Helium is a vital element in advanced industrial applications, with few viable substitutes.

Helium is a unique chemical element, and it is the second-lightest and second-most abundant element in the universe, after hydrogen.

It is colourless, odorless, and tasteless gas that has a range of unique properties. Helium is known for its extremely low density, which makes it lighter than air, and its best-known uses include filling balloons and airships.

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Helium is also used in many advanced industrial applications with little or no substitutes. That’s in part because it’s unique among all elements because it can reach ultra-cold temperatures. That makes possible everything from magnetic resonance imaging (MRIs) and semiconductors to fiber optic telecommunications and even space exploration.

Prior to 2016, helium supplies were not an issue. The U.S. began stockpiling helium as a matter of national security beginning in the 1960s, at the height of the Cold War. That strategic supply of helium was stored at the Federal Helium Reserve in Amarillo, Texas, with controlled pricing.

Nearly half of the U.S. supply of helium came from this reserve. That reserve is dwindling, and in early August 2023, the U.S. Bureau of Land Management announced that all the remaining assets of the federal helium system would be auctioned off for sale in November.

Going forward, most new supplies of helium will likely come from geopolitically sensitive places like Russia and Qatar. That adds risk; for example, the war in Ukraine effectively cut off helium supplies from Russia.

Meanwhile, companies like Total Helium are looking to boost supplies of helium produced in the U.S.

Here’s a look at a helium junior

Recently, in response to a question from a member of Pat McKeough’s Inner Circle, we looked at Total Helium Ltd, symbol TOH on the TSX Venture Exchange.

Total Helium aims to become a significant producer of helium. Its focus is now on a recently acquired interest in the Pinta South helium field in Arizona.

In March 2023, Total Helium announced that it had entered a transaction with Brooks Range Corporation to acquire 20% working interest in two producing wells at the Pinta South helium field, a 50% working interest in eight more wells at the Arizona project, and a 50% interest in any future wells beyond those 10.

The company paid $12 million U.S. in cash for all the above. It will also provide $2 million U.S. for a future capital development program.

Meanwhile, Total Helium has partnered with German firm Linde plc (symbol LIN on New York) to help fund the Pinta South project. Linde is the world’s largest industrial gas producer; it has committed to fund a pipeline expansion at the Pinta South project and to purchase all helium from the first 10 wells at Pinta South for $500 per Mcf (one thousand cubic feet) as part of its funding.

On June 26, 2023, Total Helium announced that the Pinta South project had completed 15 new wells, with seven of them producing helium. A six-mile pipeline connects these seven wells to the project’s helium processing facility.

The remaining eight wells are in various stages of completion. Once completed, the company’s helium production capacity will increase significantly. Total Helium believes that the Pinta South project has the potential for 150 more wells.

In its fiscal year ended March 31, 2023, Total Helium’s revenue was $130,000. That revenue was from its Helisium project, which has since been shut down. The company had no revenue in the prior year. The company lost $11.2 million, or $0.17 a share, compared to the $3.8 million, or $0.09., loss from the prior earlier.

Companies like Total Helium are looking to boost supplies of helium produced in the U.S. However, the company will need to successfully expand production at Pinto South to lift its revenue and generate positive cash flow. That’s not a sure thing and is mainly why the stock trades at just $0.12 a share and has a market cap of just $11.8 million. However, the helium field is already in production, and the sale contract with and funding from Linde is a big plus.

Total Helium is okay to hold, but only for highly aggressive investors who are investing money they can afford to lose.

Bonus tip: How much should you invest in the aggressive segment of your portfolio

Aggressive stocks typically don’t have a secure hold on a growing market or at least the stable clientele that conservative companies have. When something goes wrong with aggressive investments, there is great risk of serious, if not total, loss.

When we single out our aggressive favourites, we try to choose those with as much underlying value and as many hidden assets as possible. This is the best way, for both conservative and aggressive investors alike, to cut risk with those stocks.

Our stock selections for the aggressive investor tend to be more volatile than our conservative recommendations, and they can give you bigger gains and bigger losses. This may be due to financial leverage, or to the risk in their industry or particular situation. Keep in mind that these or any aggressive investments should make up only a smaller part of most Successful Investor portfolios.

If you want to diversify your portfolio with aggressive stocks, first you should understand the chances you take. They’re only suitable for investors who can accept a greater degree of risk. You can be wrong on any of your stock picks, of course. But when you’re wrong on an aggressive stock, losses are likely to be larger than with a well-established company.

Zeroing in on a handful of small to medium-sized companies can pay off nicely when it works, but it can be extremely costly when you pick too few winners and/or too many duds.

But that doesn’t mean you should avoid aggressive stocks altogether. We recommend limiting your aggressive holdings to a smaller part of your overall portfolio. This is because these stocks expose you to a greater risk of loss.

Ultimately, the percentage of your portfolio that you should hold in either conservative or aggressive investments depends on your personal circumstances and risk tolerance. An investor with a longer time horizon or without the need for current income from a portfolio can invest more money in aggressive stocks.

Do you invest in aggressive stocks? Why or why not?