Many investors avoid investing in an emerging industry or market, because they are usually high-risk/high-reward propositions. However, two Canadian clean technology companies deserve serious consideration if you’re investing in the future.
NanoXplore (TSX:GRA) and Nano One Materials (TSX:NANO) outperform the broader market in 2023 and are potential high-growth stocks if their wonder materials reach commercial scale. The former is a graphene powder producer, while the latter’s industrial process produces cathode powder for lithium-ion batteries.
Material of the future
NanoXplore’s graphene business is doing well, and favourable fundamentals should rake in profits soon. Graphene is extracted from graphite, made up of pure carbon, and has mechanical, electrical, and thermal properties. The $472.5 million graphene company manufactures high-volume graphene powder in its fully integrated facility in Montreal (4,000 metric tons per year).
According to Vantage Market Research, the global graphene market could reach a value of US$2.5 billion by 2028 due to the increasing demand in industries such as biomedicine, electronics, and energy. The Aerospace and automotive industries are the largest consumers of graphene-reinforced composites.
Unfortunately, production challenges and high costs hinder graphene commercialization. NanoXplore’s shareholder base includes Martinrea International, a diversified, global automotive supplier. VoltaXplore, a 50/50 joint venture between NanoXPlore and Martinrea, uses graphene in lithium-ion battery production.
Soroush Nazarpour, NanoXplore’s president and chief executive officer, said, “Our main objective is to manage our business for the long-term and build a strong, reputable and sustainable graphene franchise with the ultimate goal of creating significant value to shareholders for years to come.”
After three quarters in fiscal 2023 (nine months that ended March 31, 2023), total revenues rose 37.1% year over year to $90.53 million. The net loss of $10.79 million was 15.8% lower than a year ago. Its chief financial officer Pedro Azevedo said the momentum to profitability continues following four quarters of positive adjusted earnings before interest, taxes, depreciation, and amortization. He adds that higher margins from graphene should lead to profit soon.
At only $2.79 per share, NanoXplore is up 7.31% year to date. Based on market analysts’ buy ratings, the return potential in 12 months is between 151% ($7) and 473% ($16).
Zero-emission future
Nano One Materials wants to advance its cathode technology for e-mobility and energy storage system applications. This $286.71 million technology company has a platform and manufacturing plant for the global production of a new generation of battery materials.
Like NanoXplore, the stock continues to beat the TSX. At $2.78 per share, the year-to-date gain is 13.93%, while the one-year price return is 61.63%. Market analysts have a 12-month average price target of $6.25 (+125%).
Nano One’s patented process for producing low-cost production of high-performance cathode materials used in lithium-ion batteries is the unique differentiator. More importantly, the company wants an active role in the global push for a zero-emission future.
The technology applies to electric vehicles, energy storage, and consumer electronics. Its chief operating officer Alex Holmes said Nano One is retrofitting its plant, as it moves toward commercial and industrial-relevance scale. Management also sees a US$1 billion licensing opportunity from the battery cathode materials market that should be worth US$23 billion by 2025.
Winning investments
Clean technology companies NanoXplore and Nano One Materials are winning investments this year. The available business opportunities in huge addressable markets should extend their market-beating returns beyond 2023.
