Friday Beers with Marc & Stuart: Back in the office !!!

October 22, 2021

A2 Milk, Ansell, Baby Bunting, BHP, NCZ, New Century Resources, Paragon Care, PGC, Transurban, video, Xero, XRO

This week in Friday Beers:

– Name that Stock!
– The Love Doctors help out Dom P.
– The Bitcoin Bet
– Conan The Contrarian loves gold
Red Nuts in Canberra

 

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Transcription

 

Stuart: It’s Friday afternoon in Sydney, and that means it’s time for “Friday Beers” with Marc and Stuart. I’m Stuart Roberts.

Marc: I’m Marc Kennis. And finally, Stu…

Stuart: We’re out of lockdown.

Marc: We’re back.

Stuart: Back in the old watering hole after three months of being locked away by a tyrannist premier, like the rest of the country, right?

Marc: She’s gone now, though, right? We made sure of that.

Stuart: It’s so good to be back. Now, [inaudible 00:00:29], we wanna promise that, now that we’re back together in our old [inaudible 00:00:33], we’re gonna be funnier. Because, frankly, we were not funny for the last three months, right?

Marc: Drinking beers over Zoom just doesn’t…

Stuart: Doesn’t cut it.

Marc: It doesn’t cut it.

Stuart: Right.

Marc: This is a lot better, being back here in the pub. It’s still quiet here, but yeah, people are slowly coming back from the office…back to the office…so the pub is still a bit quiet. But I think it was never really busy in our little pub.

Stuart: No, no, no.

Marc: Anyway.

Stuart: Okay. And now, Marc, we’ve got a new game we’re gonna play to celebrate getting out of lockdown.

Marc: Name that Stock.

Stuart: Okay, tell us the rules of Name that Stock.

Marc: It’s really simple. I’ll describe, Jeopardy style, a stock to you, and you need to guess what stock I’m stalking about.

Stuart: Okay, if I get it right, what happens?

Marc: You get a shot.

Stuart: Okay, right. [crosstalk 00:01:22].

Marc: All right. And Stu, we each…I’m not sure if we have a prize for the winner, whoever gets the most right, but…

Stuart: Yeah, I’ll give you a couple beers if you win.

Marc: Right, okay. Is that the prize? All right, hang on. So, company number one, stock number one. Drum roll. So…you get a shot. [inaudible 00:01:42].

Stuart: Yeah, I like to mix my rum with my beer together, right?

Marc: All right. It’s beer with a rum chase.

Stuart: We’ve been locked down for a long time, Marc.

Marc: You have been drinking, right?

Stuart: Right.

Marc: Yeah, during lockdown. All right.

Stuart: Is the pub Catholic?

Marc: All right. Careful. There you go. So, I’ll take this one, and you take that one.

Stuart: All right. What’s my question?

Marc: It seems like you’re stalling, Stu. You’re afraid of this question? All right, here we go. This stock, which is currently suspended because of a strategic deal they’re doing, is probably the biggest laggard in the corporate space. So by the time it comes out of suspension, this one is probably going to make a big jump. Which stock is it?

Stuart: It is Stavely Minerals.

Marc: Eh.

Stuart: All right, I give up. What is it?

Marc: All right, come on. [inaudible 00:02:31]. You’ll miss the copper.

Stuart: It’s Copper Mountain Mining.

Marc: No, it’s not.

Stuart: Okay, I give up. What is it?

Marc: Copper Mountain Mining is not suspended, is it? So, this one is suspended.

Stuart: Okay.

Marc: We actually spoke about it the other day.

Stuart: Right.

Marc: Stuart, your final try. If you get it wrong, no shots for you.

Stuart: Okay. I think it’s OZ Minerals. Waa, waa, waa, waa, waa..

Marc: It’s New Century Minerals.

Stuart: Right.

Marc: Resources, NCZ.

Stuart: Right.

Marc: So, this one has been suspended. They’re doing a strategic deal. A couple of products shot up. It’s now at $4.70, or whatever it is. So this one is…it’s probably gonna spike when it comes back on, which is expected on or before the 28th of October.

Stuart: Yeah, Patrick Walta has done an outstanding job of building the foundation of New Century, which is the [inaudible 00:03:23] Century Zinc Mine in Queensland. [inaudible 00:03:26] because of the zinc price, but obviously, yeah, they’ve got some more stuff on the boil, which [inaudible 00:03:31] order.

Marc: All right, well, we’ll see. [inaudible 00:03:33].

Stuart: Okay. Now it’s your turn, Marc.

Marc: All right.

Stuart: Are we ready?

Marc: Be gentle with me.

Stuart: Okay. Which stock am I? I’m named after an Island in Indonesia.

Marc: In Indonesia?

Stuart: Right.

Marc: You know there’s 22,000 islands in Indonesia, right?

Stuart: Yeah, yeah, but this is a big one.

Marc: All right. Is it Java…Java Resources? Sulawesi Resources? Borneo?

Stuart: I’ll give you a clue. It’s a Top 100 company, and they’re named after an island in Indonesia.

Marc: Shoot. That’s not it, shoot.

Stuart: Your people used to run Indonesia for a long time.

Marc: I know.

Stuart: You should know this.

Marc: What do you mean, “You people”? That’s so racist.

Stuart: Yeah, that’s what the Indonesian thought.

Marc: Sulawesi…no, it’s not Sulawesi. Java…Bali. No.

Stuart: Do you give up yet?

Marc: No, I’m…

Stuart: You Dutch people don’t give up easily.

Marc: See, I’m not good with Top 200 companies. I’m more of a micro cap guy, so.

Stuart: Okay, do you want me to tell you?

Marc: Yeah.

Stuart: Right. It’s BHP, Billiton. Belitung is an island in Indonesia. You might know it as Billiton. But there was a…

Marc: No, I don’t know it at all.

Stuart: All right, your turn, Marc.

Marc: You had said BHP… All right. It’s gonna be like that, huh?

Stuart: Mm-mm. Come on, give it to me, buddy.

Marc: All right. Name this stock.

Stuart: Right.

Marc: So, this company is actually on our watch list. And if you’re a subscriber to “Stocks Down Under,” you can access the watch list. That’s stocks that we keep a close eye on. They’re not yet on our topics list, but it’s a watch list stock. So this one is set to rebound strongly once elective surgeries come back on Australia-wide.

Stuart: Okay, I think it’s Paragon Care, PGC.

Marc: You got it.

Stuart: [inaudible 00:05:20]

Marc: [inaudible 00:05:22]

Stuart: [inaudible 00:05:23]. Okay.

Marc: All right.

Stuart: You’ll go first.

Marc: Cheers. I’m expecting a simple one from you as well now, right? No BHPs [inaudible 00:05:36].

Stuart: Okay, I’m gonna make it easy for you. So, who am I? I’m a Top 100 company.

Marc: Again?

Stuart: Yeah.

Marc: All right.

Stuart: But I’m in the tech space. And I was founded in Auckland, in Wellington, I should say, by a guy named Rod.

Marc: Does it have to do with accounting?

Stuart: It may or may not be involved in the accounting space.

Marc: What kinda answer is that? Can I buy a vowel? Is it Xero?

Stuart: It’s Xero. [inaudible 00:06:06].
Marc: [inaudible 00:06:09]

Stuart: Okay. So it’s a tie here at Name that Stock. We got one each.

Marc: We don’t do ties here. We do suspenders, though.

Stuart: Right, of course. Yeah, yeah. Now that we’ve had a bit of fun, it’s time to go make the lives of some of our subscribers a little easier. So it’s time for… From Dominic from EPIC. And Dominic from EPIC has written, “Dear Marc and Stuart…”

Marc: Does he have a last name or any initials?

Stuart: Dominic P.

Marc: Dom from [inaudible 00:06:43].

Stuart: From EPIC.

Marc: All right.

Stuart: And, “Dear Marc and Stuart, really enjoying the publication. I just got a promotion at work. I’m now in charge of my organization.”

Marc: Right.

Stuart: “And, round about the same time, my wife and I discovered we were pregnant with our seventh child.”

Marc: Seventh?

Stuart: Yeah, seventh. So, well done, Dominic P. and…

Marc: Who wants seven kids anymore? Seven?

Stuart: Dominic P. and his wife. Okay. So he says, “Now I’ve got a problem. I’ve now got to put some stocks into the trust fund for baby number seven. And, look, I actually have a few ideas. A guy at Mass told me I should buy Pushpay, for example. And, meantime, I’ve got the inside knowledge from some of the companies that will do well out of [inaudible 00:07:29] the state of New South Wales.

Marc: How does he have the inside [inaudible 00:07:32]? We need to talk, Dom, offline. We’ll give you a call.

Stuart: But, anyway, “I’m at the kitchen table last night. My wife and I got into a bit of an argument. She wanted some more conventional plays for some of the risky stuff that I wanted to put in the portfolio. What do I do to keep us both happy and look after baby number seven?” Okay, what advice have we got for Dominic P.?

Marc: Well, probably, you know, start off with buying some Ansell for then baby number eight. Probably a good idea.

Stuart: Now, what do you think of the idea from Mass on Pushpay?

Marc: Yeah, that’s probably good. It’s a religious play, almost.

Stuart: Right.

Marc: Because they’re using the church as [inaudible 00:08:13]. But, coming back to Ansell, don’t buy that on the ASX. But that at the pharmacy run, just for baby number eight. But yeah, look at the usual suspects, Baby Bunting, [inaudible 00:08:25].

Stuart: Now, Baby Bunting…Dominic and his wife probably know Baby Bunting. So, you know, Dominic, that, basically, they have cornered the market. I call them the Buntings of baby-type products. And when you’re in the game, you’re in the game for about 10 years, so the customer base can become fairly loyal through the journey.

Marc: So these guys…Dom is in the market for 70 years now. For seven babies [inaudible 00:08:49].

Stuart: Like in the 10 years from…typical family size, from when you start to when the kid gets to be…kids go to school. It’s where you’re in that range. Dominic might be in there for slightly longer, as a more oiled customer.

Marc: Sure, just a little bit.

Stuart: But it’s fair to say the growth profile is quite strong, because they’ve driven just about everyone else out of the game who’s involved in baby products.

Marc: All right, well, that’s [crosstalk 00:09:07].

Stuart: So that’s a good one [inaudible 00:09:08].

Marc: So you’ve got Pushpay, Ansell, Baby Bunting. What else?

Stuart: A2 Milk. Obviously, yeah, the baby powder, depending on whether they wanna breast feed or not.

Marc: Fonterra.

Stuart: Or Fonterra. Any of those dairy stocks would be an obvious one.

Marc: What would be really interesting, though, and this is what we need to talk to Dom of, is about that opening up, because Transurban could be interesting.

Stuart: Okay. So depending on what Dom [inaudible 00:09:30]. Dom, yeah, if you’ve been a lot on one of the toll roads in Sydney lately, you’ll know that the traffic is up markedly. So business is brisk…

Marc: Absolutely.

Stuart: …at Transurban.

Marc: Yeah. So yeah, we got Dom’s email and phone number, so we’ll chat, Dom.

Stuart: Yeah, so crack open the Dom.

Marc: All right. So, Stu, we’ve had a number of bets over the years. [crosstalk 00:09:53]

Stuart: Okay, must you bring that up, Marc?

Marc: I must. I must, because, first of all, I’m still owed for bet number two.

Stuart: Right, okay.

Marc: Which I think we’re about to settle.

Stuart: Well, for the viewers who came in late, remind them what bet number two was.

Marc: Yeah, that was the election in the U.S. last year.

Stuart: Right.

Marc: Biden versus Trump, and I won.

Stuart: Biden versus Trump, and I picked Trump, and I lost. Yeah.

Marc: Yeah.

Stuart: I believe it was stolen from me, quite frankly.

Marc: Well, you’re still coming, right? But I think we’re about to settle that one in some nice restaurant somewhere.

Stuart: Right.

Marc: But then there’s another one that we’ve got, which is Bitcoin. So, I said a little while ago that Bitcoin would see $200,000 before it saw $10,000. So it came down to $30,000 or whatever. Spiked up again, come down a bit, but now it’s at $67,000 following the start of ETF trading in cryptocurrency in the U.S.

Stuart: And China’s decision to ban…

Marc: That was really short-lived. It was…you know, it came down to $5,000 per bitcoin and spiked right back up.

Stuart: That shows you that Bitcoin’s got some momentum.

Marc: Absolutely.

Stuart: That would-be financial superpower, it can’t stop the onward march.

Marc: Exactly. And [crosstalk 00:10:53]…

Stuart: And in some ways, the meltdown of Lebanon as well is gonna persuade a lot of people that sovereign currency is not worth the paper they print it on.

Marc: Exactly. Plus, and this is really important, inflation is coming back.

Stuart: Right.

Marc: And if you look at the news section on our website, which is, you know, open for everyone, we wrote a little bit about inflation there and that it’s not transitory, a much-hyped word these days. But it means, and this is interesting, I think, mentioning on Conan, is gold might make a comeback as well. So here we go, with…

Stuart: We haven’t looked at closing day as to when to close out on the [inaudible 00:11:28], but if it either hits $200,000 on Bitcoin…

Marc: There’s no end date.

Stuart: Okay. But either $200,000 or $10,000, whichever it goes to first, determines the outcome. Now, gold has been trending back since the middle of last year. The peak was the period in the U.S. where there were a lot of disorders in the major American cities. It crossed over $2,000 an ounce at that time. Headed back, it’s now about now under $1,800 an ounce. Now, I’m seeing it could curve out a bit. As you say, the world is printing a heck of a lot of money to flood its way out of this mess that we’re in. And gold, as I like to say, it’s the original cryptocurrency. It’s like Bitcoin, only for 10,000 B.C…since 10,000 B.C. So a lot of people who wouldn’t know how to access a Bitcoin will still be socking away gold in the safe in their back yard.

Now, so, I’m predicting that before too long, gold will be back over $1,800, headed for $2,000 again, and then beyond. It’s not unreasonable to see…

Marc: When you say “beyond,” what do you mean?

Stuart: Ten-thousand dollars. Medium term, let’s go for $2,500 and maybe…

Marc: And what’s the medium term, two years? Or…

Stuart: Next few years, I predict we’ll see a $2,500 an ounce gold.

Marc: And why would we go to $10,000?

Stuart: Well, ultimately, that’s the price that you’d restore a kind of gold standard for.

Marc: Right.

Stuart: The historical average that’s tended to prevail would average it out about $10,000, given the amount of paper that’s out there.

Marc: Right.

Stuart: Now, it might take some sort of a crisis to get there, but I think that’s coming one of these days. Now, in that environment, gold stocks are gonna do well. Been a tough environment for a lot of gold plays. The one we singled out yesterday at Resources Stocks Down Under is Bardoc Gold. I like Bardoc. We’re talking 3 million ounces, I mean, 40 kilometers north of Kalgoorlie. Can you believe that large a resource that close to a major population center out in the Goldfields? The Eastern Goldfields of Western Australia.

Marc: Right.

Stuart: That just shows you how clever we’re getting on the exploration front these days. Now, they had a definitive feasibility study. We wrote about it September of last year and put two stars on it just because gold was trending back. We’re now taking the view that gold will eventually bottom out around about where it is now, on top of which the definitive feasibility study, slightly optimized, is showing this project is with…in excess of half a billion dollars. So it’s quite a valuable offering. But the companies are putting the development on hold [inaudible 00:13:48] cost base of the outrageous, kind of, labor situation you get in Western Australia where there’s a shortage of everything, before they can make a final investment decision on the mine.

Marc: All right. When is that expected?

Stuart: Well, you know, ask the state premier when he allows new labor to come into the state.

Marc: Yeah, 2025 then, probably.

Stuart: Are you listening, people in Western Australia? You’ve gotta vote that tyrant out before things get really out of control. Here’s a mine that’s not going ahead, because it’s…

Marc: [crosstalk 00:14:12], yeah.

Stuart: …too expensive to do it. Now, in the meantime, there are other strategic alternatives. They just build out their resources a bit more, they engage in [inaudible 00:14:20] activity, whatever. So we’re calling Bardoc Gold…we switched it from two stars to four stars. I think that Conan and his fellow gold bucks need to go and look at these midsized resource opportunities. In the case of that one, you can get it for only about $30 to $40 per resource ounce, which is tiny in this game.

Marc: All right. Excellent. All right, Stu, I noticed that we don’t have nuts on the table. You had one job.

Stuart: To get the nuts.

Marc: To get the nuts.

Stuart: Well, I did. Look at it. It’s called Red Nut from BentSpoke.

Marc: Yeah, all right. Okay.

Stuart: You’ve heard the quote before. I’ll say it again. Can any good thing come out of Canberra? Well, there’s at least one good thing. It’s the BentSpoke Brewery in the ACT. Any time you go to Canberra, first place you gotta go to is the BentSpoke Brewery. This is the best drink in probably the entire country as far as craft beer goes, in Canberra, of all places.

Marc: I’m wondering how they got the name.

Stuart: Well, a lot of people like cycling down in Canberra. It’s just a beautiful outdoors kind of activity.

Marc: Some guy fell off his bike. Ended up with…

Stuart: Yeah, you would fall off your bike if you drunk too much of that. This is 7% alcohol by volume, of beer, in this case.

Marc: Oh, all right.

Stuart: Now, it’s called Red Nut because they’re using reddish malts. So if you were to pour it in the glass, you’d see it was quite a red color.

Marc: Red and hoppy.

Stuart: What interests me is the hoppy aspect of it, 56 on the IBU. That’s outrageously hoppy. And they’ve chosen some really interesting hops. East Kent Golding is in there. Now, that tends to make it boring. That makes it taste like an English ale if you have too much of that. But they’ve whacked in things like the usual standbys from America, Citra and Amarillo to balance against that. Then they’ve whacked in something called Fortnite, which is a mixture of five different kinds of…

Marc: That’s a game, right?

Stuart: Well, the name is out of the game, presumably because it really packs a punch.

Marc: Right.

Stuart: They’ve taken a lot of Yakima Valley hops and then moved them to one big hop developer out here. So there’s something for everyone in this beer. Now, tell me what you though.

Marc: I like it, yeah. And I also like…BentSpoke have a way with designing their cans.

Stuart: Right, right.

Marc: I like it.

Stuart: So, basically, this is the first tourist…before you go to any…okay, go to a memorial first to one of the boys who didn’t make it back. Then you go to this brewery. And [inaudible 00:16:34].

Marc: True. Yeah, really good. That’s what we were [inaudible 00:16:39] for, I think.

Stuart: Yeah.

Marc: So it’s good to be back.

Stuart: Thanks for sticking with us through lockdown. And if, in lockdown, you didn’t do yourself a favor or your portfolio a favor and subscribed to “Stocks Down Under,” you know what to do.

Marc: Do it now.

Stuart: See you in a Fortnite.

Marc: Happy investing.