5 Best Helium Stocks In Canada: A Unique Commodity (2022)

When it comes to investing in commodities or securities based around certain commodities, helium doesn’t even make the top ten.

Apart from their uses in balloons that stay afloat due to a lighter than air gas and its use in the common Helium Ion laser, few people know much about helium.

This lack of knowledge can result in missed opportunities if you are not keeping an eye on some of the best helium stocks in Canada for when they go up like the balloons this gas fills. It’s an interesting commodity and one that Canadian investors should be familiar with.

Best Helium Stocks In Canada

What Do You Need To Know About Helium As a Commodity?

Even if you are not really interested in helium as a gas (maybe noble gases just aren’t your thing), you would need a good understanding of helium as a commodity if you are thinking about investing in it.

Understanding the demand-supply cycle of helium and the global landscape of the helium market will help you identify whether it offers the right mix of risk and opportunity for you or is something you should steer clear of (for now).

Helium Reserves And Cost

Helium Reserves And Cost

The first thing you need to know about helium is that it’s rare, but ironically, on earth. It’s the second most common element in the universe (after hydrogen), but on earth, it’s quite difficult to find and extract.

And that’s because most of the helium that we have access to is trapped inside because whatever was above the ground has floated away (since it’s lighter than air).

Most of the helium we can extract is produced via radioactive decay in natural gas chambers. Note that there is helium in the atmosphere but too little to extract (about 5 PPM).

The US has the world’s largest known reserves, with Algeria and Russia in second and third place, respectively. Helium’s rarity is what makes it a relatively unique asset. We may still have several potential applications of helium but only limited supply to meet the demand needs.

The cost is not fixed or regulated like that of other commodities, and it varies quite heavily based on the supplier and the level of purity. But liquid helium is far more expensive compared to helium gas because of the cost of liquidation.

And it cost somewhere between US$18 to US$38 (per liter), and the prices are expected to have grown since then.

Uses Of Helium

While the balloons and Helium Ion laser are the most common uses, they don’t take up much of the supply.

Uses of Helium

Source: Edison Investment Research

As the pie chart suggests, the most common use of helium, which takes up the largest chunk of supply, is MRI or cryogenics. Cryogenics is the study of the behavior of different substances at very low temperatures.

And while liquid helium is not nearly as commonly used as liquid nitrogen for cryogenics, it is the primary choice when need temperatures below 63 Kelvin (lower than -209.8 Celsius) are required, which is the point at which nitrogen freezes.

Most commonly, it’s used to cool the superconducting MRI magnets, which offer the best result when the temperature is quite low. If we add the other 4%, cryogenics take up about one-fourth of the entire helium supply in any given year. Other major uses include welding and lab work.

So helium is used mainly for the MRI machines, but there are only so many MRI machines built every year – about 2,500 and it’s unlikely to spike. And though there are other uses of superconducting magnets as well, in industry and research (like supercolliders and particle accelerators), they are even rarer than MRIs.

But these magnets are also used in Maglev (magnetic levitation) trains (cooled by liquid helium), and there are only six commercially operated Maglev trains in the world right now, with none in North America. That’s one of many avenues which can spike helium’s demand in the world.

Another use of helium is in quantum computers, but that’s a highly untapped avenue so far.

Which Company Produces The Most Helium?

Which Company Produces The Most Helium?

ExxonMobil is supposedly the largest helium producer (liquid helium) in the world. However, Air Liquide is also working on opening the world’s largest helium refining and liquidation plant. Another major player would be Russia’s Amur (owned by Gazprom) is expected to gain the top position by 2030.

The top helium-producing countries are the US and Qatar. But the overall helium market is more spread out. For example, Qatar is regarded as the largest exporter of helium, even though the US is the largest producer due to in-country consumption.

While the largest importer is not clear it’s most likely China, which currently gets most of its helium from the US.

Best Helium Stocks In Canada

There is a decent selection of Helium stocks in Canada, though most of them fall in the micro-cap and nano-cap categories. The stocks are arranged by market capitalization (at the time of writing this).

1. Xebec Adsorption Stock (TSX)

Xebec Adsorption Stock

Ticker: XBC

Xebec Adsorption is not exactly a helium company. It provides several solutions related to renewable energy sources and gas purifications, and one of those solutions is Helium purification.

This solution doesn’t allow you to capture/extract helium from their natural reserves, but it does allow businesses that use helium to recapture as much of it as they can. Xebec’s plant then purifies it for another use.

And while this makes Xebec Adsorption a helium stock only by extension, it’s a stock worth considering. The stock is only a fraction of what it used to be before the great recession. It’s a very small/affordable stock representing a company with a lot of potential and multiple revenue streams.

If the stock is bought when it’s in a rut, it has the potential of blowing your capital to a great extent, and its growth is not as connected to helium supply and demand as most other stocks on this list.

2. Desert Mountain Energy Stock (TSXV)

Desert Mountain Energy Stock

Ticker: DME

Desert Mountain Energy is a Vancouver-based company focused on the extraction of helium and other rare earth gases. It has operations mainly in the US, where it holds about 85 thousand acres of land in Arizona.

The project is in Holbrook Basin, which is dubbed the “Saudi Arabia of Helium,” which is a reference to its rich supply potential. The region is known for its high purity, which is easily eight to ten times higher than the industry average.

The company is still mostly in the exploration phase and is expecting to bring one of the projects online by the mid of 2022. The company has multiple wells within the scope of the first project with varying helium concentrations, with the lower threshold at 4% and the higher one at 7.1%.  

Since 2008, the stock has shown major growth spurts. The first time, it offered returns of over 600% in about three years. The second was the post-pandemic spike that shot the stock over 2,700% in under two years.

If that’s the kind of upside you want to capture, you may consider buying this stock if it falls under $1 per share.

3. Total Helium Stock (TSXV)

Total Helium Stock

Ticker: TOH

Another Vancouver-based helium company that you might consider investing in is Total Helium. It’s making a move in the helium storage space in North America and is expecting to compete with National Helium Reserve in the US.

The facility Total Helium is proposing will be underground, and the company will own and operate it on a 50% partnership basis with a multinational gas company. Total helium also has access to 86,000 acres of land in the US.

The combination of storage and helium production makes Total Helium a potentially potent helium investment. Thanks to the non-renewable nature of the gas and limited supply, demand growth can make a good storage helium facility like the one Total Helium is proposing quite attractive.

The stock has only recently joined the stock exchange, and so far, the small activity has been positive. But if you are expecting a demand spike for helium, you might consider investing in the company.

4. Avanti Energy Stock (TSXV)

Avanti Energy Stock

Ticker: AVN

The BC-based Avanti Energy is a gas exploration company focused on helium extraction in the US as well as Western Canada. As per the company’s claims, Canada holds the world’s fifth-largest helium reserves, and they are practically untapped, thanks to the global focus on the US for helium.

So it’s focusing its exploration efforts in-house as well as in the US where the reserves are easier to find and utilize. The company currently owns about 69,000 acres of land in Canada and the US and expects a helium content of about 1 to 2% in the trapped supply under their lands, which is in line with the industry average.

The company expects results from its wells by the third quarter of 2022 and helium purification by the end of the year. The stock is only a shadow of its former self, but that can be a very good reason to invest in the company.

If its stock has a reasonable chance of going back to its glory days valuation, it can grow its investors capital several times over.

5. Royal Helium Stock (TSXV)

Royal Helium Stock

Ticker: RHC

Royal Helium is based in Saskatoon, and its land holdings are massive compared to the other companies on this list: 862,908 acres of land in Saskatchewan. The problem is concentration, which is quite low (between 0.33% and 0.64%).

However, considering how much land the company holds, if it can manage its production and refining cost-effectively, it can produce much more helium from its relatively poor sources than many others would with their helium-rich sources and higher concentration of the noble gas.

However, the company might benefit from the supposedly lower depths of drilling needed to extract the gas.

The stock has been quite unappealing so far, but it is capable of great growth spikes. Between its pandemic value and the post-pandemic peak, the stock grew about 2,700%. If you can buy when it has hit rock bottom and wait for another spike like this, you may experience similar or at least comparable growth.

There are two nano-cap helium stocks that you might want to consider (trading in venture cap):

First Helium: (Ticker: RHC) – It’s a helium discovery, development, and production company with lands in Alberta.

Imperial Helium: (Ticker: IHC) – The company has consolidated a lot of energy-related expertise under one roof and is leveraging its knowledge and a data-driven approach to identify and develop helium resources.

There are several US companies that are associated with helium production and refining. The US is the largest helium producer in the world and is home to many of the largest helium companies as well, but they can’t be labeled as helium stocks per se because that’s usually just one of their many divisions.

Companies like Linde PLC, Air Products and Chemicals, and Air Liquide might be considered great investments, but they will not be exposed to and affected by helium prices the way stocks mentioned above would be.

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Helium’s limited supply ensures that even a small and steady rise and demand might keep pushing the prices higher. In the coming years, we might see more reserves online (that are currently untapped) to meet the demand needs.

However, if a more affordable alternative is discovered, especially for helium’s cooling function (which is a very slight possibility), these stocks might become dead weight. So if you are unsure, you may consider sticking to the gas with a more predictable supply/demand environment, i.e., hydrogen.  

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Author Bio - Christopher Liew is a CFA Charterholder with 11 years of finance experience and the creator of Wealthawesome.com. Read about how he quit his 6-figure salary career to travel the world here.

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