Inflation Busters: Six Small-Cap Stocks With "Moonshot" Potential

Gold surged to a two-month high earlier this week — up near $4,450 an ounce — thanks to inflation fears that continue to nag …

Then, yesterday (Tuesday), a Wired interview emerged in which Austan Goolsbee, president of the Federal Reserve Bank of Chicago, insisted that inflation was the No. 1 problem in the U.S. economy right now.

“The biggest problem facing our economy … is not the collapse of industry and the collapse of jobs; it’s that prices have been rising too fast,” Goolsbee said. “We got an inflation problem and people hate inflation.”

Frankly, I’m not surprised.

And neither are you …

I’ve been saying this for more than two years.

Cumulative inflation — and an affordability crisis that’s grinding away at the American Dream — has been a consistent storyline of mine here at Stock Picker’s Corner (SPC) … and a driving force in our efforts to help you.

And for Wealth Builders like you and me … storylines matter.

Indeed, it’s a core belief here at SPC (and in my brand-new e-book) that “if you find the best storylines, you’ll find the best stocks.”

Those storylines will help you find the “money doublers” that create wealth. And, just as important, they’ll help you stay ahead of inflation.

And it’s beating inflation that we’re focusing on here today.

Because inflation — and the American affordability crisis — will only get worse as the wealth gap widens and as Washington’s addiction to debt spirals higher.

Watch the news as the latest inflation reports get released later this week. But, no matter what those numbers tell us, remember this: They are just a “snapshot” — a point in time. And the inflationary forces at work right now are unrelenting.

Affordability (and all that debt) highlight the list of challenges that new U.S. Federal Reserve Chair Kevin D. Warsh now faces. That became even clearer after Warsh’s first Fed meeting, which I deciphered for you here last week.

I also made you a promise: I said I’d circle back with a list of “inflation buster” stocks for you folks to research.

In today’s issue, I’m bringing you six “moonshot” candidates — special-situation companies that represent what the Big Money Pros refer to as “asymmetrical upside” plays. In plain English, they are high-risk/high-return candidates – semi-longshotters that could blow up — but, if they work out, will hand you many times your initial outlays.

Next week, I’ll bring you some more conventional stocks.

Here’s what I did.

I combined our “find the best storylines” with some quantitative screening.

For those “more-conventional” stocks, I screened for top names with the highest forward EBITDA/EPS forecasts.

[EBITDA (earnings before interest, taxes, depreciation and amortization) is a rough measure of how much money a company makes from its core operations before debt costs, taxes, and accounting adjustments are taken into account. Many analysts view EBITDA as a useful way to assess the underlying strength (earning power) of a business. EPS (earnings per share) helps investors gauge how much of a company’s profit is attributable to each share outstanding.]

I will bring you a list/report on those more-conventional “inflation-busters” next week.

For the “moonshots” I’m bringing you here today, I screened for stock-gain forecasts — ranking them by projected return potential over the next 18 to 36 months.

From a list of 10, I picked the six most intriguing. They’re involved in gold and silver, uranium, lithium, copper and even gene-editing technology.

It’s important to underscore here: Forecasts are just that — predictions of what “could” happen … not what “will” happen. Analysts create financial “models” and use those to make their forecasts.

The usefulness here is more about “magnitude” than specific accuracy. Moonshot-stock forecasts have wide ranges because small catalysts can lead to massive share-price gains. Money managers refer to this as “binary outcomes”: These are companies that will either stumble — or launch into massive gains.

I tried to mitigate the risks somewhat by taking the stocks my screener turned up and checking them across the storylines being followed for you here: Powerful narratives can serve as sustained “Triggers” that stay in place for three, five or seven years — or more.

View this list for what it is: A starting point for your own research — and not official recommendations. Remember, too, that these companies have high-risk/high-return potential. So it might be worth an approach in which you invest in a “basket” of moonshot stocks.

Our highest-conviction stocks go into our Model Portfolio — or into our Special-Situation Portfolio. Companies we’re watching closely can also join our Farm Team — our official “watch list.”

One or more of these companies could join one of those “portfolios” for our paid-up SPC Premium family members.

Check back next week for “Inflation Busters: Round 2.”

And SPC Premium members can look forward to a new official recommendation very soon.

Inflation Buster No. 1: Snowline Gold Corp. (SNWGF)

• Recent Price: $11.27.

• Projected Return: +150% to +600%

• 52-week Range: $6.48 to $15.53

• Market Cap: $2.2 billion.

• Thumbnail: The Vancouver-based Snowline is a Canadian exploration-and-development company. High‑grade Yukon discovery leverage; top asymmetric upside in the entire universe.

• Storylines: Deglobalization and the New Cold War; the Long-Term Commodities Supply Shortfall; Inflation, Affordability and the Death of the Middle Class.

• Internal Trigger: Development of a gold field.

• External Trigger: Resurgent inflation and the mainstreaming of gold and silver.

Snowline is a so-called “junior miner” — an industry descriptor for a small venture that’s still searching for a big mineral “strike” — versus an established “major” like Barrick Mining Corp. (B). It’s the mining equivalent of a biotech startup seeking a “breakthrough” drug: In both cases, the odds are long — but victory can generate a “moonshot” stock surge.

Snowline is searching for silver, zinc, nickel, vanadium, copper and molybdenum. Its flagship project is the Rogue gold project, a collection of nearly 5,400 mineral claims in the Yukon Territory’s Selwyn Basin. The area is huge. It’s about 110,189 hectares — about 25 square miles, or 1.5 times the area of New York City.

Here’s one final tidbit — and a super-intriguing one, at that. In mid-November, famed short-seller Carson Block — founder of the Muddy Waters investigative research firm — revealed he’d taken a “long” position in Snowline. Yes, you heard me — he bought the stock.

Block made his name as a kind of “financial detective.” He and his firm dig into the finances of public companies, look for financial shenanigans — and then report what they’ve discovered. As a short-seller, Block is betting that the shares of the companies he targets are headed down — and usually, a lot. At the Sohn Conference in London late last year, Block told attendees he believes Snowline’s projects were undervalued compared with the price of gold. And describing public reports Snowline had released, Block also said that he believed the company had taken a conservative approach to its own growth projections.

According to Mining.com, Block said “we think this project works at $1,800 gold and don’t see much downside risk here” — a comment he made when the yellow metal was trading at $4,070 an ounce.

Gold was trading at about $4,350 early this week. High‑grade Yukon discovery leverage; top asymmetric upside in the entire universe.

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