Categories: Stock Market
Topics: Alternative Investments

How to Invest in Helium Stocks

Helium is just like uranium in that it's a very opaque market. 

There's no spot price for helium. It's all done via contract. 

And helium prices have been going up because there's no longer a US strategic helium reserve. 

Increasingly, helium is needed for all kinds of stuff, including AI and semiconductors. You can't make a semiconductor chip without the pressurized environment that helium creates.

You can't make a fiber optic cable that connects all these devices that support AI to the internet. You need the helium to make a pressurized environment to make the fiber optic cables. 

You can't conduct MRI scans. You've got an aging boomer population. MRIs save 100,000 lives a year through early detection of disease and other ailments.

And helium is essentially the fuel that powers an MRI machine. 

It's needed for nuclear energy as well — for both fission and fusion. In the nuclear reactors we use today helium is used as a coolant. 

And in the fusion plants of tomorrow, helium provides the very atoms that are being fused. Last year saw a fusion breakthrough when scientists at Lawrence Livermore National Laboratory created a net energy gain using fusion for the first time. 

Helium is used for many other things as well, like research environments in university labs. Some of that research has in fact ground to a halt, with the Harvard Physics Lab recently having to shut down equipment because of a helium shortage. 

And that’s all without mentioning the space launches. Everyone is intrigued with going to Mars and there’s a lot of buzz about Elon Musk's SpaceX launches. Those things don't happen without helium. You need helium to launch a rocket into outer space. 

With demand increasing and scant new supply, helium prices have been rising.

A couple of years ago helium was $100 to $300 per thousand cubic feet (MCF).

That's ramped up to $500 to $700 recently, and the executives I've spoken to have seen one-off contracts at $1,000 to $2,000. 

While demand is up, it’s the lack of supply that has been a major factor in rising helium prices.

We don't have a strategic reserve anymore because Congress sold it off. 

And so stocks that are involved in the helium space have done quite well. 

Not just the big ones, the Air Liquides of the world, the Lindes, the Air Products and Chemicals, but smaller ones as well. 

In fact, a company named First Helium just announced a $100 million off-take agreement in May 2023. And they're not expected to produce for at least another year. 

I've been involved in the helium space for a couple of years, first by participating in a financing with a small company that eventually got taken out. And the company that took them out is about to bring the first well online. They're creating the plant as we speak. It's being built off site by an engineering firm. It's modular and then they'll transport it to site, put it together and start producing helium.

The plant is expected to be complete by the end of Q2. The end of Q2 is June. Are they going to hit that target? Likely not. Companies rarely meet their deadlines. You know if you've ever built a house or done some project that takes years you know that there are typically overruns, especially in the supply chain environment that we've seen the past couple of years. 

But nonetheless, the company has been posting photos of the components as they are produced and they're getting darn close. So whether it's June or July or August or even September, this company is going to be the next North American producer of helium. And that's going to command a significant premium to what they're trading at in the market. 

Earlier I mentioned the offtake agreement secured by First Helium. And they're a year away from production. 

This company has already signed an offtake agreement with a space exploration company, so they've already got their customer lined up, and this is just the first of several wells that they're going to be bringing online. 

I think there's a window here to position in this helium company before they start production and that will be the thrust — pardon the rocket pun — of the next helium stock gais. 

Click here to partake in what I see as coming upside in this tiny helium company.

Nick Hodge
Publisher, Daily Profit Cycle