Stock price expectations in #uranium and selecting outperformers from here:
A) overpromotion and hence high expectations priced in leads to underperformance
B) underpromotion moving to promotion and broker coverage leads to outperformance
C) the better project matrix + promotion.
...... Leads to outperformance
D) over promoted + below average project matrix + high expectations leads to underperformance
E) accelerating promotion, coupled with 1st tier project matrix coupled with ETF triple entry leads to massive outperformance.
For some time now, ego on individual #uranium stock names appears to be blinkering reality:
A) AISC of <$30 is great Vs >$50
B) 80% of the cycle is governed by the spot move, not promotor mgmt.
C) Low capex intensity is much better than high
D) low expectations + achievement =
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Is a 2-3x PE cheap for #coal company given extraordinary high spot prices?
The answer is ofcourse no, perhaps 2 upside remains.
Variables to consider:
Low cost producer, still profitable as cycle lows, what's mid cycle CF multiple?
Are volumes expanding?
Is the share count reducing due to stock buy backs?
Using a price to book ratio, is it trading near an historic High?
How much super normal cashflow will be collected, prior to the cycle drop off?
Does the current PE drop to 8-10x using midcycle assumptions?
Whats the debt level?
A combination that could produce a 3-4x return from here:
- 50% sustainable increase in volumes over 2022 as low cost
- a net cash balance sheet allowing 20% of shares to be repurchased over 18 months
- 1st quartile cost producer, always profitable through the cycle