Picks and Shovels - 5N Plus (VNP-T)

Who makes the money? They guys who sell the picks and shovels? Or the ones that use that go out and use them? The guys who sell them do.

This past week an interesting article came out on Seeking Alpha which highlighted the story of a relatively underfollowed Canadian company: 5N Plus (VNP.TO).

http://seekingalpha.com/article/71942-the-tellurium-supernova-has-erupted?source=yahoo

VNP has a monopolistic hold on the Tellurium metals market and are the largest supplier of the refined metal to FLSR. Some worries brought up in the article are whether there is sufficient supply of this material available to FSLR and other users of it this is yet to be seen. VNP is slated to open an additional manufacturing facility by the end of July in Germany to further provide for their customers because the demand is so great. Jim Cramer, despite his antics, is very bullish on the FSLR play. He fully endorsed FSLR two weeks ago on CNBC and that he would continue to talk about out it (pump it) throughout the year. To come out and make such a bold statement would require some serious homework of which would uncover whether FSLR has sufficient supply of Tellurium or not. Analysts on the street have probed both management teams of FSLR and VNP and have been reassured not to worry on shortage or supply issues of the material to meet demand and production. If the analysts cannot come up with any dirt (and they have the brains and the resources to get as much information possible) and if Cramer has done his homework (which I believe is safe to say in this case, YES) then the dynamics for VNP (with its monopolistic position as FSLR affiliation) are exceptionally bullish. Also, they just reported record 3Q earnings, and a second round of bought financing (4 million shrs @ $11.55 CDN) which was pitched to both U.S. and Canadian investors. It would not take much for this stock to start FLYING if it only got some exposure in the media. As the author recommends, check out 5N Plus' prospectus, it has to be one of the hottest solar stories out there. Oh, and they are and have been profitable for a while. How many solar plays do you know turning a profit?

There has been a lot of press lately on FSLR and I believe it speaks volumes on VNP’s potential.

http://seekingalpha.com/article/72029-the-state-of-the-thin-film-photovoltaic-industry

http://online.barrons.com/article/SB120796071412009549.html?mod=yahoobarrons&ru=yahoo

Both articles are extremely bullish on FSLR. Once could treat VNP as a call option on FSLR!!! FSLR May $270 Call Option went out at $29.20 Friday where VNP went out at $12.

With FSLR you area paying up the rear for volatility, I mean this stock can have a $20 trading range in a day no problem. At the end of the day, they take on the risk of performing and managing expenses. Any hit to earnings for this play and you could see a rapid deterioration in the stock price. With VNP you are betting on a relatively unknown company with a monopoly in the market place. Rapidly expanding, just completed a round of bought financing to fuel that growth, and the management has not sold out.

You really need to look into this company to understand what a great play it is.
VNP is a company with a real story, profitable, experienced management team, diversified, with the dominant position in the Tellurium market.