be a SAAS business model to ideally generate profitability. It's a decent business model and idea, but it's not clear to us how this small cap out of Canada plans to dominate this industry when Silicon Valley dollars will almost certainly come up with their own solutions. 

Contrast this to our recent pick Blockmate Ventures Inc. (MATE.V)(MATEF). At $0.10, MATE has an $11 million market cap. Its 55% owned Hivello DePIN platform is slated to launch in December, along with its token. Bluesky has a tighter float which is conducive to greater spikes and more volatility, but that's already offset with the higher price and the (in our opinion unjustified) greater valuation. In every other way, MATE presents a far better investment opportunity than BTC:

• Hivello has been able to raise capital through the private equity market, with the latest $3.5 million at $30 million U.S. valuation in the latter stages of completion. That means Hivello has managed to attain a valuation outside of the Canadian penny stock market. MATE's 55% stake implies a per share CAD price of over $0.20 and that excludes the potential valuation bump once the Hivello token starts trading. It's trading at half the price it should be based upon a verified third party valuation of Hivello from experienced institutional crypto investors who are willing to hand over a check at that price. In contrast, we don't know how much BlueskyIntel is actually worth because there is no third party investment outside of the Canadian smallcap markets. 
• A follow up to the previous point, Bluesky has been raising capital. The latest raise of just under 5 million shares recently closed at $0.05, with warrants at $0.065. This is substantial dilution for those who are buying in at over 10 times the price just a few days later. In contrast, MATE's share count has remained steady at 111 million for over a year as the last capital raise through the public vehicle took place in mid-2023. Bluesky might have the lower share count, but once the capital raises come off their lock, it will have a lot more selling pressure. 
• The previous point is backed up by substantial insider selling seen on Bluesky. The COO and President Anthony Pearlman has sold nearly half of his shares on the run up:  
  
  
  
• While BlueskyIntel seems like a decent idea, as a SAAS model, it will face an uphill battle to profitability. We find Hivello's DePIN model that enables users to participate in crypto projects and get paid inherently superior in today's economic climate. For Bluesky to make money, it has to convince businesses to hand over money for its services. Hivello enables its users to MAKE money and takes a cut of the earnings. Everyone with access to spare computing power who wants to make a few extra dollars a day will be a potential target. In a climate that's very favorable to that type of model given the gig economy and rising prices of groceries and housing costs. Contrast that to the climate BlueskyIntel's target market is facing - small business closures and rising input costs. As Bluesky is asking for money, it's subject to competition from similar (and presumably more well financed) solutions. There is nothing stopping someone from using Hivello, making money there, then making additional money on another DePIN project that isn't run on the Hivello platform. There are no competitors in the same way Bluesky faces competition.
• Finally, investors in MATE are actually engaged in what the company is doing. They know about Hivello, the arbitrage opportunity through the private equity raise and the business model. They actively talk about these opportunities on the message boards. They can hype the company's prospects without hyping the stock. They are what we would classify as "smart" money. In contrast, BTC is absolutely inundated with dumb money right now or dishonest day traders posing as diamond-handed longs. The rocket ship crowd that just talks about stock prices and their half-assed technical analysis. They're not talking about BlueskyIntel or its coming release in January. They are ignoring or laughing off the insider selling. There is also misinformation out on the stock. Bluesky is NOT the social media platform. Bluesky ISN'T currently mining crypto. But that doesn't matter to someone who is FOMOing in at $0.60 hoping for a $1.00. Well, it doesn't matter until the hype is gone then they have to face the reality of what they actually own and how much it's actually worth. 

Bluesky appears to be a perfectly named company with the perfect CSE symbol that is trading purely on hype. Blockmate is a real investment in the crypto space. Smart money will be coming into MATE and taking profits on BTC while there is profits to be had. It's up to each trader if they want to be smart money or dumb bagholders. Because BTC is almost certainly headed down. Or if the market is so strong that BTC still gains from here, MATE is going to catch up and have the far better returns from this point forward. If you like our picks you can follow this blog by clicking the follow button on the top of the left hand panel. We have 1016 followers on here as well as 120 followers on our Canadian blog. You can also follow us on X @StockTradePicks which has over 5,000 followers.

Disclosure: We are long MATE.V

The Cheapest Crypto Stock You Never Heard Of

With Trump easily winning the U.S. election last week, left-wingers in politics are trying to understand why. Especially with a split ticket trend where people voted Trump for President, but voted Democrats otherwise. AOC did some market research on this topic to figure out why some people support her and Trump. Anti-establishment and anti-war reasons were brought up, but one theme that sticks out is the idea that Trump wants regular people to make money and be successful and self-sufficient. Rather than being poor and relying on government handouts and therefore big government bureaucracies. That falls in line with his pro-crypto stance and why he is so popular with crypto traders. A 22 year old with $1,000 to his name will be able to turn that into $10,000 or $100,000 with the right crypto play easier than trying to build wealth through labor or racking up large student loan debt in college. 

We have seen the impact on the price of Bitcoin and crypto-based listings like BTC Digital Ltd. (BTCT) which has gone up 10x in three days. This trend is so strong that it has even infiltrated the notoriously dead Canadian small cap market, where TSX Venture and CSE listings such as Spirit Blockchain Capital Inc. (SPIR.CN), Bluesky Digital Assets Corp. (BTC.CN) and BIGG Digital Assets Inc. (BIGG.V) are on fire. However, there is one crypto stock that is trading well below fundamental value that has one of the biggest upsides of them all, Blockmate Ventures Inc. (MATE.V). While it's up 67% so far today, it's still relatively unknown and trading at a fraction of the value of its majority-owned project. If you like our picks you can follow this blog by clicking the follow button on the top of the left hand panel. We have 1016 followers on here as well as 120 followers on our Canadian blog. You can also follow us on X @StockTradePicks which has over 5,000 followers.

At $0.075 and with 111 million shares outstanding, its market cap is currently $8.3 million. Its main asset is the Hivello DePin project, which is in the latter stages of a $5 million raise at a $30 million USD valuation. MATE will maintain a 55% stake, so the value of its holding is $16.5 million USD. Translating that to CAD, it's $23 million, or a little over $0.20 per share. Even with the stock having doubled from its zombie price at the start of the week, it still is nearly two-thirds undervalued compared to the value of the project. 

Why the disconnect? We think it's simple. The TSXV is currently so far removed from the crypto space that the liquidity of the crypto project dominates the liquidity of the parent stock. But we have seen this trend happen before. Eventually the TSXV catches up as the mining investors capitulate and chase the hot trend. And when that catchup happens, it will be violent. SPIR was trading at $0.03 at the start of October, and it's around $0.30 now. The TSXV is the birthplace of HIVE, one of the first listed crypto stocks. Investors there have shown themselves to support the crypto trend. What makes MATE unique is that it's sitting so far below its intrinsic value that another 200% move merely has it trading at a justified level. The "pump" wouldn't have even begun, but shareholders can expect it to after that. 

The Hivello project can raise funds at a $30 million valuation for good reason. DePin projects are like crowdfunding in the crypto world. Instead of only rich people in the know having access to the best projects, individual crypto investors can contribute and make money on these projects. We're not sure if the near 80-year old Trump understands everything there is to know about crypto, but the Hivello project which promotes the monetization of assets while they would otherwise be idle would be something up a real estate mogul's alley. 

Hivello describes itself as such:

"We are dedicated to simplifying DePIN nodes for the masses, aiming to break down the complex barriers often associated with decentralized networks and making them more accessible and user-friendly for everyone.

We are in the process of building a radically simple desktop app. This app is designed to empower users by enabling them to earn a passive income simply by contributing their computer resources. This innovative approach not only benefits the users but also strengthens the overall network."

For anyone who is old enough to remember the early days of the internet, you'll know that pay-to-click ad business models were very popular among students and other people looking for some spare change in the late 90's and early 2000's. The market is definitely there for even $5 per day income streams. With today's hustle and gig economy, that market has only gotten bigger. The advantages to Hivello and other DePin projects are that they are completely passive income. You don't have to be at your computer to earn money. Users can benefit by running the program overnight during non-peak hours, where electricity rates are cheapest. It has the potential to turn everyone in the working class with a computer to at least get a taste of how capitalism works. We expect it to be extremely popular in the developing world where every U.S. Dollar goes a lot further than it does in the West. 

With the launch expected in a few weeks, there is substantial hype around Hivello. Its X account has over 100,000 followers and each mundane post gets a decent amount of engagement. Once it does launch, we expect that hype to increase, with positive effect on MATE's stock price. If Hivello ends up with a valuation north of $100 million (not at all a big ask for a Web3.0 project that makes money for people in this political and economic environment), the value of MATE's investment stake would be worth in excess of $0.50 per share. This is completely disregarding the FOMO hype that can be generated from day traders piling into momentum stocks like we have seen on BTCT or SPIR.CN. If you have made money trading crypto stocks, redeploying those profits into an obscure blockchain stock that has barely moved and is trading below its fundamental value seems like a good move. 

While we think $0.20 per share should be the minimum value on MATE due to its stake in Hivello, our target is $0.50 given the bullish macro environment and pending launch. This target is certainly achievable when looking at the performance and fundamental valuation of peers. Heck, we can't even rule out a move to $0.50 in a few days. 

Disclosure: We are long MATE.V 

CCM Joins NISN and RGC as a Low Float Runner With TOP or HKD Potential

We recently wrote up two stocks - Nisun International Enterprise Development Group Co., Ltd (NISN) and Regencell Bioscience Holdings Limited (RGC) - while also calling NISN the most undervalued stock in the world. These stocks exhibit traits that make them potential TOP Financial Group Limited (TOP) and AMTD Digital Inc. (HKD) type of runners. RGC has increased 5% since the July 25th write up while NISN has increased 25%. We remain bullish on both. But another small float Asian-based stock is starting to run, which could create more problems for people who tend to short these stocks while trying to blanket the sector as a scam. Concord Medical Services Holdings Limited (CCM) shot up 27% yesterday on 213,000 shares traded, making it the perfect play to bet on a massive rise.  If you like our picks you can follow this blog by clicking the follow button on the top of the left hand panel. We have 1016 followers on here as well as 120 followers on our Canadian blog. You can also follow us on Twitter @StockTradePicks which has over 5,000 followers.

CCM just undertook an ADS ratio change, equating to a 1 for 10 reverse split. With this change, it now has less than 3 million shares outstanding and just like NISN and RGC trades like a stock with a very low float. Two months ago it spiked from $7.90 to $21 in one day, and looked like it was about to do it again yesterday as the stock briefly spiked over $10.

NISN is a value play while RGC is a trading vehicle. CCM is a value play but in a different way from NISN. In an SEC filing yesterday, CCM mentioned its subsidiary Concord Healthcare Group which is publicly listed on the Hong Kong Exchange under the symbol 2453.HK. In the subsequent events section at the very end of CCM's 20-F filing, it mentioned how 2453.HK went public on January 9th. This is the result since then:

Concord Healthcare Group has been on fire, rising from its HKD $14.28 IPO price to over HKD $48 today. This is CCM's YTD chart:

How much sense does it make that CCM's subsidiary is up over 3x but other than quick spikes, CCM's price is flat YTD? It makes absolutely no sense. We think CCM was starting to break out in late June as we see it start to track 2453.HK when it made 52-week highs over $50. The news of the ADS ratio change scared some traders, but now that the change is behind us, CCM looks like a low float value play. Especially as 2453.HK has broken its mini-pullback downtrend and looks set to create new 52-week highs shortly. 

Disclosure: We are long NISN, RGC, CCM

The Two Best Candidates To Run Like TOP or HKD With Verified Shorts To Squeeze

Most people who are reading this know about TOP Financial Group Limited (TOP) and AMTD Digital Inc. (HKD). The former ran from $6 to as high as $250 in three days a little over a year ago and the latter ran from $20 to $2,500 in a couple of weeks shortly after its IPO in late July and early August 2022. There is not just one, but two low-float, light volume and proven volatile Asian listings that have a shot at going parabolic like these stocks. Not only that, both of these stocks have the same admitted short on them. Meaning if one runs, the other is likely to follow as the short will be subject to a domino effect of margin calls. Those two stocks are Nisun International Enterprise Development Group Co., Ltd (NISN) and Regencell Bioscience Holdings Limited (RGC). This short is spamming various fintwit platforms, trashing both companies, so we know they are desperate. If you like our picks you can follow this blog by clicking the follow button on the top of the left hand panel. We have 1016 followers on here as well as 120 followers on our Canadian blog. You can also follow us on Twitter @StockTradePicks which has over 5,000 followers.

Update 7/29: With RGC up 35% and NISN up 22% on Friday, shorts are in even greater trouble. NISN is particularly interesting as it is rising on only a couple hundred thousand in daily volume. When LPA exploded to $500 in late May, it did so on 200,000 shares. Light volume stocks are the ones with the best chance to explode in price. 

Update 7/30: RGC and NISN continued their rise on Monday. 9% and 11% respectively. Though they did pull back from their day highs. Notice the strong correlation in their charts. Shorts were trying to push both down in the afternoon but then both shot up near the end of the day. Squeeze potential remains strong with both of them as shorts are getting desperate. 

The short in question runs the Reddit forum Vampire Stocks. Their analysis on NISN is filled with errors that they admit exist in the comment section when users bring them up. Their analysis on RGC claims that they are now short but admitted that they badly lost on the company in the past. So they have been subject to short squeezes before but apparently haven't learn their lesson on the exact same stock and want to do it again in order to fulfill their loony bin fantasies of all Chinese listings being run by criminals.

We consider NISN to be the most undervalued stock in the world. Revenue growth was 65% and EPS was $4.46 for 2023 while the company ended the year with cash per share of $29. Working capital is $182.2 million, or over $45 per share. There is absolutely no reason for this stock to be trading less than $50, at that would imply a P/E ratio of just 11x and trading at barely over 1x of its working capital. With the CEO and Board of Directors looking at ways to maximize shareholder value, they could easily enact a buyback plan or special dividend that sends the stock flying while putting hardly a dent into the substantial cash balance. 

Since that write up from a couple of weeks ago, the stock has started turning back up after a pullback into the $7's. It closed at $8.34 yesterday, the highest close it has had in over a week. The one-month chart looks really strong for a breakout as the mini-downtrend from the pullback has been broken:

RGC is on the opposite spectrum in terms of fundamentals. As an early stage biotech, it has no operations and doesn't seem to be doing much of anything other than early stage work. According to the short, it's a worthless shell. But that's okay, because what we are looking for is a tight float and volatile trading for a potential squeeze. We aren't looking for long term fundamentals here, just like on HKD and TOP. The CEO spent over a million dollars to purchase shares on the open market back in 2021, despite already owning about 80% of the shares outstanding. 

The stock has already gone on a wild ride from $3 to $30, and has since pulled back into the $10's in early morning trading today. That's okay though. Why? Because it did a very similar pullback two years ago:

August 20, 2021 is very reminiscent of the trading that took place two days ago. Yesterday's pullback was similar to August 23 while today is another quiet day trying to form that base. We will see if in another day or two if RGC screams into the $40's like it did back then. If this is a boiler room pump and dump like the shorts claim it is, then logic would suggest that the same boiler room can get the same level of activity as last time. One key difference is that volume has been much lighter. This is important because the most notorious runners (HKD, LPA) do so on extremely light volume. RGC traded barely over a million shares each of the past two days. Unlike "small float" dilution scam type of stocks which allegedly have only a few million in the float, but will trade 10's of millions of shares in a day and go nowhere.  RGC trades like a stock with only a 1.5 million float. So does NISN with its 3 million float, trading a few hundred thousand shares or less each day. That actually gives both stocks credibility. 

Shorts can scream pump and dump with Aegis and Maxim until the cows come home, but neither of these stocks trade like traditional Aegis and Maxim pump and dump dilution scams. Both of them have had stable shares outstanding for years. Their "pumps" are relatively stable, not like stocks that go from $1.00 to $10 then back to $1.00 on 100 million in volume within a matter of a day or two.  

Funny enough, if RGC and NISN announced a business combination, both of those stocks would absolutely go flying. NISN has the cash and fundamentals to support a high valuation while RGC has a story that has been proven to get the market's attention. That would destroy the shorts. 

Disclosure: We are long NISN, RGC

The Most Undervalued Stock in the World

 On Friday, Nisun International Enterprise Development Group Co., Ltd (NISN) rose 52% to $9.15 after releasing its 2023 annual results. These results are spectacular in terms of revenue growth and EPS generation. In addition to that, the company is trading below cash and book value. This deal seems too good to be true, but it isn't. NISN is likely the most undervalued stock in the world. With only 4 million shares outstanding and a 3 million float, this one could be the next Asian HKD-like runner, except with the numbers to back it up. This stock fundamentally justifies a price over $50. As it has risen from less than $4.00 at the start of the month, it might finally be getting the recognition it deserves. If you like our picks you can follow this blog by clicking the follow button on the top of the left hand panel. We have 1015 followers on here as well as 120 followers on our Canadian blog. You can also follow us on Twitter @StockTradePicks which has over 5,000 followers.

From the news release:

Nisun International Reports Financial Results for Fiscal Year 2023

 

Nisun Achieves 65% Revenue Growth and Ends the Year with $29.0 Cash Per Share

 

Shanghai, China – July 12, 2024 – Nisun International Enterprise Development Group Co., Ltd. (“Nisun International” or the “Company”) (NASDAQ: NISN), a technology and industry driven integrated supply chain solutions provider, today announced its financial results for the fiscal year ended December 31, 2023.

 

Financial Highlights:

 

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Revenue: Total revenue for the year was $386.7 million, representing a 65% increase compared to $234.2 million in 2022.

 

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Gross Profit: Gross profit increased to $40.0 million from $37.0 million in the previous year.

 

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Net Income: Net income for 2023 was $17.7 million.

 

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Cash and Cash Equivalents: The Company ended the year with $114.5 million in cash and cash equivalents.

 

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Earnings per Share (EPS): The Company reported earnings of $4.46 per share, with a cash per share value of $29.0.

 

CEO’s Comments:

 

Xin Liu, CEO of Nisun International, commented, “We are thrilled to report another year of outstanding financial performance, underscoring the success of our strategic initiatives and operational excellence. Our revenue growth of 65% is a testament to our robust supply chain solutions. We have made significant strides in expanding our supply chain capabilities, diversifying into other agricultural products. These efforts have positioned us well for sustained growth and profitability.”

 

Mr. Liu continued, “Despite our strong financial performance, substantial cash reserves of $29.0 per share, and robust earnings, our stock trades at just over one times annual earnings by the end of June. We believe this significantly undervalues our company. The Board of Directors and I are actively considering strategic alternatives to unlock shareholder value and better align our market valuation with the intrinsic value of our company. Our strong cash position and ongoing growth initiatives provide a solid foundation for these efforts.”

 

Operational Highlights:

 

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Supply Chain Trading and Solutions: Nisun International continues to enhance its supply chain trading and financing solutions capabilities, leveraging state-of-the-art technology to streamline operations and reduce costs. The Company successfully managed the daily supply of 3.6 to 6 million eggs to major online platforms across key regions.

 

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Geographical Expansion: The Company’s supply chain operations now span multiple regions, enabling delivery of a diverse range of products. This extensive network ensures seamless operations and strengthens Nisun’s market presence.

 

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Diversification: Nisun has expanded its supply chain solutions to include other agricultural products, positioning the Company for substantial growth in the agricultural sector.

 

 

 

Looking Ahead:

 

Mr. Liu added, “Our commitment to innovation and excellence remains unwavering as we continue to drive growth and create value for our shareholders. The strategic expansion of our supply chain solution will enable us to meet the evolving needs of our customers and capitalize on new market opportunities. We are excited about the future and confident in our ability to achieve even greater success.”

 

Revenue growth was 65%, EPS was $4.46 and cash per share is $29. Working capital is $182.2 million, or over $45 per share. There is absolutely no reason for this stock to be trading less than $50, at that would imply a P/E ratio of just 11x and trading at barely over 1x of its working capital. With the CEO and Board of Directors looking at ways to maximize shareholder value, they could easily enact a buyback plan or special dividend that sends the stock flying while putting hardly a dent into the substantial cash balance. 

Despite numerous Chinese and Asian-based pumps going to insane valuation levels, this stock appears to suffer from a lack of visibility or people just think there is something fishy going on, despite having a PCAOB-compliant audit. However, with the financials showing the business growth is strong, fundamental valuation is very cheap, the leadership team is looking to unlock greater shareholder value, numerous Chinese stocks rising to insane levels and that NISN has only a 3 million float and generally trades only a few thousand shares each day, this is an ideal play to look for a 5x to 100x bagger.  

Disclosure: We are long NISN

A Reverse Split Microcap Play That Could Go On A Massive Run

There have been numerous small float penny stocks that have had incredible reversals and sustained runs lately. Some of them on little to no news. Inspire Veterinary Partners, Inc. (IVP), Zapp Electric Vehicles Group Limited (ZAPP), Soligenix, Inc. (SNGX), Longeveron Inc. (LGVN) and NaaS Technology Inc. (NAAS) just to name a few. Kazia Therapeutics Limited (KZIA) is an example today that is up around 300%, but that's on great news from a Glioblastoma trial that might be worth a look as a multi-day runner to $2+. Like all of these stocks it has the risk of dilution. But right now even with the risk of dilution and even post-financing announcements, that has not stopped these stocks from continued runs so we don't see how KZIA should be any different. One stock that fits the bill perfectly to these others is Beneficient (BENF). After running over 100% on July 5th, its pullback into the mid $3's is an excellent level to buy in for a lottery ticket type of purchase. If you like our picks you can follow this blog by clicking the follow button on the top of the left hand panel. We have 1015 followers on here as well as 120 followers on our Canadian blog. You can also follow us on Twitter @StockTradePicks which has over 5,000 followers.

BENF announced its year-end results on Tuesday and they were absolute garbage. Think of this company kind of like a B. Riley Financial, Inc. (RILY) or Upstart Holdings, Inc. (UPST) on crack and then you will understand why it has struggled since it went public. The market initially reacted negatively, bringing the stock down to $3.03. However, by the end of the day it raced back up to $3.95, actually finishing green. Wednesday's trading has seen it bounce between $3.50 and $4.00 on light volume and large spreads. This trading indicates that it's the mirror image of a "sell on news" event we see with runners. BENF's performance has been bad. It has an open SEPA and going concern clause. But it has already dropped from a reverse split-adjusted 52-week high of just under $300 to all the way down to $2 before the slight bounce. It looks like the bad news is priced in, at least for now. Almost certainly the company will tap into the SEPA at some point in the future, but it will need to do so on a high volume, high pump day. It doesn't look like it happened on July 5th, so there will be another day that it will run. 

ZAPP looks like BENF's closest comparable. An absolute financial disaster that has tanked massively since going public but has recovered considerably since its reverse split fueled lows. On June 5th, ZAPP increased from $0.71 to $2.43 on over 54 million volume before pulling back to under $1.50. It shot up again on June 20th before a quiet period of low volume and large spread trading around $2.00. Since the start of this month it has not looked back and has hit nearly $20. That is the type of trading we are looking for on BENF. We think it's a good idea to buy a lottery ticket position then add to it once volume and price starts gaining momentum again. It will be quick but those who are watching it closely should be able to capture an awesome run.

Disclosure: We are long BENF and KZIA