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Is Calix the real deal or a green trap?

Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.

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Is Calix the real deal or a green trap?

Hi James,

I love the info you produce and my portfolios are running well with your guidance. I don't necessarily follow your recommendations but the one that struck me the other day was a company called Calix (CXL). They may be able to make cement with their technology but it will never compete with the very large coal fired rotary kilns around the world . The rotary kilns in Australia are struggling to be competitive at the moment and I cannot see how their vertical kilns could ever compete. A component of cement is fly ash which is coal ash. Where is their fly ash coming from? Are you being clouded by the companies green credentials in this recommendation?

Geoffrey S

Answer

Hi Geoffrey,

CXL is now a $850m mineral processing business which happily has soared since our purchase for our Emerging Companies Portfolio. The recent sale of a portion of a subsidiary to a US ESG investment firm has certainly put the stock in focus. While the sale maybe small in terms of dollar figures it shows belief in the company’s technology and importantly they now have a connected backer to help commercialise the product plus we should also remember the stock was rallying strongly into the announcement, we still like it around $5 and it’s a trend we wouldn’t be fighting or fading for a while.

In terms of the technical issues in doing what they are doing and whether we are being clouded in our judgement, new ways of doing something will always challenge conventional thinking and it’s the ability for a company like Calix to ultimately solve these sorts of problems that we’re backing. I’m certainly not a technical expert in this area, no doubt you will know significantly more than I, however from what I can see / hear / understand of this company some large industry players believe they have potentially a game changing technology – which is what we have backed with the understanding that it is very high risk and not for everyone.

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Calix Ltd (CXL)
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