Member Info for LunaNera

Hi Sirius,

I don't diversify. I never did.... for decades. There are better ways of managing risk. I only ever have a handful of positions. It takes me years to find one to invest in though. £2.35 is still 50% of where this one should be in 2022.

Which other 'savings account' offers this rate of return? If you find a better one, let me know :)

N

Darn. SEC. I leave lol

Apologies, should read "SCE territory" etc.

The financials don't look very trustworthy either.

Free cash flow since 2014: 1.58 0.361 -7.02 -5.09 -3.16 -11.6
Net profits: 4.44 13.5 10.8 -10.1 0.804 -43.0
EPS: 0.409 1.24 0.997 -0.931 0.074 -3.97
and a forward rolling P/E of 6,413.5.

Doesn't look like a good investment. Can someone explain me where the balance sheet is "going from strength to strength"?

On a US exchange the share may not fare any better. Governance in the SCEE territories is much tigher and less permissive than in the UK or Eurozone. Eventually a company needs to show some tangible progress and shareholder value. It's a delusion assuming it would fare better in a SCEE territory.

Shame, because the potential is there.

Hahaha, not so impatient!

A few pullbacks on the way cannot hurt xD

Darn, it didn't go low enough to hit my limit order yet... we'll there's still hope for a proper pullback. Am I the only one cheering for the occasional discount?

Nice pullback.... I have a limit order waiting for you baby...

Overvalued US market and improved ratios make this a very attractive proposition to US investors. There's one possible explanation ;)

Found a public source for mining sector ratios etc...

https://www.gurufocus.com/industry_overview.php?industry=Metals-and-Mining®ion=UK

Confirms PE for 13 (well 12.51)

Well Sirius, if he's an academic then he would most certainly publish his data... So that should not be a problem. But that's not the issue here. You'll find that at least a few UK sites would have the median PE around that figure. And one could argue that this is a figure which future investors may be prepared to pay for SLP. I'm sure it makes a lot of sense. SLP at a PE of 13 is not exactly a radical suggestion.

In the meantime, I'll let the dear professor battle the bulls and bears on Wall Street :)

Sirius,

I used LSE only. Maybe that is global? Or just a mistake? That's a huge discrepancy. PE of 175 in this sector would be what I call 'irrationaly exhuberant'.

Are you sure you trust this data?

That's why I am always with joy when the price tumbles ;) I treat this like a high interest savings account. When the price goes down, my interest has just gone up! Loved it when it got discounted to 30p last year.

FYI - for that EPS Graham formula says £10.- Let's wait and see. Nobody knows what the longer term situation will be, but one thing is certain, it's very good value for money right now. Difficult to find a position as good.

Consider the metals and mining sector average PE of 13. Now, if SLP would trade at that ratio and we take the 2022 forecast of 54.7pps into acount, then you would get a price of 711p. Thus a valuation of £7 is a rather realistic prospect. It's the magic of compounding :)

should have said "so I kept the old one to make estimates less enthusiastic" --- love it how one cannot correct one's posts.

The only thing one can establish with a degree of certainty, is the current value of a business. Valuation for investment purposes aim to calculate the incalculable, namely what is the value in a future point in time? Nobody knows. Thus, all these exercises are estimates, and I treat them as such.

Even with current data, valuations are rather subjective. What multiple shall I pay for that company? If that company is a competitor or will enhance your business proposition, higher multiples are often not problematic at all. Usually, people use five years earnings as a starting point...

For investors, a relative comparision, like what is my sector's typical PE and at what rate do I _estimate_ the business to grow at over a time-period? Again, rather fuzzy figures and estimates. Simply projecting eps growth at a sensible rate with a given PE will do (you can do at DCF but I prefer to quickly work out these ranges in my head).

I am using a slighly obscure formula from Ben Graham, which served me well for decades. A growth rate of 5% is realistic (not in the current climate, but overall I'd be thrilled if a business can achieve that year over year at infinitum), and I also compare it to the current 20yr gvt bond rate (which is too low this time, so I kept the old one to make estimates less realistic -- lower bond rates make securities more attractive to investors) of 2.8%. This currently puts the fair value at around 435p.

And because these are estimates, I take a 50% margin of safety -- which makes it a buy for under 217p.

It takes only a minute to do.

That's why I actually don't like it when the share price explodes because a value proposition with this outlook over the next three years is extremely rare. It currently makes a lot of sense to still build a meaningful position.

There are other filters I use, but that one is always a good starting point ;) All estimates, but I prefer the conservative approach. My screens only ever return a handful of stocks anyway...

Happy investing.

This security is ridiculously neglected. I noticed it would qualify for Benjamin Graham's deep value criteria.

Forward PE of 2.5, PEG 0.1 and a whooping 50%+ growth.

Crazy

Stoodio, indeed.

Jumping off only makes sense once valuation reaches exhuberant levels. That's a long way off from the levels we are at. We would be looking at P/E's at least ten times our current level... at least...

Indeed Velo....

Maybe they all pile in at the peak? Would not be the first time this happened.

That's when jumping off the wagon might be a consideration... or not. Depends on the BOD's vision going forward.

The shares are still cheap. That's the amazing thing. If one where to take a position now, a 30% return is not unrealistic.

Yep. A lot of 'value compression' building....