Gordon Stein, CFO of CleanTech Lithium, explains why CTL acquired the 23 Laguna Verde licenses. Watch the video here.
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I would have thought the fact that the title of my post "Motley Fool" was sufficient to clarify it's provenance.
I sometimes forget there are some
"alaninvestor" for example who are ######.
The risk is high for investors here are reasons why buying at the moment might not be as crazy as you think if you do not mind taking on some risk.
Price-to-book value is a financial metric that is useful for investors looking below the surface. It is a figure that compares the current share price to the book value (think tangible value) of the firm. In effect, this is if Royal Mail stopped trading today and sold its assets and paid the liabilities it has, how the amount of money left over to pay to shareholders compares to the value shareholders currently assign to it.
Currently the ratio is 0.39, which is very low. While this highlights the negativity of investors (the tangible value of the firm is over double what the share price currently reflects), in my opinion this shows a very undervalued stock, and one which therefore could be worth investing in.
Dividend yield hunters. As the dividend yield takes into account both the absolute value of the dividend along with the current share price, a move lower in the share price artificially pumps the dividend yield higher. This has been the case for Royal Mail, with the dividend yield rising sharply over the past couple of months to currently stand at 13.5%.
This is high, and although a dividend cut is on the horizon, you will see various investors buy into the share at current levels to lock in the generous yield on offer. Over the next few months, this buying could see the share price well supported, even rallying, I believe.
Respect the bottom line. In the latest trading update two weeks ago, group revenue was up by 3.7%, with a fall in letters offset by a growth in parcel deliveries. Indeed, the company is expecting gross profit in line with expectations for the period of between £300m -£400m.
For all the concerns of potential strikes and loss of business to competitors, the financials reveal two tangible things to me. One, top-line revenue is growing. Two, the business is profitable. On these two factors alone, the share price looks undervalued, I think.
If Royal Mail happened to be several years into loss-making territory, with huge debt and liabilities on the books, then I would say steer clear of investing. While I acknowledge valid arguments that this is a risky investment, the above reasons do merit a small investment, in my opinion.