NIA is excited to release Part 1 of its 2020 mid-year Top 5 overall stock suggestions report, beginning with our top two ranked overall mid-year picks:
NIA's #1 ranked stock suggestion:
Benton Resources (TSXV: BEX)
Current Price: $0.10 per share
Confidence Rating: 100
Shares Outstanding: 87.1 million
Market Cap: CAD$8.71 million
Cash: CAD$1.7 million
Debt: $0
Enterprise Value: $7.01 million
BEX is currently trading at an insanely low enterprise value of $7.01 million! BEX owns a huge position of 4.2 million shares in Quadro Resources (TSXV: QRO) for a 10.53% equity stake in the company. After finishing 2019 at $0.055 per share, QRO has gained by 236.36% year-to-date in 2020 to a current price of $0.185 per share, valuing BEX's 4.2 million QRO shares at CAD$0.777 million. In addition to BEX's 10.53% equity stake in QRO, BEX owns NSR royalties covering QRO's flagship Staghorn gold project. BEX owns a royalty of 1.5% covering half of Staghorn and a royalty of 0.5% covering the other half... for an average NSR royalty of 1% covering all of Staghorn. NIA believes that the market currently values mining royalties approximately 10X higher than equity in the same project. Therefore, we believe BEX's average Staghorn royalty of 1% is worth 10% of QRO's current enterprise value of CAD$6.75 million, thereby valuing BEX's Staghorn royalties at CAD$0.675 million.
BEX also owns 2 million shares of Maxtech Ventures (CSE: MVT), currently trading for $0.08 per share thereby valuing BEX's MVT shares at CAD$160,000. Five months from today in mid-October 2020, BEX will receive an additional CAD$100,000 worth of MVT stock. BEX will receive another CAD$100,000 worth of MVT stock in October 2021, CAD$100,000 worth of MVT stock in October 2022, and CAD$300,000 worth of MVT stock in October 2023. Based on MVT's current share price of $0.08, BEX will end up owning 9.5 million MVT shares worth CAD$760,000. BEX will also retain a 2% NSR royalty in MVT's flagship Panama Lake gold project. Based on MVT's current enterprise value of CAD$5.3 million, we estimate that BEX's 2% NSR royalty in Panama Lake is worth CAD$1.06 million.
If we add up the value of BEX's 4.2 million QRO shares, average NSR royalty of 1% in QRO's flagship Staghorn gold project, 2 million MVT shares, 7.5 million MVT shares to be issued, and NSR royalty of 2% in MVT's flagship Panama Lake gold project... BEX's QRO and MVT equity/royalty assets are worth $3.272 million.
This means that BEX at $0.10 per share is only receiving CAD$3.738 million in value for all of its other assets!
BEX's 19.68% owned Clean Air Metals has just announced that it is now awaiting final approval to begin trading on the TSX Venture exchange under the symbol AIR. The newly consolidated Thunder Bay North/Escape Lake high-grade palladium, platinum, nickel project of Clean Air Metals has already had nearly 200,000m of historical drilling. It would cost CAD$50 million to conduct that same 200,000m of drilling today and AIR will have approximately CAD$10 million in cash when it begins trading. With AIR set to launch a major drilling campaign during this current quarter targeting the highest grade deposit at Escape Lake, which was discovered in 2011-2012 by Rio Tinto but kept totally secret until now... AIR's market cap could very quickly reach CAD$60 million especially considering that AIR's Executive Chairman Jim Gallagher sold his last company North American Palladium in December 2019 for CAD$1 billion!
For AIR's market cap to reach CAD$60 million, AIR will need to rise to $0.48 per share. At $0.48 per share, BEX's 24.615 million AIR shares will be worth CAD$11.82 million. BEX also owns an NSR royalty of 0.5% in Thunder Bay North/Escape Lake so if AIR's market cap reaches CAD$60 million with an enterprise value of CAD$50 million, we estimate that BEX's Thunder Bay North/Escape Lake royalty will be worth 5% of AIR's enterprise value or CAD$2.5 million. In this scenario, the combined value of BEX's AIR equity+royalty could soon reach CAD$14.32 million.
NIA's #2 ranked stock suggestion:
Chicken Soup for the Soul Entertainment (NASDAQ: CSSE)
Current Price: $7.71 per share
Confidence Rating: 95
Shares Outstanding: 12,007,429
Market Cap: $92,577,278
Cash: $6,447,402
Debt: $20,010,475
Preferred Stock: $40,000,000
Enterprise Value: $146,140,351
CSSE right now is completely undiscovered even though it is the leading publicly traded company in the booming AVOD space. AVOD stands for Advertising video on demand. AVOD services compete with Netflix but instead of charging a monthly fee they are completely free and use an advertising-based revenue model.
CSSE will report its 1Q 2020 results after the close today. According to Google Trends, searches for CSSE's Popcornflix web site doubled between March 14, 2020 and March 28, 2020! According to Google Trends, searches for CSSE's Crackle web site increased 75% between March 14, 2020 and April 18, 2020!
If you do a Google Search for 'free movies' Popcornflix is the #2 result and Crackle is the #7 result!
The #3 result Tubi TV was acquired by FOX on April 20, 2020 for $440 million in cash! On the same day that FOX acquired Tubi TV, Comcast announced a deal to acquire another AVOD service called Vudu at an undisclosed price! Last year, Viacom acquired the AVOD service Pluto TV for $340 million!
Netflix (NFLX) is currently trading at an insanely high enterprise value/revenue ratio of 9.45. Roku (ROKU) is currently trading at an insanely high enterprise value/revenue ratio of 11.07.
CSSE's enterprise value of $146.14 million is only 2.64X its 2019 full-year revenue of $55.36 million when CSSE is growing at a much faster rate than both NFLX and ROKU! We believe CSSE could become a takeover target in the second half of 2020 and would likely sell for over $300 million.
Over 500,000 Marriott hotel rooms have automatic access to CSSE's Crackle on their Smart TV as one of only a few pre-installed apps! Crackle is also a Top 5 Network on Roku!
Past performance is not an indicator of future returns. NIA is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This message is not a solicitation or recommendation to buy, sell, or hold securities. NIA's President has purchased 1.05 million shares of BEX in the open market. He intends to buy additional BEX shares prior to Clean Air Metals going public. Sometime after Clean Air Metals goes public he intends to sell his BEX shares for a profit. This message is meant for informational and educational purposes only and does not provide investment advice.
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