Whatever the 'conflicting views', taking a look at the fundamentals one sees exemplary ratios and returns. 30%+ ROE, negative debt, huge cashflows, a ridiculously low P/E and a PEG of 0.065 TTM and 0.2 forward. If this doesn't scream value, what then please does?
In the bigger picture there is a strong demand for Rhodium going forward for the next few years, Platinum demand is expected to grow due to the rollout of hydrogen cells (amongst others). Let's not forget about Palladium which is frequently used in organic chemistry due to high functional group tolerance.
And someone is covering their backs? Seriously?
Right now the case is so strong that I am treating SLP like a high interest savings account. Looking forward to the dips. Thank you Mr Market, I sincerely hope you panic more often.
Agree on the stellar results. Not worried about the market mispricing it. That's fine by me. Plenty more opportunities for putting capital to good work at discounted prices. What's not to like?
Eventually though, it will snap to fair value. In the meantime I enjoy the opportunity in building my position even further.
Thank you Mr Market.
Indeed.
For as long as I am building a position in a business that compounds in double digits, I'd rather for the price to remain as low as possible indeed.
"The stock market is the only market where the customers complain when the prices go down". --WB
Is it really?
I am seeing a business whose returns are in rather high double digits,. A low forward PE (5.7) and a PEG of 2.0.
The bottom line is that on the quality and value metrics it looks rather good.
So what about their debt?
Just recently the company became profitable. It has 1.94M in cash with a net debt of -1.33M (both TTM). Compare that to these in 2019 of 1.44 and 0.14 respectively.
Arguably, their debt is no longer a going concern.
However, fheir low liquidity in share Capital, is. If one is not bothered by this, then this position offers a rather interesting opportunity....
DYOR
I'd rather the surplus would be put to good use, such as developing the company further, than returning the cash to shareholders. Given the excellent returns to date, this would be my preferred option.
Not that I would mind a dividend, but why can't this surplus go towards a mild expansion of their (brilliantly run) operations?
and there is this one as well. interesting outlook for platinum if industry proceeds with the hydrogen cell...
https://newagemetals.com/pgm-based-fuel-cells-applications-for-industry/
"They are going for large increase in the dividend starting from a low base... 1, 2 and then 4c certainly captures the attention"
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Are they going for the Fibonacci sequence? Then the next one would be 6.
"A company has a duty to reward shareholders with the right dividend decision when cashflow merits it"
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No, it doesn't have this duty. It may decide to, if it cannot deploy the capital sensibly, but it never is under any obligation to do so.
Not that I wouldn't mind a windfall dividend, mind.
Hi Jammy
Yes, it's a good one as well. Both are stellar. I prefer a position with has no leverage (debt) though. So the decision fell on SLP. That's enough exposure to this sector for me. My positions are rather focused. It would be a close call though. It depends on how one approaches investing. There are many ways to do this.
Excellent suggestion though. Many thanks.
The way I see it is that I am building a position here there is a realistic potential of purchasing £1.00- for £0.50-.
I am in no hurry for the share price to increase. It's rather common sense.
There are some risks to an investment in SLP, and as the basket prices increase, so does the downside risk. I am rather chuffed to note that the board has a similar view (of the basket price turning and going the other way -- they've experienced this first hand themselves).
The company is in good hands, no doubt about it. But for as long as I am building a meaningful position I rather that it remains a good value purchase rather than storming into exuberant territory.
Totally selfish of me. I agree. But then.... so are many on this board wanting this to jump to prices I would simply no longer be willing to pay ;)
So, pleeze -- no squeeze!
Happy value hunting.
Every security traded is purely priced according to supply and demand. Buy a meaningful amount of shares in a poorly performing company and watch the price rise. Even when everyone knows it's going bust. The same goes for the reverse.
Thus markets are often efficient, but not always. They are open to manipulation if one has meaningful amounts of funds at one's disposal.
stoodio
Indeed a correction by 50% is hard to conceive (it would need to be a similar panic we've experienced 10 months ago). It was a welcome panic though. Some of my holdings in SLP indeed halved and this was a welcome opportunity to add more. With a balance sheet like this one would be hard pressed not to seize such opportunity.
I agree with you and doubt this will happen again to these levels.
PS: It would be Camel Blue -- this is by no means a recommendation to buy them or an endorsement to smoke. But since you asked...