Market Talk
With the market excited about the C19 vaccines being deployed and the possibility of more stimulus, it is looking past the pandemic and maybe into economic recovery the summer or autumn next year. I will not try to prognosticate on how that will actually go, but paint me somewhat cautious as the market reaches all time highs.
Stock Talk
Like a lot of investors and traders, I continue to watch stocks within the parameters of being under-recognized and with growth left in share value. Such parameters can also present a fair amount of risk. Usually considered a small cap stock and often sold short with bettors taking an opposite position. If they fail to perform as anticipated sometimes the market will be unforgiving in devaluing share price as shorts increase the notional float (shares outstanding) to buy back lower and reap profits. There are many dark forces that can waylay "hope" of a small cap speculative position. When we toss our hat into the ring with a position of some new prospect we do so full well knowing the stock is in a sea of sharks and I use the word "some", meaning "not too much" a lot here. The one thing is to try to buy low and sell higher and if the company delivers it may be a good stock to stay long in some. That is the goal.
But in practice, it doesn't always work out.
A fundamental analysis in solid companies includes assessment of earnings per share (eps) , both actual and estimated, Price to Earnings (PE) ratio, book value, along with accumulated debt. A few companies defy such analysis and soar in share price (early Amazon, Tesla, etc) because the market believes that future growth is so attractive that it marks up the share value and they actually start to deliver expected performance. Certain sectors, like technology, are more forgiving of bad current fundamentals if high growth is expected. Also, for example, in biotech companies that are developing new drugs and treatments become takeover candidates by big pharma for huge markups if the treatment helps or even cures an unmet need. This happened, for example, in the recent cures for hepatitis C.
Today, I am going to take a different tact away from the C19 vaccine space. Keep in mind, the following is not a recommendation. But it is something I am watching because it is kind of an interesting "story". We know to be cautious of "story stocks". Sometimes story stocks can catch some air and take off if the story holds up in "Growth " - and captures investor interest. (So did tulip mania happen in the 17th century until it crashed.)
With the above preamble and cautions, I will now present a stock I have started watching that is kind of interesting. But it is not because the current fundamentals are good in my view. The earnings per share listed looks like a terrible - $4.44. However, we see that at least one analyst is reiterating a buy rating on CleanSpark, Inc. (CLSK). We maintain a healthy skepticism of analysts but as a matter of interest I will re-post as follows:
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--Analyst Actions: HC Wainwright Adjusts CleanSpark's Price Target to $24 From $18, Reiterates Buy Rating BY MT Newswires— 11:40 AM ET 12/11/2020
"About CleanSpark (CLSK):
CleanSpark (CLSK) offers software and intelligent controls for microgrid and distributed energy resource management systems and innovative strategy and design services. The Company provides advanced energy software and control technology that allows energy users to obtain resiliency and economic optimization. Our software is uniquely capable of enabling a microgrid to be scaled to the user's specific needs and can be widely implemented across commercial, industrial, military, agricultural and municipal deployment. Our product and services consist of intelligent energy controls, microgrid modeling software, and innovation consulting services in design, technology, and business process methodologies to help transform and grow businesses."
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In plain language, my take is CLSK develops control management software to efficiently integrate various distributed forms of power sources such as solar and wind with the public grid in the micro grid of that environment. There is energy savings that can be gained and well worth the effort in industrial settings.
Now this is where a recent move of CleanSpark gets kind on interesting. Enter a new Bitcoin story. Here is a snipit of the following link:
"Last week, the microgrid software player announced it is buying bitcoin miner ATL Data Centers. The purchase will cost CleanSpark $19.4 million in an all stock deal, and will mean CleanSpark will get its hands on ATL’s 3,471 mining rigs."
Bitcoin is a cryptocurrency that has captured the interest of many because it is not related to any one country and the variables of that currency like inflation. New bitcoins have to be "mined" using algorithms and high energy data servers. This notion is foreign to many of my generation. However, people in bankrupt socialist countries such as Venezuela are turning to crypto currency such as Bitcoin. In addition many younger Americans believe in crypto currency and are buying and trading in bitcoins.
The goal of CleanSpark in buying a data miner, is to show how their products can improve energy usage to make it less expensive to mine bitcoins. So it is a demonstrative move. But at the same time ONE bitcoin value is currently at $19,350 .
There are currently 3,471 bitcoin mining units ("ASICs") in daily operation on site, processing approximately 190 PH/s which are using approximately 9.6 MW of capacity. We anticipate that upon completion of the equipment and energy expansion, the facility is expected to produce between 0.9-1.4 EH/s, depending on the final configuration and ASICs deployed. We expect that this will result in multiple bitcoins being produced daily at some of the lowest energy costs in the nation for this type of enterprise. The Company expects to demonstrate that, by using our technologies, we can reduce the cost of energy to below $0.0285 per kw/h. After successfully deploying the systems, we intend to take this model to other sites, many of which have significantly higher energy costs offering potentially greater opportunities for savings."
Bottom Line
CleanSpark is an interesting stock to watch. With the current Bitcoin hoopla on an international basis, one premise is that if CLSK shows that it's energy savings delivers more Bitcoins that require high energy to "data mine". The company also will showcase how other industrial centers can save by using their microgrid management tools with battery storage units to lower energy costs significantly. Interesting story! Will the market continue buying up CLSK shares to be in "some" and thus drive the share value higher? To that I would not dare to say at this juncture. I have learned to stay cautious and humble in making predictions especially as to market behavior. If venturing into a position, I always use the word "some" not "too much" especially with speculative stocks . Why? because "something always happens!" and beware dark forces around hope and story stocks. With all that, energy savings and Bitcoin is interesting to watch as it relates to CleanSpark.
ALL in my humble opinion, scroll down and read more..This site does NOT make Buy / Sell recommendations.
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