Hello all. Just as we said in yesterday afternoon's newsletter, this morning we've got a brand new trading idea for you, and it's not hyperbole to call this name a one-of-a-kind opportunity in the right place at the right time.
Do you know the difference between a cyclical trend and a secular trend? The former means the ebb and flow that makes a stock investment-worthy (and then sell-worthy) is recycled over and over. A secular trend, however, is a one-time-only paradigm shift that changes the world forever. The rise of the internet was a secular trend. The advent of electric cars is a secular trend.
The notable part about secular trends that means the most to investors: There's a lot of money to be made by picking the right stocks at the forefront of that trend.
Well folks, you probably don't need me to tell you the rise of cannabis -- hemp and marijuana -- is a secular trend you don't want to miss out on, because it won't be in the midst of explosive growth like it is now ever again.
The key is finding the right way to play it... which is usually a way most other investors never really recognize.
Enter Radient Technologies (CVE:RTI).
Radient Technologies manufactures natural ingredients for global customers across a range of industries, including food and beverage, nutrition, supplements, pharmaceuticals and cosmetics. Using a proprietary, patented technology, Radient's products are superior in quality and purity while manufactured at a significantly lower cost than other methods thanks to superior yields and efficiency.
More relevant to the matter right now, Radient is entering the cannabinoids market, aiming to tap into the new opportunities stemming from increasingly favorable regulations for marijuana and hemp.
The key, however, lies in the science.
Radient Technologies uses an ingredient-extraction process called microwave assisted processing, or "MAP," for short. As the name implies, the use of radio microwaves helps the extraction process along. To fully appreciate why it matters though, you have to look at the approach other ingredients suppliers are utilizing now.
With current approaches to create ingredients from an appropriate source, the material with the target compound or molecule in it is soaked in a solvent, heated to 50 degrees Celsius (or more), and over the course of several hours, the desired ingredient diffuses into the solvent. After filtration, drying, and other processing, that ingredient is finally isolated and then collected.
It works, but it's hardly ideal. Aside from the fact that this technique doesn't work very well at large scale, yields are relatively low. Worse, a lot of things you don't want to extract can still be found in the extract, lowering the quality and purity of the ingredient.
Radient Technologies' microwave assisted processing changes all of this.
Using its patented MAP process, Radient is able to selectively deposit microwave energy into a biomass (source material) and heat the target elements while leaving other materials in the mix unaltered. The near-instantaneous "in-core" heating that occurs creates pressure which drives out the target compound much faster than more conventional extraction methods. In fact, the pressure-driven process outperforms the conventional extraction on pretty much every front. That is, the technique reduces the extraction time from hours to minutes, delivers a higher active ingredient purity, increases the recovery of actives from often scarce biomass, and uses much less solvent and energy than the more typical approach.
And to be clear, this isn't just some in-the-lab theory. This is happening right now. Its plant in Edmonton has the capacity to process five metric tons of material per day. The 20,000 square foot facility is GMP compliant and NHPD (Natural Health Products Directorate) licensed, and to date has extracted more than 40 different kinds of revenue-generating materials. Yes, the company IS already bearing revenue.
The story took a very interesting turn last week, though, which is when and why it piqued our interest. That's when it announced it had signed a memorandum of understanding with Aurora Cannabis to jointly develop and market a superior cannabinoid extract.
If you don't know, Aurora Cannabis is one of Canada's premier providers of medical marijuana. Some might even say it's the best, even if not the biggest.
It's also growing fast. Q3's revenue was more than twice Q2's, and the company really only flipped the revenue switch, so to speak, the quarter before that. There's a reason for the explosive growth, and it's a big deal that it wants to team up with Radient Technologies to develop a new category of revenue-bearing product.
At stake is a piece of a cannabis market that some say should be worth $20 billion by 2020. Honestly though, that projection may underestimate what consumers demand as we learn more about how to get more use and functionality out of hemp and marijuana. The use of Radient's MAP is one of the evolutions that may help make the cannabis market even bigger than most investors might suspect is possible.
This is just the beginning though. Radient Technologies could perform similar work for all sorts of cannabis companies.
It's not just doing contract work for other suppliers in a variety of industry that makes RTI a powerful opportunity at this time, however, whether cannabis-related or not. The company can also license its patented technology. And of course, Radient can use the platform to make its own proprietary products. These are all ideas the company has presented recently.
Whichever paths the company chooses, there's a lot to look forward to... especially now that cannabinoids are on the radar.
One thing to note: RTI is only listed on the Canadian Venture Exchange, which is usually denoted with a 'CVE' prefix or a 'V' suffix. Whatever the case, Canadian stocks are still plenty accessible outside of Canada through most U.S. brokers. If memory serves, E*Trade, Fidelity, and Interactive Brokers (at least) facilitate these trades quite easily - account holders would just need to convert American dollars to Canadian dollars first to fund the trade.
Obviously you'll want to consult your brokerage firm's website or call your customer service number to get the specifics, but in most cases it's not going to be anything unfamiliar.
And yes, RTI is one of those few names we think is worth venturing into the world of foreign stocks for, if you haven't yet.
The normal rules of smart trading apply, of course, which are never invest more in one company than you can afford to lose, use an entry limit, and then use a stop-loss once you're in. We think this is a fantastic opportunity though, for several reasons. The biggest is simply how Radient can do something no other company quite can, and it's venturing into what's going to become a massive cannabis market. We'd be surprised if you can get into RTI at its current value a month from now. Indeed, given how something lit a fire under the stock last week, you may not be able to get in at this nice price even a mere week from now.