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Tuesday, December 22, 2009

Early 2010 picks - Encana Resources (gas) , Ballard Power (Green Energy) , Wilan Technologies (Tech) and Apollo gold.

A&P, COFFEE, SANTA CLAUSImage by George Eastman House via Flickr

Natural Gas, Gold, and Technology companies went into our Christmas Stocking in 2009 and here are the reasons why they will outperform in 2010.

Natural Gas: This is the green energy solution for the short to medium term (next 25 years at least). It is still a fossil fuel, however, it is 50% cleaner than oil and 85% cleaner than coal. It already powers homes, factories, buses, forklifts, back-up power generators and almost 5 million vehicles worldwide. Natural gas is also the short to medium term fuel for Fuel Cell power until the pure hydrogen problems can be fixed.

North America has just become the best store of gas in the world with world class shale gas deposits being discovered monthly from Texas to Nova Scotia. Encana, a mid sized Canadian company has huge stakes in Texas, Louisiana, North Dakota, British Columbia and Alberta in every major shale gas field that is covered by Wall Street, and sought after by the big dogs. Last month Encana split into two companies, one as a stand alone oil company and one as a stand alone Gas company. The original company, Encana - ECA-TSE has become the gas play and for good reason. It's management also sees natural gas in the same light as this writer, as the short to medium term solution to the Green Energy revolution. It is pursuing this strategy with zeal (along with other competitors in the sector) however it has a broader brush of huge, proven deposits in most of the major fields in North America. Management is focused and determined to become one of the premiere gas companies in the world.

Cramer (mad money - cnbc) has recently recommended Encana as a strong buy and we couldn't agree more. On Dec 18th we bought Encana at 32.69 We believe this will be a home run in 2010.


Gold:

Apollo Gold announced on Dec 18th an update on it's core drills at it's Grey Fox site and those results are excellent! They are now drilling cores at their newly acquired Pike River property which connects it's Black Fox producing mine to the Grey Fox site. The potential is enormous and we believe Apollo gold is at the infant stages of becoming a world class deposit. This reinforces my reasoning for increasing my holdings through December and I believe there is more good news to come in the Q1, 2010 reports.

Gold Analysts from The Gold Report had this company at a strong buy before the drilling at "Grey Fox" even began, with a minimum target price between $1 and $2.79 (it is currently trading at .50) Those estimates were solely based on Apollo's new production at it's "Black Fox" Mine (approx 40,000 oz in 2009 and 100,000 oz in 2010). Now, add to that, the drill results at Grey Fox and Pike River, and you have a world class operation at the infant stage.

I expect those estimates to be greatly revised upwards into the 2010 Q1 reports. When Grey fox and Pike River come on stream they could make Apollo our first 10 bagger of 2010.

Apollo Gold Corp - (TSX: APG / NYSE Amex: AGT).


These Analysts recommend Apollo Gold as a Strong Buy:

1. . . .We continue to recommend the shares of Apollo Gold Corp. with a SECTOR OUTPERFORM rating."
-KERRY SMITH, HAYWOOD SECURITIES

2. "We have left our assumptions for 2010 unchanged, resulting in no effect on our $1.00 target price and SECTOR OUTPERFORM rating" for Apollo Gold.

-
-TARA HASSAN, M PARTNERS

3..."Apollo Gold is very much a strong buy, an aggressive buy".
"We think this company's Black Fox Mine, from which management expects to produce more than 100,000 ounces this year, represents the beginning of a world-class gold mining operation in the making. We say that on the basis of upside exploration potential not only on the producing Black Fox Mine but also on the basis of drill results from the Grey Fox and historical data from the Pike River Property, which Apollo recently acquired from Newmont. The combination of these three properties stretches out over 3.5 kilometers along strike. Moreover, mineralization is open at depth."

"
If Bob Hoye is right and we start to see a major takeover craze beginning next year resulting from rising gold mining profits, companies with gold in the ground and with the kind of exploration potential Apollo has may suddenly be targeted very aggressively."

-Jay Taylor - J. Taylor gold Letter.

Other References: The argument for Gold,

Simply put, Apollo Gold is not just a gold play. It is a growing producer of a commodity that is under pressure around the world. that makes it a great takeover target for 2010. that is why we bought more Apollo Gold in December at .51 and .52

Technology Stocks:

We continue to increase our holdings in both Wilan Technologies and Ballard Power Systems as they both have a unique position in their respective markets.

Ballard Power - This first mover in the fuel cell industry Which has spawned a number of other fuel cell companies sometimes referred to as "Baby Ballards" has shifted it's focus to industrial uses for it's back-up power generators and is currently in production of 10,000 back up power units for the wireless industry in India. That contract alone will propel Ballard forward in 2010, but there is much much more.

Besides selling Fuel Cell forklifts to factories around the world at this writing, Ballard has great potential for building large fuel cell stacks that can actually replace coal, oil and nuclear power plants around the world. Such plants will at first utilize natural gas as fuel (see above-Encana) until the pure hydrogen problems are fixed. They also just completed the sale of a fleet of fuel cell buses to the city of Vancouver and no doubt, you will see coverage of this technology during the winter Olympics in February.

Look for Ballards stock to spike During the first week of February as the world is made more aware of Ballard during the Vancouver Olympics as their fuel cell buses carry athletes and spectators to Olympic venues and the international news runs stories of it's technology and numerous patents in the fuel cell sector.

Wilan Technologies is a "patently valuable company for the 21st century". Simply, it holds over 750 patents in wireless and internet technology including docsis, wimax, wilan, DSL, blue tooth, vchip and many more. Inventions in their portfolio are licensed by companies that manufacture or sell a wide range of communication and consumer electronics products including 3G cellular handsets, Wi-Fi-enabled laptops, Wi-Fi/DSL routers, xDSL infrastructure, WiMAX base stations, Bluetooth-enabled devices and digital television receivers. Over 210 companies, including Cisco, Nokia, Panasonic, Samsung, RIM, Sharp, Sony and Toshiba, have licensed WiLAN technologies. We think this is a $10 Stock (maybe more) trading currently at a very undervalued $2.40

The above noted stocks are, in our humble opinion, very much undervalued.

The Big dogs haven't yet taken notice of them, with the exception of Encana which is covered extensively by a number of analysts who have rated it a strong buy.

Hope you have a very Merry Christmas and a Happy New Year!

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