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It is tough to forecast for a company that is pre-production. ETL recently stated that it may need to issue more shares and also that, "The company's ability to continue as a going concern is dependent upon its ability to fund its project and move toward commercial production of battery-grade lithium hydroxide monohydrate." This tone pretty much cements a future share offering, potentially in the near term. The company also has forecasted that in its investor presentation that commercial production will begin in 2026. We would say outlook wise, share offering(s) are likely and things will get worse before better. If ETL can begin revenue production/commercialization even to a small extent by 2026, the stock could do better.
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For a direct investment, we would consider CCO fine and likely the safest. There are smaller exploration companies, developers and companies involved in building facilities. One can also invest in uranium ETFs that hold the metal directly. But we think CCO provides the easiest stock exposure for exposure to the sector.
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It looks decent to us; it is a cyclical business, but MAS has grown earnings nicely over the years. The balance sheet is a bit leveraged with debt at 2.5X cash flow, but cash flow is consistent, with high free cash flow conversion. At 16X earnings, it is priced reasonably well considering expected growth of 12% to 16% over the next few years. The 1.72% dividend has shown good growth. The last quarter was good as operating margins have improved with better cost control. The stock is up about 4-fold in the last decade. We would consider it 'good' but not 'great'. Its cyclicality and debt do add some risks here.
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Market Update:
The Bank of Canada officials discussed whether to wait until July to cut interest rates to gain further assurance inflation is still on track to reach the central bank’s 2% target. On the other hand, the Bank of England kept its main interest rate unchanged at a 16-year high of 5.25% even though inflation has fallen to its target of 2%, as policymakers are concerned a premature cut could fuel another price rise. The Canadian dollar was 73.00 cents USD. The U.S. S&P500 ended the week up 0.4%, while the TSX was down 0.5%.
It was a mixed week of greens and reds. Materials rose 2.2%, while energy and industrials gained 1.2% and 0.2%, respectively. Real estate, consumer staples and technology all edged down by 1.7%. Financials slid by 0.7%, while consumer discretionary gave up 0.4%. The most heavily traded shares by volume were Canadian Natural Resources, Bitfarms, and Power Corporation of Canada.
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He just trimmed it. His holding got too big. This stock is on steroids. He'll trim it again, because he's nervous about the risk/reward. It's his largest position. The price action has been kind of crazy. Too much of the AI boom has happened, stocks over their skies, though some stocks will grow into it, like Microsoft.