Why I believe Superior plus is a good investment (For the Short and Long Term)

When people think of Superior Plus, they mostly attribute this company to selling propane.  This is not correct as propane only represents a third of the company.  Another entire third (and growing quickly) is its speciality chemicals.   This component of the company is going to be a driving force in the years to come. 

In the recent years, as most people know, Superior Plus engaged in upgrading its Port Edwards, and Saskatoon chemical processors so that they could create not just Chloroalkali, but also Hydrochloric Acid.    Most people don’t know that there is a massive shortage for Hydrochloric acid at the moment.   The shortage is in Alberta/BC as well as in the Eastern States.   Superior Plus is perfected suited to supply both these markets due to the location of their chemical plants.  

Hydrochloric Acid had many uses which include (but not an exhaustive list):

Steel Pickling:

This is used in the automotive, fabrication, and appliance industries.  A recent article stated that the automobile industry in Eastern Canada/States is running plants at 100% capacity due to increase demand for automobiles.  Two shifts of 8 hours running, (they were thinking of adding a third, night shift).  So demand for hydrochloric acid in this industry will continue.

Pharmaceuticals:

Use lots of HCL

Soda Beverage Industry:

HCL is a common ingredient in pop.  

PVC PLASTIC Industry

Again, automobile industry, sewers and drains, etc (to many to list)

Oil well drilling:

 This has exploded in a very short period of time due to the increased use of hydraulic fracking.  After the fracking portion of well drilling is completed, the fissures that resulted close due to the weight of above rock/sediment layers above.  However, the HCL makes the bedrock porous and allows the oil/natural gas to be extracted.  This industry alone has led to a massive demand for HCL.  It has resulted in the price of HCL being substantially more expensive than it was in recent years.  (Not sure how I feel about fracking in general, but that is a discussion for another day)   It is noted that Americans have significantly increased the amount of oil and natural gas they produce in the last 5 years, something that hasn’t happen in almost 50 years, (this looks to continue).  I heard they want to do between 50,000 to 100,000 such wells in New York State alone, which has been challenged by environmentalists.  I personally think this is excessive. Still even if they gradually increase well activity in the couple thousand range, demand for HCL will continue for some time, for many years to come.  There is also a current trend to have cars run on Natural Gas (Westport Innovations)

Soon Superior Plus’s will have the ability to produce Chloroalkali and HCL at will, at double the capacity. This will put them in a perfect position to profit from this demand.

Analysts have already predicted that this increase in sales will push revenues above one billion during every quarter. (Not just quarter 4 and quarter 1)

Here are just a few of the links I have seen involving the shortage of HCL

http://www.parchem.com/news-articles/Hydrochloric-Acid-br-Competitive-Pricing-in-Shortage-N000081.aspx

http://www.securingindustry.com/pharmaceuticals/hydrochloric-acid-shortage-worrying-says-rx-360/s40/a1113/

In the meantime, we get a 5% dividend for holding this stock for the next few years. 

To date my education is (which obviously helps formulate my opinion):

Diploma of Technology in Environmental Science

Diploma of Technology in Applied Chemistry and Biochemistry

Associate Degree in Chemistry

Associate Degree in Biology

Bachelor of Business Administration (Accounting Major)

 

More to come…