Friday File: “Green California Goes Dark” CO-27 pitch, plus Portfolio Updates

Checking out some teased cobalt ideas, plus updates on Delphi, Lending Club, Shopify and more...

By Travis Johnson, Stock Gumshoe, October 6, 2017

The latest ad for The Casey Report caught my eye this week, partly because I thought they might be following in teasing eCobalt (ECSI)… but it turns out that’s not the case, this pitch from E.B. Tucker about the next cobalt bull market being driven by lithium-ion battery demand is all about two other cobalt companies.

So let’s see what they are, shall we? If you’re new to this story, the short intro on cobalt is that demand is surging and expected to grow substantially in the next few years as battery demand rises, and the price has been rising as a result. Cobalt is one of the major ingredients in a lithium ion battery (along with lithium and graphite, both of which are far less rare than cobalt), and, as we are all quite aware by now, Elon Musk’s Gigafactory and the dozens of other large battery production plants are sucking up those raw materials like mad.

E.B. Tucker uses as his hook the blackouts in California that will be caused by a lack of storage capacity for their huge solar energy production infrastructure, and which have led to a mandate that the state must build lots of battery storage facilities, but electric vehicles, as a whole, are a far larger demand source for batteries… assuming, of course, that adoption of electric vehicles continues on the expected course (that seems a safe bet these days, with every automaker focused on electric vehicles and some jurisdictions, including China and California, considering further disincentives for gasoline automobiles.

And, to make matters worse, more than half of the cobalt currently produced comes from the Democratic Republic of the Congo, where political risk is high and human rights abuses, including child slave labor, scare off image-conscious buyers like Tesla and Apple.

Most cobalt is mined as a by-product in nickel or copper mines, so those metals have a big influence on cobalt production too — if nickel prices rise because of stainless steel demand, or if copper prices rise because of industrial development, that leads to more production from those mines, which also increases the cobalt supply… but there are not very many “pure” cobalt mines that were built primarily to get at that blue metal.

So that’s my lead-in — what are the cobalt stocks E.B. Tucker is recommending to potential Casey Report subscribers? Here are our clues:

“The first ...

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