A couple smokies for you today.
Outside chances on biotech and natural gas.
Gold and rare earths dominated the early stages of this commodity cycle.
With companies like Lynas Rare Earths soaring (and now coming back to earth) and gold stocks delivering triple-digit returns – it’s time to look beyond the obvious plays.
The smartest investors know that by the time everyone’s talking about a trend, the easy money has often been made.
That’s why two sectors could be setting up for explosive moves: natural gas and biotechnology.
We don’t have enough gas!
And yet they’re still cheap
I think natural gas represents perhaps the most compelling contrarian opportunity on the ASX right now.
The Australian Competition and Consumer Commission isn’t mincing words.
Eastern Australia faces potential shortfalls starting as early as Q4 2025, with supply gaps possible throughout 2026.
By 2027, a staggering 87% of domestic gas supply accessible to National Electricity Market states will come from Queensland, rising to 96% by 2037.
Yet natural gas stocks remain “deeply unloved”, creating a textbook setup for patient investors.
There are plenty of prime Queensland gas developers out there right now.
Gas prices have rocketed from $5/GJ a few years ago to between $12-14/GJ today. Yet the market continues treating these companies like yesterday’s news.
Meanwhile Victoria’s government policies have “squeezed out” gas, creating an emerging gap between demand and supply that’s forcing prices higher.
Energy analysts are positioning for a potential renaissance. Amplitude Energy [ASX: AEL] 3D Energi [ASX: TDO] and Emperor Energy [ASX: EMP] are all planning significant drilling campaigns over the next few months.
So natural gas could be a major dark horse over the next six months.
Here’s the other sector I’m watching closely…
Unloved biotechs to hit the front?
The biotechnology sector presents an equally compelling contrarian opportunity.
The sector benefits from multiple tailwinds that most investors are overlooking.
Australia’s biotech market specifically is expected to see revenue of AU$12.3 billion in 2025.
We have a lot of really bright people in this country too…
The country ranks fifth globally for research and translation capabilities.
There’s some big drugs coming off patent soon too…
The “patent cliff” phenomenon adds upside potential. Morgan Stanley predicts that products losing exclusivity by 2030 generate $183.5 billion in annual sales currently.
This creates opportunities for companies to enter markets as generics and compete directly rather than seeking entirely new indications.
It also means Big Pharma will be racing to secure rights to their next big blockbuster drug soon as well.
Meaning plenty of acquisitions.
The “Horses for Courses” Strategy
Being a favourite means short odds. Higher probability, but a low reward.
Right now, with my trader cap on, I wouldn’t be in gold or rare earths. They’ve run their race for now.
Commodity cycles will continue turning, rewarding those patient enough to position for the next move rather than chasing the last one.
Sometimes the best strategy is backing the outsiders that everyone else has overlooked.
In natural gas and biotech, that’s exactly what the smart money is quietly doing right now.
The track conditions are changing. The question is whether you’re willing to bet on the horses nobody’s watching.
Good luck today.
Better yet, start planning for tomorrow.
Regards,
Lachlann Tierney,
Australian Small-Cap Investigator and Fat Tail Micro-Caps
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