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The
Future of Video: Broadcast International Hitting a Moving Target |
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| Ever
heard of a micro cap company called Broadcast International (BCST)?
If not, you might - sooner than you realize, and the hard way. As part
of our ongoing goal of spotting looming trends before they become obvious,
the research staff at the Micro Cap Press has uncovered a potential problem
with the U.S. government's requirement that all television broadcasting
soon be done in 'HD' format.
High-definition,
digital video is indeed an improvement relative to current and previous
formats. However, as the FCC-mandated standard changes to an 'all HD' mode,
the country may be surprised that a bandwidth bottleneck is going to be
created. In other words, the infrastructure (wires) needed for the United
States to be an all-digital-broadcast system is not adequate.
The
straight-forward solution is to install more capacity. It would work, but
will take lots of time and lots of dollars. The alternative is better compression
of digital broadcasts, which could utilize (but not burden) the current
infrastructure.
Better
compression isn't a new idea. However, it too has inherent problems. Specifically,
most of the digital sending and receiving hardware is designed to compress
and decompress one video format - MPEG2. The problem is, MPEG2 may not
be compliant with the FCC's ever-changing 'H.264' high-definition standard
in the future. If the H.264 standard changes to something besides MPEG2
(and it's assumed it will), much of the current hardware may become obsolete.
Moreover, the currently-preferred MPEG2 format still may not be compressed
enough to use the current infrastructure's bandwidth capacity.
The
solution? Hardware that can adapt by upgrading the compression/decompression
software in perpetuity. That includes the ability to make a complete switch
of digital formats.
Enter
Broadcast International (BCST). They're working on that very technology.
Click here to see the website and see for yourself exactly what it is they're
doing....and plan on doing in the future.
From
an investment perspective, it looks as if at least some traders like BCST's
place in the race. The stock has moved from below $1.00 to $3.00 over the
last three months. The volume behind the rally was significant too. Though
the fundamentals don't look great right now, it looks like the market is
looking well into the future in trying to find the 'right' price for these
shares.
Click
here to see the chart.
Whether
or not Broadcast International is the industry leader or has cutting-edge
R&D, the misunderstood (and underestimated) problem of inadequate bandwidth
could mean some company in this space is poised for explosive growth.
We'll
add details to the dilemma as we can. In the meantime, if you have thoughts,
opinions, or other investment ideas related to the looming video compression
challenge, leave us a note on the blog. |
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Is
Food Scarcity Going to Feed Investors? |
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 One
of the goals of our 'Macro Trends/Micro Caps' series of articles
is presenting our readers with data-based emerging trends before they become
obvious - while they're still actionable. We've recently looked
at clean
coal and clean
water as two such trends offering tremendous (though very speculative)
potential
for returns. We've been trying to gather data for a third commentary in
this series, but have been surprised by how little information is actually
available. Nonetheless, we still see a great deal of opportunity
in an under-recognized global paradigm shift, and are pleased to feature
it today.
In simplest
terms, the world is running out of food.
Over the last
five years, global grain consumption has outpaced production, leading to
a reserve considerably lower than the one we had as of 2002. Were it tobacco,
sugar, cotton, or just about any other commodity, perhaps the fact might
not be too alarming. However, given that grain is the single-biggest
source of food for most of the world's population, clearly nobody can
afford for the illness to become an epidemic.
Yes, that's
a little bit sensationalistic in that it might inspire some fear. But,
based on verified data and underlying trends, it is the truth as of right
now.
Fortunately
it's a problem that can be fixed, but the 'fix' raises two questions....(1)
who will fix it, and (2) how will they fix it? With that in mind we'll
add another rhetorical question to the mix...is there an investment opportunity
here? Our non-rhetorical answer is "Yes, we believe there is an opportunity
here." First things first though.
There are two
immediate issues driving this less-than-evident trend....overpopulation,
and uses of crops for things other than for nutrition, (i.e. energy).
The world's
population has risen substantially in recent decades. Between 1980 and
2000 it rose from 4.4 billion to 6.1 billion. During this time, food production
kept up with the pace, increasing by 50%. By 2050, experts anticipate the
global population will be 9 billion or greater. Can we increase the
world's food output by another 50%? Some would say yes, but many would
say no. Changing climate, misuse of land to the point where it becomes
completely useless, and the inability to create 'new' land means the supply
of agricultural real estate is getting relatively smaller.
At the same
time, food products like grain, corn, and sugar are the prime ingredients
for 'clean' biofuel.....the more and more popular alternative to petroleum-based
or coal-based energy sources. Every ear of corn used to make ethanol is
an ear of corn not eaten. The hot button is, the caloric/energy benefit
of using crops for food is usually far more efficient than it is for use
as an energy source.
All the same,
most governments are mandating (or will mandate) the use of biofuels, which
further crimps the supply of staple crops.
 There
are a handful of novel solutions to the shrinking supply of food, aside
from the obvious one of making smarter use of land. One of them is genetic
engineering - a practice already in use.
The idea is
simply to engineer a plant to produce a greater yield of food per acre
of farmland. Similarly (though more controversial), livestock can be genetically
altered to also yield a greater portion of food per animal.
The arguments
against such practices are rooted not just in morality, but also
in effectiveness. Often, genetically altered food also lacks the nutrient
levels of the non-altered version. The same goes for livestock. And in
both cases, genetic engineering may also lead to dire-but-unforeseen consequences
of a much bigger nature.
Another solution
is just smarter and better traditional farming.
Are there
other solutions we haven't considered? Certainly. Perhaps a non-farmed
food product (or products) can be created that still offers all the nutrients
and bulk needed by humans. It's a bit Star-Trekkish, but so were a lot
of
things not too long ago.
In any case,
we did find a handful of specific companies we thought may be well-positioned
for this long-term challenge. The list isn't complete, nor overly-researched.
So,
further research may be necessary if you feel completely comfortable with
the idea of a looming food-shortage. In other words, our only goal is to
set the 'food scarcity' stage.
Monsanto
Co. (NYSE: MON)
- This large cap seed and agricultural chemical company may seem a tad
obvious for a news site geared towards finding undiscovered companies,
but let's face it - Monsanto has deep pockets and a lot of market share.
 UAP
Holding Corp. (NASDAQ:
UAPH) -
A younger cousin of Monsanto, this small-cap outfit also has a hand in
the biotechnology and crop-management aspect of the business. UAP takes
a wildly-scientific approach, which seems to work for them; the
stock is up 65% over the last two years.
Cresud Inc.
(NASDAQ: CRESY)
- We had never heard of this ADR either, until we started poking around
some of this industry's companies. Cresud is an Argentine company operating
through four key segments: crops, beef cattle, milk, and feed. There's
nothing particularly exciting about this Argentinean company other than
it's located in Argentina...which happens to play host to rich farmland.
That's why the country is such a big agricultural product exporter. Like
UAPH, this one's slow and steady, for now.
Balchem Corp.
(NASDAQ: BCPC)
- Of the four companies we've mentioned, we'd expect Balchem's employees
to be most likely to wear lab coats rather than overalls. They actually
offer a variety of products, including many non-farm lines. But, we'd put
all of their crop/livestock products under the 'ingredient and vitamin-delivery'
umbrella. It's pretty cutting-edge stuff as far as agri-science goes.
Anyway, that
may plant a few seeds (sorry, terrible pun) and help get your investor
gears spinning. However, you may not want to act too fast and pour
your last bit of spare capital into agricultural stocks. Why? We may
have another specific trading idea for you later this week. If so,
we'll send another newsletter, complete with our research report. We'll
follow up with the food shortage issue at a later time.
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Updated: 8:15 pm PDT (03:15 GMT), November 2, 2010
