SuperQ Quantum Computing: The Revenue Generating Phase Has Accelerated

In January, we initiated bullish coverage on SuperQ Quantum Computing Inc. (QBTQ.CN) (QBTQF) with a $10 target. The stock has dropped from $1.20 to around $1.00 since then, though it's up 10% today. This decline, while frustrating, makes the valuation proposition on QBTQ even stronger. Quantum and AI stocks continue to increase to extremely rich valuations in the United States. QBTQ has been overlooked for now while traders overpay for hot trading vehicles like Xanadu Quantum Technologies Limited (XNDU). We don't think that trend will last forever, especially as QBTQ jump started its revenue-generating phase in news announced today. While QBTQ might be down 20% in four months since our first report, it certainly hasn't tanked 60% in a day like XNDU after several days of being a high flier. If you chase value instead of hype, you won't leave yourself exposed to that kind of immediate and devastating loss. 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 1039 followers on here as well as 131 followers on our Canadian blog. You can also follow us on X @StockTradePicks which has over 5,000 followers. 

Our previous report primarily focused on QBTQ's revenue potential through the growth of its subscription model of ChatQLM. While that is well underway, QBTQ achieved a big boost in near-term revenue by securing an agreement with AI Financial Corporation (AIFC). QBTQ will provide post-quantum security and compute tokenization to AIFC's digital asset infrastructure. AIFC is currently valued at around $140 million, but raised $1.5 billion last year in order to create a World Liberty Financial (WLFI) digital asset treasury. No revenue numbers are directly quoted in this release, just a reference to a "commercial agreement of significant size". Given the size of the treasury itself, a million dollar annual contract would represent just 0.07% of it. We think it is reasonable to assume that this contract is around this figure in the six or seven-digit range. 

Why is this move not garnering more attention today? While a 10% move up is nothing to sneeze at, had this news been announced a year ago, we think it would have garnered a significantly more positive market reaction. AIFC has dropped from its $10 peak from a year ago, and took a $400 million unrealized loss on its cryptocurrency assets in 2025. This deal is a victim of poor market timing from a stock exposure perspective, but it's perfectly timed from the perspective of QBTQ growing a new market segment. If a company the size of Advanced Micro Devices, Inc. (AMD) can double in a matter of a few weeks on expected financial improvement, QBTQ is going to eventually do the same regardless of the initial market reception of the news. Numbers will dictate valuation. Smart investors are buying low or at least putting the stock on their watch list to monitor closely heading into future quarterly financial reports. 

Hardships breed opportunity. AIFC is not alone in being a struggling digital asset strategy play that went from being valued well over its NAV at peak hype to below it today. There were many small cap companies that pivoted to various DAT strategies and raised a boatload of money to do so. As such, there is a plethora of companies for QBTQ to target. These companies are desperate to turn their fortunes around regarding their floundering stock prices and underlying crypto assets. Being proactive in the deployment of NIST-approved security in the face of hacking threats is one way to boost the perception of AIFC's business model. We point to AIFC's CEO stating the following in the news release:

"By partnering with SuperQ, AiFi is among the first to embark on the journey toward a quantum utility and security economy. Future-proofing our multibillion annual monetary flows and our strategic $WLFI treasury is a priority. Enabling decentralized computation and secure AI e-commerce is our competitive edge. This partnership sets a new benchmark for institutional digital assets, ensuring our infrastructure remains the safest harbor for capital and compute as we scale across borders."

We did not build in QBTQ's ability to service the crypto industry into our $10 target on QBTQ. However, given the current stock price and upside from current levels, we are comfortable leaving this target as is. 

One final thing that we noticed that we think is very important to how QBTQ is going to be viewed by potential investors moving forward. We typed "QBTQ NIST" into Gemini and got the following results:

QBTQ is being portrayed as a company that has initiated the deployment and commercialization of NIST standard services. Unfortunately the AI is occasionally mixing up QBTQ with BTQ Technologies Corp. (BTQ), but the deal with AIFC which unambiguously belongs to QBTQ is now yielding results. Investors in QBTQ should also be aware that if the AI is confusing BTQ results with QBTQ, logic would dictate that the opposite flow will also be true. Those who are specifically searching for BTQ-related NIST activities will potentially be fed with QBTQ results. Further research will cause BTQ investors to stumble upon QBTQ accomplishments. Given that BTQ's market cap is over 20 times higher than QBTQ and that it has a NASDAQ listing, the cross-pollination of the two company's accomplishments will have a bigger impact on QBTQ. Both from the sheer number of investors and from the perception that QBTQ is a "near-peer" to BTQ but is valued at a small fraction of it. 

Disclosure: We are long QBTQ.CN, We have been compensated to write about QBTQ through stock options, but have also engaged in open market buying.

A Stock With Less Than A 580,000 Float That Trades At A 3 P/E

Today was just another regular day in the market, where a couple of Asian-based small caps took off as Star Fashion Culture Holdings Limited (STFS) and Powell Max Limited (PMAX) both nearly doubled. Phoenix Asia Holdings Limited (PHOE) took off yesterday and Julong Holding Limited (JLHL) did the same a day before. While FOMO buyers in these stocks now are going to take a risk of them falling, smart value traders have identified an Asian-based listing that can explode like these others have already done. What makes Ten-League International Holdings Limited (TLIH) stand out from the rest is that its fundamentals support a much higher price. With it moving up on much lower volume since it released its annual report last week, it is primed for a massive breakout at any time. 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 1039 followers on here as well as 131 followers on our Canadian blog. You can also follow us on X @StockTradePicks which has over 5,000 followers.

TLIH released its financials last week. Revenue growth was 30% and net income increased 197%. The stock reacted positively with a 50% increase, but we think the increase was muted because there was some confusion over the numbers. The company reported $0.15 in EPS for 2025, but that was before the 1-for-10 reverse split that took place on May 1. Split-adjusted EPS is $1.57. That means TLIH trades at less than a 3 P/E, an impossibly low valuation for a company that is growing 30% in a year and isn't diluting. 

The market is slowly beginning to recognize the opportunity. While it traded nearly 20 million shares on May 1, the volume has declined to where it traded only 238,000 shares today. This lower volume has resulted in a steady move up, with three days of gains moving the stock from $3.66 to $4.12. The high frequency trading bots have left the stock and value investors who recognize the opportunity are buying in. Three of the last four days have witnessed a high of around $4.60, so that is a key level to watch for a breakout. Assuming it does, the stock could move quick because the financials justify a much higher price and the thin float of less than 580,000 shares makes a PHOE-like move on 200,000 shares possible. 

Disclosure: We are long TLIH

SuperQ Quantum Computing: Moving from Quantum Potential to Quantum Utility

SuperQ Quantum Computing Inc. (QBTQ.CN) (QBTQF) and Aegis Critical Energy Defence Corp. (QESS.CN) (QESSF) recently announced an MOU to "integrate SuperQ's proprietary quantum optimization technologies with Aegis's high-performance energy infrastructure, creating a next-generation framework for efficient and resilient energy management". It should come as no surprise to our readers that we are going to cover QBTQ next. Since we first mentioned QESS f/k/a Energy Plug Technologies Corp. (PLUG.CN) (PLGGF) about a year ago, the stock tripled in price and hit our previous $0.50 target so that we had to upgrade it to $1.50. We will be providing an update to QESS in future reports but today's focus will be on QBTQ. 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 1041 followers on here as well as 125 followers on our Canadian blog. You can also follow us on X @StockTradePicks which has over 5,000 followers.

Our readers are not stupid and we are not going to treat them as such. Clearly our successful coverage on QESS has led to being recruited to provide coverage on QBTQ as well. But we don't take deals that impact our reputation unless we see clear upside potential. We think QBTQ is in an even more advantageous situation than QESS was a year ago and it is reflected in the type of compensation we accepted for our research. With QESS we participated in a private placement at the time in addition to buying on the open market. For QBTQ, there is no private placement. The only way to buy shares right now is on the open market and we accepted stock options along with putting our personal money at stake. As the disclosure of compensation is out of the way, we will explain why we are enthusiastic about this stock and think it offers a unique opportunity for retail investors to get in at the ground floor. There are four reasons, but really two sets of inter-related reasons: technology and time to market and valuation and float. QBTQ is at the forefront to move the industry from quantum potential to quantum utility, yet is trading at a sub-$50 million market cap. 

Naysayers who don't pay a lot of attention may look at the QESS deal with QBTQ and wonder: "this company just did a deal with QNC, now this one. Are they just lining up empty deals to pump stock?"

No, as a next generation infrastructure play, QESS actually needs to explore these integrations of technology. Any deal with Quantum eMotion Corp. (QNCCF) (QNC.CN) is related to quantum security. Making sure that the system is safe from hacking and related terrorist threats. The MOU between QESS and QBTQ is related to QBTQ's quantum computing technology. Looking at ways to use data and predictive modelling to design energy systems in the most efficient way. 

While companies like QESS and QNC have bright futures, keep in mind most of their business is focused on B2B. Seeking and developing partnerships are inherent to their business models. That is not the case for QBTQ. Partnerships are obviously nice to have but the company doesn't need them to generate revenue. 

QBTQ recently launched ChatQLM at the Consumer Electronics Show. The app is based off of the company's Super™ Platform, which is like the ChatGPT of quantum and supercomputing. The goal is to let regular people access quantum computing tools in a normal conversational way. As opposed to existing tools which are meant primarily for physicists and researchers and have user interfaces requiring a high amount of expertise in those fields. We think of it like the "WWW" moment for quantum. The internet in the 1980's was primarily college networks communicating with each other to share scientific data. It was the creation of the WorldWideWeb with a more user-friendly interface that spurred the wild growth of the internet. ChatQLM is of course a long way off from being a mainstream name like WWW, but that is what gives investors the opportunity to buy into it at a sub-$50 million market cap in the first place. We are betting on the name becoming mainstream. But even if it doesn't, entry now is at a low enough bar where even mild success can be materially profitable. 

The company has released a corporate presentation. We will be referencing this presentation as part of our bullish thesis and recommend that readers review this document thoroughly. 

After discussions with CEO Dr. Muhammad Khan, he gave a clear outline and examples of when ChatQLM will be superior to ChatGPT. ChatGPT is good for content generation and qualitative work. We think people understand this as they have encountered enough stories or conversations on the internet that look like they were generated by AI. Where ChatGPT falls short is its inability to provide analytical answers as it does not have the access to quantum tools nor the computing ability to use them. For instance, if someone was to ask "How to build a stock portfolio to maximize returns?", it gives out a generic answer about knowing your time horizon, diversification, etc. The goal of ChatQLM would be to provide upside and risk assessment based off of quantum computing power that could help in determining actionable buy or sell decisions for the user. Another area where ChatQLM would come in handy would be for scheduling. People who work in large organizations and run meetings with multiple attendees know that trying to schedule meetings with no conflicts can be a time consuming and frustrating task. Scheduling blue collar workers in an efficient, productive and engaging way is a notch of difficulty higher. This is where ChatQLM can be used to simplify the process just like ChatGPT or Microsoft Copilot is being used within organizations to write emails. 

The launch of ChatQLM along with the existing Super™ Platform comes with a near-term revenue-generating business model. On the individual consumer version of the app, there will be a freemium version to test out how it works. If people want it to solve basic problems, there will be a $20 per month tier. An $80 per month tier gains access to some quantum computing capabilities. A $200 per month tier provides users with full access to ChatQLM along with a limited amount of computing power. ChatGPT has approximately 35 million subscribers paying at similar price points, so there is evidence that this business model can be successful. 

On the enterprise side, organizations can buy a license for $25,000. Unlike a lot of other SAAS models which require a license per employee, the one license is good for everyone within the organization. QBTQ expects to generate the bulk of its revenue from selling compute. The more people that use it within an organization, the more computing power will be needed. QBTQ's model is similar to cell phone plans from a few years ago. People would pay a monthly plan for calls and text, but the real money being made was by selling data usage. As QBTQ is an early stage provider of quantum computing power to the masses, it has the pricing flexibility to really rake it in from selling compute. Dr. Khan estimates $75,000 in annual compute revenue per every $25,000 license, and the margins projected on both will be around 50%. 

There is also a research subscription tier for $12,000 meant for non-commercial use. QBTQ also runs "Super Hubs" for training, upskilling and accelerator programs for corporates, governments, students, researchers and entrepreneurs. Finally, the company offers a quantum computing consulting service where companies can hire QBTQ to solve their problems for them at $350 per hour, with an estimated 40 to 80 hours required per problem. 

Regarding the company's intellectual property, the software that enables regular people to access quantum computing in a conversational way is proprietary to QBTQ. It's hardware agnostic and the company uses D-Wave Quantum (QBTS) and IonQ (IONQ) to provide the quantum computing power. Dr. Khan stated that the eventual goal is to bring hardware in-house through M&A deals with the right Canadian built quantum computing startups. The technology is innovative, business model is clear and the timing is just right for speculative investors to dive in as the company has just started commercialization of Super™ and ChatQLM.

The other half of the equation that makes QBTQ a compelling investment is the valuation and float.  It has just under 30 million shares outstanding, but 10 million of those are owned by Staque Computing FZ-LLC, Dr. Khan's holding company. In addition to that, Dr. Khan and other insiders have been purchasing shares on the open market. This leaves less than 20 million shares in the float. Should the launch of ChatQLM garner media attention, the thin float will act as a launching pad as a lot of new buyers will find the supply of shares to be limited. 

At $1.20, QBTQ sits at around a $36 million CAD valuation. According to the corporate presentation, the company has 7.7 million warrants outstanding and 1.7 million stock options, so the fully diluted share count is 39.3 million. For retail investors, this is an opportunity rarely seen in the public markets. ChatGPT's parent company OpenAI is still private yet has an estimated valuation of $500 billion on $13 billion in annual revenue in 2025, a 38x revenue multiple. Mr. Khan could be seen as a Canadian Sam Altman and investment access to his company - at all - let alone at this kind of valuation despite imminent commercialization is unique. 

Dilution risk outside of existing derivatives appears minimal for a company of this size. On the corporate presentation, it claims $3.5 million in cash and that it is already profitable with a track record of securing non-dilutive capital for R&D. The existing warrants and options - most of them being a stone's throw away from being in the money - would bring in over $13 million in cash upon exercise spread over the next four years. Any acquisitions as previously discussed would primarily be through issuance of shares. This would be dilutive but would have much less of an impact on the float as these deals would presumably come with share lock-ups and be with acquisition targets that would want to keep the bulk of their shares as part of a larger organization. 

Page 18 of the presentation outlines a five year revenue and net profit forecast. These projections do not include ChatQLM subscription revenues. While one could expect significant and likely the bulk of the revenue to come from ChatQLM, given that the launch is two weeks old, it's a reasonable and responsible move for QBTQ to hold off on any public projections until more data is generated and assessed.

Even without ChatQLM projections, these numbers suggest a significant upside given some very aggressive valuations for larger quantum peers. QBTS trades at a valuation of over $10 billion, over 300x its trailing revenue. IONQ trades at approximately 150x its trailing revenue with an $18 billion market cap. QNC trades at around a $1 billion CAD market cap while also being in the early stages of commercialization and without revenue projections like QBTQ. 

Assuming Year 1 is 2026, QBTQ trades at a relatively muted 30x revenue multiple. It trades at a forward revenue multiple of 12x and forward earnings multiple of 40x based on Year 2 projections. 

We are comfortable with a $10 price target which implies just under a $400 million fully diluted market cap based on the following:

1. This implies a 330x revenue multiple. While extreme out of context, it is not out of line compared to other much larger quantum peers. ChatQLM revenues offer unknown upside that could blow conservative company projections out of the water. 
2. Forward year revenue multiple comes in at 126x, but with profitability attached, making it an attractive comparable to larger peers even at $10. Presumably at a $10 price and near $400 million market cap, it would attract more mainstream and institutional investors and brokerage houses, who would make a similar kind of argument as we do today. 
3. At a $400 million market cap, QBTQ is trading at less than half of the valuation of QNC. Even though these companies could be seen as peers, have a mutual partner in QESS and QBTQ appears further ahead in terms of revenue and profits, at least when it comes to its forecast. The only difference appears to be that QBTQ is lesser known as a recent RTO listing. This should not be a mitigating factor going forward given that ChatQLM has the potential to be a consumer-facing product that should garner mainstream coverage.

Factors would invoke an upgrade from the current $10 price target:

1. QBTQ reaching $10, presumably on a very successful launch of ChatQLM and associated media coverage. 
2. Updated financial forecasts that included ChatQLM subscription revenue.
3. A conversion of financial projections into financial results in upcoming quarterly reports. Even a slim $200,000 in net profit proves QBTQ as one of the first, if not the first profitable quantum pureplay. 
4. An accretive acquisition on the hardware side. 

Disclosure: We are long QBTQ.CN, We have been compensated to write about QBTQ through stock options, but have also engaged in open market buying.

QESS: Now is the Time to Buy as the Stock Shows Strength During Final Stages of Warrant Exercise

On January 22, we announced a bullish call on Aegis Critical Energy Defence Corp. (QESS.CN)(QESSF) f/k/a Energy Plug Technologies Corp. (PLUG.CN) (PLGGF) with a $0.50 target along with a follow up blog in October related to its partnership with Quantum eMotion Corp. (QNC.V) (QNCCF). We since upgraded that target to $1.50 as our initial $0.50 target was hit before a pullback that we think was largely due to the exercising of warrants. We were initially planning on saving this update for early January, but it is clear to us that with QESS rising 37% to close at $0.405 on Friday and with technology partner QNC hitting new highs, the opportunity to buy is now. The impact of warrant exercises is waning. It wouldn't go up 37% in a day with such little resistance if there was a significant warrant overhang remaining. 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 1040 followers on here as well as 124 followers on our Canadian blog. You can also follow us on X @StockTradePicks which has over 5,000 followers.

We direct you to two charts that you can find on the company's September 30, 2025 financial statements and MD&A that were filed on November 27 on SEDAR:

As we discussed in our last blog, we thought that the stock price held up quite well given the fast pace of warrant exercises. This data confirms our suspicions. At the end of September, QESS had 32.2 million warrants outstanding, with 24.5 million of them coming due by February 14, 2026. Between September 30 and November 27, 15.3 million warrants were exercised. Presumably these would all be ones due by February 14, so only 9.2 million of those warrants remain.

The company's monthly progress report for November shows 128.6 million shares outstanding as of December 3. Up from 125.7 million disclosed in the above chart on November 27. Assuming that 2.9 million increase in share count came from warrant exercises and not options, the total warrants remaining to be exercised due before February 14 is down to 6.3 million as of December 3. Considering that 2.9 million were exercised in the four business days between November 27 and December 3, one can assume that the vast majority of the remaining 6.3 million would have been exercised between December 3 and December 19. 

The largest set of warrants remaining as of September 30, 13 million, are set to expire on December 24. We don't think the 37% move three business days prior on December 19 is a coincidence. Considering the time for funds to clear, today would likely have been the last day that anyone needing to sell QESS shares in order to exercise warrants expiring on December 24 could have comfortably done so without fear of delays causing them to miss the expiry deadline. The biggest warrant overhang hurdle has been cleared, and the market understands that. The remaining 7.7 million warrants expiring in September will likely be exercised at some point in time given how far in the money they are, but that won't take place with any urgency and will be easily absorbed into the float. 

Consider that QESS rose 37% and has managed to achieve a $0.40 stock price even with 24.5 million in warrants at $0.10 or $0.25 strike prices creating overhang. Imagine the price performance once that overhang is done? We think it is essentially done, and that's why we are sending this blog out now as opposed to the first week of January where we know it would be done for all the $0.10 strike warrants other than the September ones. 

Another thing to consider is the company's improved financial situation. At the end of September, QESS had around $1 million in working capital. The exercise of the 24.5 million warrants due by February 14 will bring in $3.7 million. This reduces the need for further raises in the future, though one should be aware that a startup company is always at risk to raise more capital until a time when it can achieve profitable operations. QESS had a burn rate of about $300,000 for the quarter ended September 30. That would suggest a fairly long cash runway of ten quarters generated by the warrants, though the burn rate might increase in the near term in order to fund growth initiatives that ideally generate revenue shortly thereafter. 

With the warrant issue mostly in the rear view mirror and the company well cashed up, we expect it to get off to a strong 2026. Particularly if there are further news releases on collaborations with QNC or other companies. The recent announcement of Tough Bhoy, a quantum-secured energy storage system meant to withstand the cold temperatures of the Arctic being one such example. 

Disclosure: We are long QESS.CN. We have been compensated in the past to write about QESS, but have also engaged in open market buying and purchased shares in excess of the value of the compensation. 

These Warrants Offer the Best Opportunity to Speculate on a Potentially Massive New Oil Discovery

Last week we wrote "Cheap Leveraged Upside on Potential Major Oil Discovery", a bullish call on Reconnaissance Energy Africa Ltd. (RECO.V) (RECAF) and in particular its warrants under the symbol of RECO.WT.A. It was based upon the announcement of results on RECO's Kavango West 1X well in Namibia. According to the press release: "Extensive wireline logging indicates ~85 metres (~280 feet) of net reservoir with 64 metres (210 feet) of net hydrocarbon pay across a gross interval of ~400 metres (~1,300 feet) containing multiple limestone reservoir units." 

Our thesis worked out perfectly as the stock moved up to $0.94 this past week and the warrants more than doubled to hit as high as $0.47 before pulling back to close the week at $0.38. Even though the warrants hit our initial target, we are still bullish as we think they offer a uniquely massive upside for two reasons. First, RECO looks like it will go on a continued run on excitement over its new discovery as it heads into the next phase of production testing in Q1. Second, RECO.WT.A is massively underpriced relative to its other set of warrants, which we think are correctly priced given the upside in the stock. 

Brian Reinsborough, CEO and President of ReconAfrica spoke with with Justin Cochrane, Head of Upstream African Research at S&P Global Energy on the positive results and next steps heading into 2026: 

This mainstream investor coverage of RECO's developing opportunity will only further add excitement towards the stock and warrants. Looking at RECO's other warrants only proves that point. In addition to RECO.WT.A, which can be exercised for one share at $0.60 until June 17, 2027, it has two other sets of warrants trading under the symbols RECO.WT and RECO.WT.B. RECO.WT expires at the end of July 2026 at a $1.75 strike price. RECO.WT.B expires on September 29, 2027 with a strike price of $0.72. When looking at a chart of the terms of the warrants and closing prices, you can see that the pricing is totally out of whack with RECO.WT.A being an undeniable bargain:

RECO closed the week at $0.94. With a strike price of $0.60 and a price of $0.38, RECO.WT.A trades with just a $0.04 time premium. This leads to an impossibly small implied volatility of 5%. Anyone with any experience with options and warrants, particularly on small cap stocks, knows that RECO.WT.A is trading at a bargain. Even without being bullish on RECO itself, one could set up some financial engineering to take advantage of the low IV on RECO.WT.A and incur some arbitrage profits. But we aren't here for that. We are here for upside potential. 

Because of the high strike price, RECO.WT has a time premium of $1.09. At Friday's close of $0.28, this leads to an implied volatility of 156%. We think that this is fair value. These warrants should be trading at this implied volatility because RECO's high, near term upside can lead it to trade well above the $1.75 strike price within the next six months. It's simply a case of RECO.WT.A and to a lesser extent RECO.WT.B being undervalued. RECO.WT.B trades at a 68% implied volatility. This is a deal, but because RECO.WT.A trades at a lower price despite having a strike price that is $0.12 lower, investors and traders should focus all of their capital on RECO.WT.A. The three months in extra time to expiry in 2027 does not offset the value of the lower strike price. That might be of importance in the spring of 2027, but right now both warrants have enough time to expiry.

Another way to look at RECO.WT.A being a bargain is to use the same implied volatility of the other sets of warrants and compare the price:

At a 68% implied volatility, RECO.WT.A would be priced at $0.48. At a 156% implied volatility, RECO.WT.A would be worth $0.70. The fair value of RECO.WT.A is likely somewhere in between. At a 90% implied volatility, the warrants would be worth $0.54. Keep in mind that this is the price the warrants should be trading today just purely on speculative upside and leveraging opportunity of RECO. If the stock has a week like it did last week and trades well above $1.00, these warrants will be worth even more. So will the rest of the warrants, but RECO.WT.A is unambiguously the best of the three. Because the warrants have only $0.04 of time premium, they have to go up with the stock at least penny for penny going forward. If the stock doubles to $1.88, RECO.WT.A will be worth at least $1.28, more than 4x upside from here. The other warrants don't offer quite that good of an upside. 

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 1038 followers on here as well as 124 followers on our Canadian blog. You can also follow us on X @StockTradePicks which has over 5,000 followers.

Disclosure: We are long RECO.WT.A

Cheap Leveraged Upside on Potential Major Oil Discovery

On December 3, Reconnaissance Energy Africa Ltd. (RECO.V) (RECAF) shot up 38% from $0.48 to $0.66 in Canada upon the announcement of results on its Kavango West 1X well in Namibia. According to the press release: "Extensive wireline logging indicates ~85 metres (~280 feet) of net reservoir with 64 metres (210 feet) of net hydrocarbon pay across a gross interval of ~400 metres (~1,300 feet) containing multiple limestone reservoir units." 

The stock gained further momentum on Monday on excitement over the production test that is to come in Q1. It rose 11% to close at a day high of $0.72. We think RECO could head over $1.00 in anticipation of that test, which leads to a lucrative opportunity for traders. 

RECO has publicly traded warrants under the symbol RECO.WT.A that can be exercised for one share at $0.60 until June 17, 2027. These warrants closed on Monday at $0.21, leaving just $0.09 of time value on them for 1.5 years of leveraged upside. From here on in, the warrants are going to move up essentially penny-for-penny with the stock. If the stock was to move up another 39% to $1.00, these warrants would intrinsically be worth $0.40 and likely be a double from here with a couple more cents in time value remaining. These warrants are similar to the situation that we wrote about on Sintana Energy Inc. (SEI.V) (SEUSF) back in 2023. SEI also had warrants at the time and that was a very profitable trade.  

Options on a similar type of oil stock typically have an implied volatility of around 90%. Applying the same implied volatility to RECO.WT.A results in a fair value of $0.35 for the warrants. This is reflected in the leveraging opportunity of the warrants. Should RECO reach the $4.40 target as outlined by Research Capital by June 2027, a six times upside on the stock, the warrants would be worth $3.80, nearly 20 times upside from today's price.

To drive home how undervalued these warrants are, RECO has another set of warrants under the symbol RECO.WT.B that expire on September 29, 2027 with a strike price of $0.72. Those warrants closed at $0.20, despite having a strike price that is $0.12 higher. Considering that the expiries are 18 and 21 months away, respectively, we don't think that offsets the $0.12 higher strike price. RECO.WT.A should be several cents higher than RECO.WT.B.

RECO has a third set of warrants under the symbol RECO.WT that closed at $0.08 on Monday. These warrants have much poorer terms with an expiry at the end of July 2026 at a $1.75 strike price. Those warrants actually appear to be correctly priced as the implied volatility on them is 110%. People are buying at $0.08 with a Hail Mary shot that RECO will triple or more in the next several months. That is a reasonable gamble, although not one that we would take. Compare this to RECO.WT.A. RECO could double in the next several months and RECO.WT would be worthless. But RECO.WT.A would be worth $0.84. That's the kind of bet that makes sense in our eyes. 

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 1038 followers on here as well as 124 followers on our Canadian blog. You can also follow us on X @StockTradePicks which has over 5,000 followers.

Disclosure: We are long RECO.WT.A

Energy Plug: Upgrading Target to $1.50 as $0.50 Target was Hit and the Company Starts to Generate Revenue

On January 22, we announced a bullish call on Energy Plug Technologies Corp. (PLUG.CN) (PLGGF) with a $0.50 target along with a follow up blog in October related to its partnership with Quantum eMotion Corp. (QNC.V) (QNCCF). We are upgrading that target to $1.50 as our initial $0.50 target has been hit. The pullback to $0.36 looks like a prime buy in opportunity as the company has been aggressively announcing revenue generating contracts. Some could say that PLUG has been riding the coattails of QNC. In reality, it's PLUG that is enabling some of QNC's first revenue generating opportunities and introduced a real world application of QNC's technology to the market place. QNC has a market cap of $700 million and that is cheap compared to other quantum startups. A $1.50 target price for PLUG puts it at a fraction of QNC's valuation. 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 1038 followers on here as well as 124 followers on our Canadian blog. You can also follow us on X @StockTradePicks which has over 5,000 followers.

We were engaged by PLUG to provide coverage after our reports on Blockmate Ventures Inc. (MATE.V) (MATEF) garnered positive attention. As such, PLUG turned into a sympathy play of MATE. As the price of MATE has unfortunately stagnated while PLUG has gone wild, we have seen the fortunes reverse. MATE jumped from $0.07 to $0.14 in a few days alongside PLUG's first move above $0.50. It has since pulled back to $0.10, but the opportunity should be clear. It moved on low volume so it wouldn't take much to get it trading back above $0.20 again. We expect that as PLUG moves up, MATE will get some more buyers. And if MATE has its own deals to announce, a quick move to $0.50 like what PLUG did won't be out of the question. The blueprint has been laid out and both stocks have a similar float. We have a $5.00 target on MATE based on it achieving one million users on its Hivello platform. It's still a long way off but the clear business model and previously stated user base goals makes a $5.00 target possible. As the PLUG business model becomes clearer, it's easier to make more aggressive price targets on it as well. 

PLUG was the first time we accepted compensation for coverage. Previous to that we said no, but we had to say yes to this company after getting an opportunity to participate in last year's private placement and understanding the unique leveraging of the technology and partnership with Malahat First Nations. We were quiet for a while as the company lacked news and a clear focus. As shareholders who bought a significant stake in the open market well in excess of any compensation we got, we were not happy as it sat around $0.10, but parked it to give time for the company to develop. It turns out that this was the right move. 

During the lull, PLUG laid the groundwork with the Malahat and QNC partnership and is now aggressively pursuing revenue generating contracts. That's in addition to a revamped management team and a coming rebrand to "Aegis Critical Energy Defence Corp.". This will more accurately reflect the company's evolution into a provider of secure, AI-enhanced, and quantum-optimized energy systems serving defense, industrial, grid, and government markets. Particularly in remote locations where grid infrastructure may not exist and security is paramount. A few months ago, PLUG's proposed business model was all over the place. The company even had crypto tickers on its website like it was pretending to be a crypto play. Now it has the right focus and investor and market messaging. This will soon be reflected in the bottom line and stock price.

Up to the date of its latest financials for June 30, 2025, the company did not generate any revenue. Even with the announcement of purchase orders last year. That will change as the company announced its first sale in the United States (very different wording from purchase order) of three Secure Energy Storage Systems in August for $290,000 and followed that up with a second sale of an ESS for an undisclosed amount in October. The company also announced a pre-order for 20 units with delivery expected in early 2026. Assuming each unit is close to $100,000, the total revenue for these three announcements would be about $2 million. How that revenue is split between PLUG and its partners will be known in future financial filings, but we believe that these contracts merely scratch the surface. There is an expectation from bulls that the company will be announcing $10's of millions worth of contracts in the near future, which would justify a much higher stock price than today. PLUG has once claimed a $700 million sales pipeline. As a pre-revenue company that lacked focus and couldn't get beyond the purchase order stage, that seemed like a pipe dream. Now that PLUG has partnered with QNC, Malahat and SEETEL to develop something truly unique in terms of a secure ESS, this number can be taken more seriously. 

The groundbreaking of Canada's gigafactory in B.C. between Malahat and PLUG received mainstream media coverage from Global News. This is not hype to pump a penny stock that only the bottom rung of Bay Street will care about. Given the recent ruling in a B.C. Court regarding Aboriginal land titles and Canada's long-standing battle to bog itself down in bureaucracy to never build anything, it can't be understated how valuable a First Nation-backed infrastructure project like this is. It can be used for consumption by the general public that is looking for some actual evidence of building back Canada's manufacturing base independent of the United States, and not just empty "elbows up" rhetoric. PLUG is well positioned to attract mainstream investor support.

Given the exciting times and hopes that this stock becomes the next QNC, one might wonder why there has been any selling at this level. We believe that the pullback and volatility around the company's stock price since it surpassed our $0.50 target is related to the exercise of warrants rather than people dumping the stock to exit the position. As part of the company's attempt at becoming more transparent and investor friendly, it has included two charts in its Q2 2025 SEDAR filings that very conveniently track the status of the warrants and its fully diluted share count. As we strive to provide accurate information to our readers, we can attest to how frustrating some companies can be with respect to reporting this information in a convenient format, so these charts are a breath of fresh air:

Approximately 10 million warrants were exercised between June 30th and October 28th, leaving another 25 million to be exercised. Presumably most of those warrants were exercised on or after October 14th when the stock price was high enough to justify doing so. PLUG's monthly progress report for October shows an updated share count of 122.9 million, meaning an additional 5 million warrants were exercised in those final few days of the month after October 28th. 

A total of 11.7 million warrants and options were exercised during October. Considering the pace of exercise seen in October, the first third of November has likely resulted in another several million being exercised. This is where the bullish argument has a two-pronged approach. Potential selling pressure created by the exercise of warrants is traditionally used as fodder by bears to create panic. Especially on a company that has 35 million of them expiring in a few months. PLUG already absorbed 15 million of those prior to November 1 and likely another several million since. Yet the stock price has remained steady in the mid-$0.30's after a rise from $0.10 a few weeks prior. There is no tank, in fact, the opposite. The second way of looking at it is that there is a ton of buying pressure. That pressure has been capped by warrant overhang. Imagine what will happen when that warrant overhang dries up? One could suggest that would happen in February when all warrants expire, but given the fast pace at which they are being exercised, we think this share overhang will dry up much sooner than that. Those waiting to buy in after the warrants expire are taking the risk that the warrants won't have effectively been swallowed up long before then and that the company won't have some follow up news to drive the stock up further. The warrants are also shoring up the company's balance sheet, with $1.5 million in cash being added to the balance sheet in October and another approximately $2.5 million to come. The company has never been in a stronger position than it is today. 

The traditional thought process of retail traders is "Why should I buy this stock so high when warrants can be exercised low?" The people who invested in this stock at that time did it when the company's risk profile was much less favorable than it is today. Now the company is ready to sell a uniquely secure energy storage system that won't be susceptible to cyber attacks. This story is a developing one and will garner positive attention after those warrants and past dilution at lower prices are long forgotten. It's up to retail investors who come across the story now if they want to buy in with a manageable position or take the risk that they will regret not doing so down the road. 

This leads us to our updated $1.50 target. While it's difficult to assess the value of a pre-revenue company using traditional valuation techniques, our $0.50 target was hit. This makes an upgrade to $1.50 more legitimate. Assuming all the warrants and options will be exercised, a $1.50 stock price results in a market cap of $224 million with working capital being approximately $5 million. A market cap of $224 million is significantly less than QNC and the rest of the quantum plays which have valuations over $1 billion and in many instances are also pre-revenue but with a much less clear and imminent path to revenue like PLUG and QNC. The partnership with PLUG and QNC enables QNC to move into its revenue-generating phase, so QNC shareholders will be supportive of PLUG and will likely allocate some funds towards it as well. Assuming a $100,000 price tag per each ESS, it would take 1,000 unit sales annually to garner $100 million in revenue. That should not be hard to achieve given the prerogative of spending on defense and "Canada First" by the Canadian government. Along with the numerous private interests such as data centers that would require cyber attack proof energy systems. Nor would a gigafactory be built if a thousand units a year wasn't an achievable expectation. Assuming the $100 million gross figure will be split among PLUG, QNC, Malahat and SEETEL, let's assume that PLUG may be entitled to half of that revenue, or $50 million. A $1.50 stock price would lead to a 4x to 5x revenue multiple, a reasonable valuation for a growth industry like this. While these numbers are still speculative, like MATE, at least there is a clear path to achieve them. 

Disclosure: We are long MATE.V. We are long PLUG.CN. We have been compensated in the past to write about PLUG, but have also engaged in open market buying and purchased shares in excess of the value of the compensation.