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  • Examining best chart in 2011 and a breakthrough technology CHGI and VSUL 0 comments
    Jan 19, 2011 8:11 PM | about stocks: CHGI

    A couple stocks under 3 we want to highlight in this report, either because they've been exibiting superior strength in 2011 / the last qtr or they have a breakthrough technology that could blossom in 2011..
    First mention is rapidly growing CHINA CARBON GRAPHIT  (OTCPK:CHGI)


    Last Trade:2.40Trade Time:1:37PM ESTChange: 0.04 (1.69%)

    Technically CHGI is in a consolidation pattern presently near 2.30, very healthy mind you following a recent run from 1.80 or so last week.... In addition the stock has also been among the strongest performers in the last month (surpassing CHTL which we mentioned as strong chart in our prior article), rising from .85 since mid Dec....
    Below is an article, although lengthy, we'd like to share as to why the stock has been exceptional and why it is likely to continue...

    .....Graphite has long been a key ingredient in steel, castings, lubricants, vehicle brakes, golf clubs, tennis rackets and — no surprise — pencils. But this polymer of carbon — a chemically identical sibling of both diamonds and coal — will become increasingly important in coming years due to its chemical, electrical and thermal properties. Its ability to remain stable in ordinary corrosive environments, conduct electricity and resist heat allow it to serve as a key component in applications like the storage batteries and nuclear electricity generation stations that will power us into the future.

    Coal powered the Industrial Revolution; its chemical twin, graphite, will be of great value in constructing the components of the clean-energy economy, making graphite a true diamond in the rough!

    While one may assume that it is as common as the dirt that it somewhat resembles, the supply of graphite is far from infinite. Natural graphite comes in several forms: Flake, amorphous and lump. Of the one million tons of graphite that are processed each year, just 40% is of the most desirable flake type. Only flake and synthetic graphite (made through an expensive process from petroleum coke) can be used in lithium-ion batteries. Graphite mining and processing are limited to a relatively small handful of countries, with China currently producing 70% of the total global supply.

    Demand for lithium-ion batteries will increase rapidly as battery power (electricity) supplements, and will even replace gasoline- and diesel-fueled internal combustion engines in vehicles as “green energy” expands. While hybrid automobiles such as the Toyota Prius have used nickel-metal hydride batteries for more than a decade, newer hybrid models like the Chevy Volt, as well as battery-only electric-drive vehicles like the Tesla Roadster and the Nissan Leaf, rely upon the more efficient lithium-ion batteries that will almost certainly be employed in all hybrid or fully electric vehicles in just a few short years. Large-flake graphite will be very much in demand to produce the hundreds of millions of lithium-ion batteries required for these automobiles.

    Governmental bodies are taking notice of just how crucial secure supplies of graphite are. Graphite prices have been increasing in recent months, and investors’ interest in this industry is almost certain to climb as word spreads about the impending boom in demand and the companies that will be making moves to meet it.

    A Slippery Supply

    Global graphite production has held steady at approximately one million tons per year over the past decade. The weak demand in the first half of the 2000s, combined with relatively low prices, led to little investment and development of graphite mining and processing capabilities over this time span. Many graphite-producing countries saw a steady drop in annual production between 2001 and 2008, including the Czech Republic, Russia, Madagascar, Zimbabwe, Canada and Mexico. Taking up the slack over this period were the Ukraine, Brazil, India and North Korea. China saw some peaks and valleys in production during this time, but currently produces nearly four-fifths of the world’s total supply of graphite, keeping 60% of this output for its own manufacturing requirements.........

    Intriguing Prospects

    Top Stock Pick

    China Carbon Graphite Group, Inc. (CHGI.OB), through its affiliate Xingyong Carbon Co. Ltd., manufactures graphite electrodes, fine-grain graphite, high-purity graphite and other carbon-derived products at its Inner Mongolia facility.The company believes that it is the largest wholesale supplier of fine-grain graphite and high-purity graphite in China. The company reported dramatically higher sales and earnings for the quarter ending September 30, 2010.

    Additionally, China Carbon Graphite has started building new forming and baking plants in order to meet the growing demand for high-purity (and higher gross margin) products in the global market. Construction of the new forming plant, which will produce large-size ultra-high-graphite electrodes as well as high-purity and fine-grain graphite, is slated to be completed by June 2011. The new baking plant will have 36 furnaces and include 30,000 tons of annual capacity, making it the largest baking plant in China’s graphite industry.

    The company noted in its recently-filed 10-Q that steel plants in China have been upgrading their electric-arc furnace facilities, which has boosted demand for large-size ultra-high graphite electrodes, a unique and specialized product. China’s steel industry, far and away the world’s largest, is today rapidly evolving into an industry, like that of the U.S., where electric-arc furnaces requiring graphite electrodes in huge quantities will ultimately be the dominant type of steel furnace used. This is inevitable, as the Chinese steel industry begins to utilize not only imported scrap steel and iron but, soon, domestically produced scrap as well. Shortages have developed and are expected to continue. Earnings could rise materially once these new plants are brought online.

    The company’s long-term strategy is to diversify and expand its product offering by manufacturing graphite that would be used as a reflector or moderator in nuclear reactors in China — a product that would have significantly higher profit margins than its current offerings.At present, there are 11 nuclear power plants in China, with 15 more plants currently under construction — and only one other manufacturer of nuclear graphite pure enough for use in these plants.The company works with Hunan University and Qinghua University to research and develop nuclear-grade graphite.

    China Carbon Graphite has approximately 550 full-time employees and a market capitalization of $24 million, and the shares trade at just over a dollar. This price could easily triple once the company begins to sell nuclear-grade graphite.

    While some investors are wary of investing in Chinese companies due to the risks and volatility in China's economy, CHGI represents a compelling speculation in the rapidly expanding global graphite industry. It is reassuring to know that internationally-recognized accounting firm BDO is the company’s auditor of record.

    The Drive Is On

    Graphite is one of the quintessential wonder materials of today that will only become more important moving forward. While the supply has proven adequate over the past decade, demand will increase significantly across all sectors of the industry in the years ahead. Already, prices are on the rise, with the best quality large-flake graphite rising in price from a low of $1,350 to more than $2,000 per ton during the fourth quarter of 2010 alone. New supply sources will be needed to meet this uptick in demand — existing mining, processing companies and startups alike will require investment.The prudent investor will not want to miss out on this overlooked opportunity. The demand for metals and minerals is now fed by the insatiable economies of southeast Asia and Brazil. There is a lag between increasing supply and demand that leads to long-term price growth for producers of such natural resources.

    Another extremely bullish article followed up on the stock calling them very 'compelling and the current price leaves it still notably undervalued.'
    A colleague of our Tobin Smith from Fox Business News and NBT Equity Research had this to say on the stock recently:

    The KEY is there new capacity to make HIGHLY refined carbon graphite which is required by the TON in nuclear power plants…

     It’s a very lucrative and diffulcult mfg process—butthey have it down and with 30 nuclear power plants under construction in China and 5 new plants coming on stream in next 12-18 months they are poised to grow top line and bottom line 2-300% over next 12-18 months…

     Selling now at very low valuation although when we started the price was at $1—the company is worth $5-$6 a share over the next 12-18 months as the new nuclear biz takes off and their NEW mfg plant which doubles their capacity comes on line…

    Bottom LIne:  This stock is going to take off again...Plain and simple...Focus on dips back around 2.35 moving forward on this very solid basing pattern we discussed above.
    Visualant Inc VSUL is second on the list.....We touched base on this stock earlier at sister site .  Although not as strong, chart wise, as CHGI, VSUL has this cutting edge sensor technology on the market that is causing considerable buzz.
    Specifically, their patent-pending technology uses controlled illumination with specific bands of light, to establish a unique spectral signature for both individual and classes of items. When matched against existing databases, these spectral signatures allow precise identification and authentication of any item or substance. This breakthrough optical sensing and data capture technology is called Spectral Pattern Matching (SPM).
    Visualant's breakthrough sensor technology offers the simplest, fastest and most inexpensive means to document unique non-visible signatures from nearly any kind of product or surface. ..... The company is targeting National security, document forgery/fraud, brand protection, label fraud and product tampering markets with its patent-pending light technology.
    Visualant, Inc. (OTCBB: VSUL), Shedding a New Light on Security From Authentication to DiagnosticsMarketwire (Tue, Nov 30)
    Technically, the stock has been building in .30-.40 area the last month or two following the runup from .20 to .75 last fall.


    0.4400 +0.0400   10.00%0.00%10,000

    Some interest has been building this week, and we think the stock could assemble another rally similiar to last fall, especially if they announce another licensing deal like the ones below.










    On the balance sheet, VSUL has become more then just a start up now as revenues went from 0 to over 2mil in the last fiscal year...Revenue (MRQ)2.1M
    Regarding Capitalization, Their low float is in their favor and could really factor in here, should the stock set to run as the limited shares.  
    Shares Outstanding5:38.25MFloat:26.27M
    Check out their site for more info on their  sensor technology.
    Bottom Line:  Ind addition to fair risk/reward at present levels, a little patience is likely to reward.  Consider retargeting .74 where it ran to last fall.

    Continue reading on Examining Best chart in 2011 and A breakthrough technology CHGI and VSUL - Denver Stock Market |
    Stocks: CHGI
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