Justin Gruenthaler

The latest posts tagged with “dchaf

2011 Stock Performance

Here are my results for the stocks I picked in 2011. You could have definitely outperformed the market if you followed these picks.

1.       EERG – I liked this junior oil stock back in April at $0.35. It was interesting to me because the merger would have pushed the share price higher. It was a little speculative, but it still paid off. Since the announcement the stock rose as high as $0.45. If you sold at the high point you would have had a return of 28.5%. It has also merged with American Eagle Energy, with the new symbol for the two companies being EERGD. The new stock currently trades at $1.35.

2.       DCHAF/DSM – I picked this rare metal holding company stock back in May at $0.49. I liked it because it was essentially a mining company except it purchased rare earth metals instead of mining for them. With China announcing that it was going to decrease the amount of rare earth metals it exported (thus increasing the price of rare earth metals), DCHAF/DSM was a no brainer. The stock rose as high as $1.24. If you sold at the peak you would have a return of 153%! It currently trades at $0.53. With assets worth $1.47 a share, the stock is still a great buy at this price.

3.       CTXIF – I announced this textile manufacturing stock back in July at $2.20. Since that time the stock rose to a high of $2.60, up 18%. I still love this company and expect it to do very well in the New Year. The stock’s current price is $2.17. It’s still a great buy, especially considering the Net Asset Value per share is $6.11, a conservative liquidating value of approximately $4.06 per share, and net working capital of almost $32 million. The company is also sitting on just over $5 million in cash, or $0.72 per share in cash. The company is continuing to grow very rapidly and since 2010 has acquired an additional yarn spinning factory to include in its operations. I strongly recommend everyone to look into CTXIF, as the company and its management are still grossly undervalued. Look for this stock to perform well as the company continues to expand. For further information check my other posts on CTXIF.

So 2011 was a good year, even with the market downturns which most people suffered from. Stay tuned for some more posts!

Justin Gruenthaler

JustinG101 - Twitter

 

Undervalued Buy of DCHAF (or DSM)

Just did some research on a company called Dacha Strategic Metals Inc. It looks like their stock is trading at a price level that is below its intrinsic value and their working capital per share.  This would be a great investment both short term and long term for the following reasons:

The company is currently trading at a discount to its net current assets (about 0.49). According to the company’s website, their net current assets are currently (as of April 29, 2011) valued at $ 0.71 a share with their inventories being valued at 48.8 million. Total current assets are valued at about $51,878,495. We should also take any liabilities off to get a net assets value which is about (using liabilities from last interim financial statement, which are almost nil) $51,077,503, giving us a net asset value of $0.70 per share. 

In regards to that it should be noted that the company does have some options and warrants that have not been executed. Currently the company has 21,316,400 in Warrants and 7,200,000 in options. IF executed these would dilute the number of shares outstanding to 101,584,704, meaning the net asset value per share would decrease to approximately $0.59, assuming other assets stay roughly the same (if all warrants and options are exercised the amount of shares would increase, but the company would receive over $8,000,000 in cash). So even when fully diluted the value is still above the current stock valuation for the company, providing some margin of safety for the investor.

The company also has a P/E ratio of only 7x, which is extremely low now that the company is generating revenues.

This company bodes well for the long term due its current EPS as well as the promising position that the industry is in.

 Dacha’s EPS has grown over the past 3 years to 0.07, starting back in 2009 when it recorded a loss per share of about 0.31 per share. The company has improved its EPS year after year and should continue to do so as the company continues to operate as a going concern.  Clearly, this means an increased share price year after year.

Dacha is in the Rare Earth Elements industry in which China is the number one supplier of rare earth elements. For those that do not know, rare earths are the “technology metals,” used in everything from cell phones to missiles. At the end of 2010 China announced that the first round of export quotas in 2011 for rare earths would be 14,446 tons which was a 35% decrease from the previous first round of quotas in 2010. This is significant because by supplying less the demand for these rare earths increases significantly, as shown by the Yttrium Oxide graph (which you’ll have to look up), one of the metals that Dacha deals in.

As you can see the price has continually increased with the continuing demand for rare earth metals. Dacha is unique in that it does not mine for any of these rare earths so it does not incur any of the high costs associated with early stage exploration companies. What Dacha does is it buys these rare earth metals through it’s great relationship with its China partners at an inexpensive price, holds these investments, and later sells them off at a higher price. Keeping these close relationships with its partners in China is crucial to the company’s success, and it is excellent news that the company tries very hard to keep these relationships strong.

Conclusion:

Both the short and long term offer some gains in regards to this companies stock. Being able to buy right now at a discount is very advantageous as it provides a margin of safety for your money. Coupled with increased EPS year after year makes this company a good buy under these conditions.  I would buy now, as it would not surprise me if this stock reached $0.60 in the near future and higher in the long term. If you have any questions feel free to send me a message!

On that note, as of May 4th Reuters has projected that Dacha Strategic Metals’ target share price will increase to 0.69 by years end! Happy buying!

Most of this information can be obtained from the company’s website as well as looking at the company’s latest financial statements for the 2011 year. The Reuters statement can be found at http://www.cnbc.com/id/42894399.

 

About

These are just my own thoughts and opinions. Some of you may not agree with everything and some of you will. Try to keep an open mind and question everything. :)

And just as a disclaimer, all articles submitted by me are of personal opinion. I reserve the right to change my opinion on these submissions at any given time and are not obligated to update any articles should circumstances change. I reserve the right to not have these redistributed. Should a person want to show my articles and analyses to someone else they may direct them to my site.

I am currently registered as an financial consultant, however all securities mentioned are that of my own personal opinion. At any time I may buy, hold, sell, or short any of the securities mentioned in my articles. Please do your own research before buying/selling any securities mentioned.

Stuff I like

See more stuff I like

Credits