Introduction: At the time of writing the US stock market is set for its 70th record close of the year. Older market watchers will know that a wall of worry is what takes stocks to their greatest rallies.
By Zak Mir
They will also know that most financial journalists delight in calling crashes, delight in investors losing money and are generally bitter and twisted when it comes to capitalism.
Somehow though, they still try and predict share prices in the newspapers.
Of course, the dominant feature of 2021 has been the pandemic, which provided the wall of worry, and as things stand, to squeeze shares higher. I would venture to suggest that we are over the worst, not because of the Omicron looks to be less bad than feared, but because of the bear trap of November 27. That was a mainstream fake news attack, delivered as a “dawn ambush” right after Thanksgiving so that the rug would be pulled from under the equity market. The effect of that move was equal and opposite to the early November 2020 Pfizer vaccine news – delivered/delayed until after the US polls closed on Donald Trump.
Such Establishment shenanigans aside, we only have those who wish lockdown rules/face masks and umteen booster vaccines, like the clouds on the horizon. One of the ironies of this 21st-century pandemic is that the technology has only served to tie us in knots and led to massive economic and human collateral damage, the latter in untreated cancers, and chronic diseases.
Unlike 1957 and 1968 when there were no rip off lateral flow or PCR tests and no instantly approved vaccines, the new diagnostic technology has allowed the Nanny State to cause psychological and actual health misery on an unprecedented level – the Pingdemic being just one example. Both the 1957 and 1968 pandemics passed without lockdowns and vaccines, and proportionate to the current world population were no worse than COVID-19.
Nevertheless, “Sado-Marxists” of the Nanny State aside, we can assume a decent rebound for shares for 2022, albeit that inflation and interest rate rises will replace the big bad wolf of the pandemic. For the record, and again looking at things historically, an inflation rate of 5-10% does not necessarily pose a problem for corporates. Indeed, it is over-regulation, red tape, and a myriad of costs just to do business, which are the greatest threat. We are entering a world where the proportion of gamekeepers to poachers (entrepreneurs) has spiralled out of control.
The Top 20 For 2022:
Of course, at this time of the year, everyone and their mother deliver their list for the winners of the New Year, as I have in recent years. However, I wanted to go from a slightly different angle. In some weeks I interview as many as 10 CEOs and many several times over the course of the year. One of the generally accepted rules of successful stock market investing is that you are investing in management, even more than the business model. It has to be said that the vantage point of being an interviewer can be the box seat as far as judging companies. For instance, it is rare an outperforming company is headed up by someone who does not impress either in an interview, face to face, or via their track record. Most of the 20 stocks included for 2022 are companies where the management are outstanding, and where there is not necessarily the case, the valuation or sentiment towards the group has sunk to “ridiculous” levels.
Finally, the selection is in the small-cap/microcap area – Elephants Don’t Gallop, remains the mantra. My influence has been and continues to be Gervais Williams of Premier Miton, and he continues to be an outstanding example in this space.
20. Oracle Power (ORCP): 0.43p Target 1p
As well as the tyranny of the pandemic, we have also had the mania of COP26 and its run-up. While the old guard might consider the green lobby as yet another device for taxing the masses, those in charge of PLCs had to play the game. Going into 2021, Oracle had offset the Thar Block VI Coal Project with new Gold assets in Western Australia. But the market clearly wanted to see more. Finding Gold at Jundee in August was clearly helpful, but one could argue that October’s Green Hydrogen Co-Operation Agreement with PowerChina International Group was the event that really moved the dial. With CEO Naheed Memon topping up her holding in September near the lows, and near term funding secured via Sheikh Ahmed Bin Dalmook Juma Al Maktoum exercising £500,000 of warrants at 0.25p, it can be said that Oracle now has the best of both worlds in terms of the old in the form of Coal and Gold, and then the Hydrogen – an element which is slated to be key on the road to the energy transition.
19. Rambler Metals and Mines (RMM): 36p Target 70p
It certainly looks as though the difficult part of the Rambler story is now out of the way as we end 2021. H2 of this year, and a cynical, illiquid market, did not want to assume that anything promised by a corporate would necessarily be forthcoming, even if the balance of probability, or in this instance, the experience of Toby Bradbury, President and CEO, would lead one to believe this situation was in very good hands. Those following the copper ores company closely would have gleaned that the Bridge Loan financing on October 13, meant that the Debt Financing the market was waiting for would be imminent. After all, that is what a bridging loan means. What is interesting now, even though the shares have doubled from the lows below 20p, is that traders still seem to be looking the gift horse in the mouth. Rambler is set to complete the development of the flagship Ming Mine, and as we heard the other week in the Mineral Resource and Operations Update, the company has been able to increase its resource estimates. 2022 is likely to underline the potential of Rambler yet further.
18. Canadian Overseas Petroleum (COPL): 17p Target 30p
There are crowded traded that take months/years to unwind, and there is Canadian Overseas. Here we have another “water under the bridge” situation. For instance, this time last year we were treated to the Atomic Oil and Gas acquisition, and a total of £9m in fundraising. There was then a $65m Senior Credit Facility and a fresh £14m raise in March, ahead of the shares being suspended in March at 38p. The stock reappeared in August, and for about an hour it looked as though it was ready to head for the stars. However, one must remember the crowded trade factor. H2 2021 has seen liquidity issues in the small-cap market, with many quite happy to throw babies out with their respective bathwater. Now with the stock as oversold as it has been at any time in the past two years, apparently having raised enough money to buy Royal Dutch Shell, and with sentiment wounded, it would be surprising if there was not a rebound in the shares – if only back to recent highs near 25p, or ideally November resistance at 30p. The only proviso is whether the pesky (short) seller in the stock has finally been seen off. Increased production numbers from Barron Flats may also finally kick in for the bulls in 2022.
17. Love Hemp (LIFE): 1.15p Target 2p
Love Hemp has on the face of it a decent recipe for stock market success. Its chosen area of CBD wellness and health is right on the money with Millennials to Generation Z. On the fundamental front, the company has made all the right moves from having its first Amazon order in September to the Deliveroo tie-up announced this month. Add in Anthony Joshua and UFC campaigns and the £11m stock market valuation seems to be mean, to say the least. This may be due to London investors being very resources focused, or perhaps more logically, that Love Hemp is still listed on the Aquis Exchange, a market that gets the lion’s share of its mentions from my good self. Hopefully, 2022 will see the efforts of CEO Tony Calamita rewarded, given that the groundwork has certainly been done this year.
16. Valereum Blockchain (VLRM): 45p Target 100p
Speaking of Aquis (yes, again), the top-performing stock on London’s challenger market, which is hoping that the LSE is going to give up its monopoly willingly, comes in the form of Valereum Blockchain. On the face of it, the explanation of the massive 3,500% plus gain on the year is that the financial NFT company hit the zeitgeist of what investors are looking for in the tech space – bridging the fiat and crypto worlds. Another idea that backs the outperformance is the way that the company managed the perfect ratio for speculative success: 80% blue sky, 20% reality. The latter has been provided by the brains of Chairman Richard Poulden, with a further boost arriving in the form of one of the founding fathers of Ethereum, Vinay Gupta, and the father of fintech Patrick Young. The stroke of genius adding to the brains trust here was October’s announcement that VLRM has an option to buy 80% of the Gibraltar Stock Exchange, meaning that it has not only invented a new type of financial wagon train, but it will also own a railroad too. Poulden suggested a £10 a share target for Valereum, and a £1 a share destination for 2022 would make most of its ardent fans feel vindicated. The latest Juno news – arriving just as this write up was being compiled can justifiable be regarded as the icing on the fundamental cake, and finally see off the naysayers – the massive ongoing share price rise notwithstanding.
15. Quetzal (QTZ): 5p Target 15p
The London market has not exactly covered itself in glory over the past couple of years, either with its attitude to tech stocks or to Spacs, appearing rather pedestrian as compared to our US counterparts. To add insult to injury, the financial media here seems keen to de-ramp the merits of the UK tech sector even more. However, Aquis listed Quetzal Capital has to date not put a foot wrong, and indeed, with the latest option to acquire crypto-fiat exchange provider TAP Global for a minimum of £26.5m, it seems that QTZ has delivered a deal that should cause both companies to enjoy a rising tide. At the time of the deal, Quetzal had a market cap of £6m. The current standard metric of valuation in TAP’s space is up to £1,000 per user. Having 58,000 registered users, even if one goes with the minimum £26.5m valuations, QTZ should and could rise to somewhere between the present value and say four times the share price. This explains the 15p Quetzal share price target for 2022 and excludes any further development at TAP in the interim, quite unlikely given that this is a booming space – trading off the picks and shovels of crypto trading activity.
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