She's concerned about the abrupt downturn in copper prices which could have a negative effect on the major indices. Copper prices were steady from 1972-2000, then created a new floor until the 2008 crisis. Now, the floor for copper is a little over $2.00 and its historic trend line is $5.35. Last week, we came close to that, but Garner feels that copper has already peaked. History says that any time copper touches $5.00, it drops down and historically it peaks a little before the market does. It's an historical indicator. In fact, if stocks pull back in a couple months, copper's decline could resume and fall to the floor of $3.00. $3.50 is a key level for copper with prices acting bullishly above that level though bearish below that. The 200-day moving average at $4.00 will act as a magnet for investors. She notes that large speculators are net long 70,000 copper futures contracts; history says that when this happens copper prices are about to peak, so when prices decline, these bullish traders will dump their positions--this creates another leg lower. We need copper though to build data centres and in tech. The good news has been priced in and prices could head seriously lower.
The Donald Project is an attractive asset with potential, but it will cost capital to develop. EFR has committed to spend $122M and issue $17.5M in shares to earn 49%. While a good asset for future growth, investors looked at the spending level and share dilution and got a bit concerned. But the initial spend level is quite small and a future 'go' decision is further out and still dependent on various factors. We would not really see this news as 'bad', just regular operations for a small cap company seeking to develop more assets. Mines do require lots of capital.
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EPS beat expectations of 47c coming in at 54c. Revenue also beat expectations of $155.12M coming in at $157.5M displaying growth of 13.3%. BL also upped its full year guidance for revenue and EPS which with the upper range better than expectations. BL added 13 customers in the first quarter for a total of 4,411 customers. The quarter and outlook were strong for BL and we would say it as a hold. The share price was under pressure recently as the company announced that it had privately issued a convertible senior note for $600M.
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FRU is quite cheap at 11X earnings, and it has a strong balance sheet with net debt about 1X cash flow. Free cash flow is good and the dividend is good and now higher than its pre-covid level (it was reduced in the pandemic). In the context of the volatile oil and gas sector, we would be comfortable owning it.
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The stock is finally catching up to the fundamentals, partially driven by their closeness to Nvidia. Shares popped nearly 5% today.