“GigaProfits! — One tiny resource company essential to the Gigafactory”

Sleuthing through the Nick Hodge tease for a play on Tesla's Gigafactory

By Travis Johnson, Stock Gumshoe, July 29, 2014

“Tesla is building the largest battery factory ever…

“Groundbreaking is expected any day now. You could see…

“GigaProfits!

“It doesn’t matter what you think about electric cars… You could make a fortune off Tesla’s new $5 billion ‘Gigafactory’ — Even if it’s a colossal failure.

“One tiny resource company is essential to the Gigafactory. Here’s why its share price won’t stay under $1 much longer….”

That’s the intro to the latest ad from Nick Hodge for his Early Advantage newsletter ($499 a year), a letter that has previously teased attention-getting ideas like the “blue light” cancer detector and the “blue blood” mollusk cancer cure — so we’ll let you know that yes, these kinds of stocks teased with mega-hype often go up… but companies that are largely driven by this attention can also often go back down awful quick.

Since Tesla’s undoubtedly going to be getting all the headlines when it reports earnings late in the week, I’m sure the promos about ancillary stocks will continue — and the questions about this one are heating up. No, Hodge is not keeping the “blue” theme alive in his string of teaser pitches by stealing Michael Robinson’s “Operation Bluestar” title for that teaser about Tesla’s planned huge battery factory (the “Gigafactory”), but his pitch is also based on that same Gigafactory and the demand it will create for a needed battery ingredient.

So let’s find out which stock he’s touting, shall we?

Here’s the crux of Hodge’s argument:

“Forget what you think about Tesla or electric cars for a second.

“I don’t care whether you consider it the most important company of the 21st century or just overpriced hype…

“It doesn’t matter.

“You could make a fortune off Tesla’s Gigafactory — even if it’s a total failure.

“Even if Tesla never sells another electric car — you’ll still profit.

“Remember, Elon Musk is an extremely rich man used to getting his way. And he’s already done deals with two giants: Apple and Panasonic…

“The Gigafactory is getting built — no matter what happens later.

“Musk says groundbreaking will happen this year.

“Production could start just 12 months later…

“But before he can build the Gigafactory, there’s one valuable resource he must secure in the next couple of months.

“And there’s only one place he can get it…”

And if there’s “only one place” Musk can get this resource for the Gigafactory, well, that would obviously mean that one supplier would make a mint, right?

So who is it? And is it truly the “only place?”

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Some more hinting:

“There’s one material in particular that’s absolutely critical to the Gigafactory…

“And there’s only one place Tesla can get it.

“From a tiny North American company whose shares currently trade for less than $1.

“By the time construction begins on the Gigafactory, those shares could be over $3 and headed higher…”

So what’s the resource Hodge is talking up?

Graphite. Which is indeed a major component in lithium batteries (that’s what the Gigafactory will be building). More from Hodge:

“What you may not know is that there’s actually 12 times more graphite in a battery than lithium.

“Graphite is crucial to how batteries function. It’s used to make the anodes of a lithium-ion battery — the part that gives the battery its charge….

“And batteries for automobiles require far more graphite than a cell phone battery. The graphite flakes also have to be larger and contain more graphite, since car batteries are responsible for a bigger load.

“Current global battery demand for graphite is 83,000 tonnes of graphite a year. And it’s growing 20% to 30% annually, even without the Gigafactory.

“So if Tesla all of a sudden demands enough graphite for