Putting out the Brexit fire


Howdy folks, welcome back to The Lake.

It’s been a funny few days on the old ASX, with the market heading back to 5200 with fears of a “Brexit” causing generalised chaos and broad-based selling of stocks. (A “Brexit” is not a British weetbix equivalent by the way, it’s the concept of the United Kingdom leaving the European Union). This would be less upsetting to you if you’d purchased Resapp (ASX:RAP) a few weeks ago, as you’d be sitting on a tidy 9% gain. Check out the article if you want to decide for yourself if there’s still time to get on board. Oh, and they’ve still got three or so major announcements coming this quarter if that helps you make up your mind.

However, stocks like RAP aren’t necessarily super attractive to most investors. While they do expose the holder to a huge amount of potential upside they can also crash spectacularly and make a mess of your portfolio. Having been in the situation before myself (not with RAP obviously) I can confirm the sensation is similar to spilling a freshly prepared cup of English Breakfast into your own lap. So most of us face the dilemma; you want a bit of risk and excitement in your portfolio, you don’t want a full blown speculative stock and ideally you don’t want to buy anything that will get decimated (rightly or wrongly) by Brexit. As we’ve said before, an ideal candidate stock in times like these is Alexium International (ASX:AJX). We last wrote about AJX wayyyy back in March, and the outlook has become even rosier since then. By the way, the vote to determine the UK’s EU status takes place on June 23, so don’t say that you weren’t warned if you end up with a case of Brexit Blues. Here’s a good article explaining which stocks are likely to tank if market Brexit fears are actually realised. Hint, anything exposed to the UK in any way whatsoever.

AJX has massive potential as an investment during turbulent market times for a number of reasons. The most compelling and important are listed below in a super convenient list format:

  • AJX holds patents for a number of environmentally friendly chemical products, with flagship product Alexiflam approved as a flame retardant for commercial, domestic and military use. Also an anti-microbial product
  • Recently added a number of customers with multi-year contracts from a huge, growing sales pipeline
  • Gigantic addressable market, literally (well nearly) any fabric that needs to be flame retardant/bacteria proof
  • A number of recent legislation changes in the US market have resulted in AJX products being the only viable substitutes for previously used chemicals that do not meet health requirements
  • Existing supply and R&D relationships with the US Military
  • Exposed to many markets with a presence in 20 countries (Brexit-resistant)
  • Recently hired a number of sales & marketing team members to focus on revenue growth
  • On track to achieve first profitable year in financial year 2017, and firm on 2016 revenue guidance indicating firm financial controls and sound commercial management

So in a nutshell, AJX is on track to make money for the first time with an ever increasing customer base and a patent-protected product set that will enjoy the spoils of legislation that aims to prevent harm to consumers and the environment. Couldn’t ask for much more really, but then there’s the fact the CEO actually won an award for being a great manager. Happy days! AJX also trades at an arguably undervalued price due to the inherent risk in buying stock in a company that doesn’t make a profit juuuuust yet. Rest assured that if AJX keeps hitting sales targets and signing up customers at the current rate they’ll safely outperform the market this year (and probably for years to come). It’s already risen 34% this month (16th May to 16 June 2016).

AJX

 

Blue Lake Invest is both flame-proof and environmentally friendly. You should sign up.