Good find Autosime. While the coverage from Under the radar is...

Good find Autosime.

While the coverage from Under the radar is certainly welcome, I often get the impression that the analysts and the stock newsletters generally miss the bigger picture when it comes to Gale Pacific.

In my view, Gale Pacific is essentially a 'weather stock', driven by trends in the weather and climate. Going on from this, I would argue that this stock is likely to benefit from a significant tail wind, namely the Global Warming trend.

Since the start of this decade, I've invested heavily in agri stocks, and I have found it difficult to ignore the impact of increasingly erratic weather patterns on such stocks over the past several years. Despite this, the words 'climate change' have been curiously absent from the financial media in Australia over most of the past decade.

This has changed a little over the past 18 months, but even so, when you do come across articles on the subject by analysts and stock pundits, they tend to be rather superficial, or otherwise seem to involve some awkward fence-sitting manoeuvering.

Thus, I wondered if there was an opportunity here, and some years back did some research to see if I could pin down any stocks that stood to directly benefit from global warming. I was a bit wary about lithium stocks and the like, I was looking for stocks that would benefit directly from the climate trend that seemed to be underway.

So, looking over a few hundred stocks, there were only two that I found that stood out: one was Phoslock, and the other Gale Pacific.

As noted in the Under the radar piece, based on traditional valuation measures, Gale looks inexpensive, and I suspect this at least partly goes back to the fact that the sharemarket pundits have never really grasped the significance of that major macro issue lurking in the background, which this stock is well positioned to benefit from.

On that topic, it is interesting to note that a study earlier this month has found that the years from 2018-2022 are likely to be abnormally hot, as reported by this science website:

...This summer's worldwide heatwave makes 2018 a particularly hot year. And the next few years will be similar, according to a study led by Florian Sévellec, a CNRS researcher at the Laboratory for Ocean Physics and Remote Sensing (LOPS) and at the University of Southampton, and published in the 14 August 2018 edition of Nature Communications. Using a new method, the study shows that at the global level, 2018-2022 may be an even hotter period than expected based on current global warming...

Assuming this forecast proves to be accurate, the abnormally warm conditions should bode well for a company that sells shading and screening products.

If Labor ends up in government next year- which looks increasingly likely following on from the political shenanigans in Canberra last week- that could also potentially serve to bolster the GAP share price. It is plausible that Labor's proposed cap on negative gearing could lead to many property investors rotating into shares, and the changes to franking credits should mean that stocks that pay a decent unfranked dividend might start looking more inviting. GAP is certainly one that fits the bill there.