John Polomny's  Instablog

It is time for my annual ritual of selecting one particular stock that I think has the possibility of rising 100% or more over the next twelve months. Last years selection was Mart Resources (MMT.V). Here is the initial writeup on Mart. The stock more than fulfilled my goal of at least 100% in capital gains and in this case has become a dividend payer. I continue to hold the stock.

The stock I have chosen for 2013 is Cortex Business Solutions (CBX.V). The company website says that;

Cortex Business Solutions is an enterprise eProcurement solutions company that improves efficiencies, reduces costs and streamlines procurement and supply chain processes for its customers.

The Cortex Trading Partner Network enhances the exchange of business critical documents, such as purchase orders, receipts and invoices, resulting in improved cash flow management and business controls while reducing days outstanding and administrative costs.

Cortex is a low cost, low risk cloud-based solution that can be implemented quickly by leveraging its customers' existing business environment.

Basically the company business is to provide a platform for managing the payment of invoices with an initial emphasis in the oil and gas business. What attracted me to this business is the revenue model which consists both of an upfront payment and a reoccurring revenue stream. Here is a link to the company's presentation which will give a more in depth explanation of the business and the hub and spoke system and how this networking is growing exponentially. In fact that exponential or hockey stick type breakout upwards in revenue is the catalyst that I expect to bring attention to this stock and a consummate increase in share price.

The company has moved past the early adopters phase and is now reaching the stage of market acceptance where the product has been proven and is now mainstream. This is proven by the customer base of companies that have adopted the product like; Suncor, Apache, Husky, Nabors, Clean Harbors to name a few. These are not the type of company's that just adopt any system or product on a whim and especially a new system for payment and procurement. The company continues to show increases in hubs, network traffic, and invoices processed as indicated on its most recent monthly report. Also take a look at the company factsheet where one clients experience with Cortex resulted in $6 million in yearly savings along with a myriad of other benefits. The company is not currently profitable but I am hopeful that it will become cashflow positive in 2013. The other catalyst will be the continued viral growth of the network and exponential growth in invoices will continue. I also expect them to branch out into other industries such as Utilities and construction. The company reports earnings on 12/20/12 so it would probably behoove any prospective speculators to listen to the call and see if the company is still on track business wise. I am an owner of shares of Cortex Business Solutions in the $.15 to $.165 cent range. This is a highly risky speculation suitable for those with a large tolerance for risk but the potential for at multi-bagger return is certainly possible. This is not advice please do your own due diligence.

Disclosure: I am long CTXZF.PK.

I have been purchasing shares of Chinese bromine and crude salt producer Gulf Resources (GURE). The quick story is that I have been watching this company for a couple of years as it has fallen due to lower sales and earnings along with getting caught up in the "all Chinese companies listed in the west are frauds" undertow. Although the company has had lower revenues and earnings, due it says to the overall economic weakness in China, it has maintained profitability. If the financials are to be believed the company has cash on hand that equals the market cap of the company ($41M vs.$43M.). Of course many will say that the company does not have the cash and that if it did it would be buying back shares. I am not going to get into that debate. So far the company has not been proved to be a fraud.

The catalyst for this trade is the recent upward movement in Chinese bromine pricing. The price is up around 8% in the last couple of months. The price can be followed here:

http://www.sunsirs.com/uk/prodetail-643.html

I am using this as a speculation on Chinese bromine pricing getting better and a consummate increase in sales and earnings at Gulf Resources. I am using a 25% stop on this trade to protect against a further deterioration in the Chinese economy and any kind of fraud allegation that might pop up in the near term. This is called a speculation and is high risk but I think with a near term increase in Bromine pricing could be in line for a decent move. This is not advice do your own due diligence.

Disclosure: I am long GURE.

ProActive Investor:

Caledonia Mining shares rose more than 12 per cent today after it revealed gold production at the Blanket mine had achieved an "all time high" in the third quarter.

From the mine in Zimbabwe, 12,918 ounces of the yellow metal were produced - 12 per cent higher than the 11,560 ounces generated in the second quarter.

And it was 33 per cent higher than the 9,743 ounces produced in the third quarter last year, the firm told investors.

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This morning, Caledonia also revealed that production from underground mining at Blanket in the third quarter to September 30 was the highest ever produced since the mine first recorded production in 1906.

It highlighted that increased gold production, further improvements in recoveries and attention to costs reduced average operating costs to US$508 per ounce from US$547 in the last quarter.

Blanket is now one of the lowest cost gold producers in both Africa and the world, it highlighted.

Meanwhile, its financial position continued to improve with almost $25 million of cash on hand.

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The analyst said that now the indigenisation process is now complete, the new board has refocused on growth and approving a capital investment programme that includes the No.6 Winze development project at the Blanket mine.

This has the potential to increase production by 70 per cent to around 70,000 ounces per annum from 2015, he noted.

"As well as the expansion at Blanket, the company is progressing with its base metal Nama project (Zambia) with a view to releasing a copper resource estimate by June 2013," he added.

"We think this year's production target of 40,000 ounces looks conservative, given nine months production of 33,600 ounces," he concluded.

These earnings and the record levels of production are really good news. The company is consistently building cash and now has $25 million in the bank. That cash level represents nearly 50% of the market cap of the entire company. You may recall that I recently wrote a letter to the company management asking about the possibility of a dividend or share buyback. They said that because they have recently completed the indigenisation process they will now discuss with the board how the company will proceed on a going forward basis. I am an advocate of making investments in more gold production, at a reasonable cost, in Zimbabwe. I am not a fan of spending money on the Nama project in Zambia. Nevertheless I am inclined to give them the benefit of the doubt for now but I am hopeful that long suffering shareholders will be rewarded fairly soon.

Disclosure: I am long CALVF.OB.