Stock Tips update: Nvidia, Syrah Resources, Nano One, Warpaint London

Another tough month for investors in September. Seasoned mining experts and value-based fund managers have been complaining at just how incredible the valuations are in some stocks, and how cheaply some once-in-a-generation opportunities can be had. Certainly there are some managers who are going to probably retire once this market rallies back.

Given how cheap bonds are at the moment, it looks as if much of the smart money is buying into Treasuries given the excellent yields that can be obtained there. That means that big investors are not buying stocks, especially in the small caps space. We even saw commodities giving up a lot of ground in September. Even the natural gas market was looking pretty lifeless.

This month Raine Lahtinen returns as a stock picker, focusing on US large caps for us. His first pick is Nvidia, of which more below.

Nvidia [NASDAQ: NVDA]

Raine’s first pick is Nvidia, one of the best performing stocks of 2023 in the US market. The shares are obviously being driven by the hype around the onset of artificial technology, itself brought to the public eye by the launch of ChatGPT. We remain bullish on the trajectory of Nvidia, despite the high level of volatility in the stock. The company has already exceeded a couple of other tech heavyweights – Tesla and Meta – in terms of market cap. It is also now followed by a staggering 54 analysts, with 17 strong buys. Many Wall Street commentators think the stock still looks cheap.

Syrah Resources [ASX: SYR]

Last month we also tipped vertically-integrated graphite supplier Syrah Resources, which is listed on the ASX. Syrah Resources is uniquely positioned to supply battery supply chain customers outside of China as a large-scale producer of high quality and qualified natural graphite products. Its resources have materially lower expected emissions intensity compared with alternative natural graphite products from a benchmarked supply route in China. We have bought stock in the company at AUD 0.58. We added it to our long term growth portfolio, as the miner is already a little too large for our venture portfolio. This means we will be looking to hold the stock for at least six months, but probably longer.

Nano One [TSX: NANO]

Shares in Canadian battery materials technology specialist Nano One, which is held in Armchair Trader’s venture portfolio at the moment, jumped in mid-September as Sumitomo Metals Mining announced it was drastically expanding its support for the company. Shares popped from CAD 2.38 to 2.90. Since then they have been searching for the three dollar level. Sumitomo will invest CAD 16.88 million dollars in exchange for a 5% stake in the Nano One at CAD3.07 a share. Equally importantly, it will also work with Nano One to help the company commercialize its production of battery cathode materials lithium iron phosphate and nickel-rich chemistries such as lithium nickel manganese cobalt oxide.

Warpaint London [LON: W7L]

Warpaint continue to impress; in September the company revealed record sales up 46% to GBP 36.7m over the six months to the end of June. UK revenues were also up to the tune of 28% (GBP 13.3m). The company continues to trade well in the discount cosmetics / fashion space in a British retail sector which is being hammered by high inflation and interest rates. The company looks well positioned to realise still further growth, including on the international stage. Management seems very upbeat on 2H prospects, as their product lines are second half weighted, reflecting Christmas seasonal sales. Shares are up nearly 60% over the last six months.

Sell: No stocks sold this month.

So how are our picks getting on?

Tactical trading portfolio

These are shorter term equity and commodity trades which we can see playing out within one to three months. We will sometimes keep these on longer if the trade is still quite range bound but we are anticipating further upside. These trades have the tightest risk parameters.

*Prices as of close of play on 29 September 2023

Longer term buy and hold portfolio

These are positions where we see a longer term growth scenario, usually in the small to mid cap space, but sometimes larger companies. We will typically be keeping these stocks on the list for at least six months and often longer. Consequently our risk tolerance is higher for these positions than for the trading list.

*Prices as of close of play on 29 September 2023

Venture portfolio

These are companies which we see as having long term and considerable growth prospects. Due to their size and the nature of the business they are in, we feel that our normal risk management constraints should not be applied to these stocks.

*Prices as of close of play on 29 September 2023