- Rick Rule – thoughts on the Art of Speculating and on Gold. Video – 8:16 minutes
- Peter Zeihan – No Hope for China to Survive as it now is. Video – 10 minutes
- Don Durrett – Price targets on SilverCrest and Discovery Silver
- Vizsla Silver: A Gem Below the Radar
- StoneCo – negative comment by Motley Fool – Positive comment by Morgan Stanley.
Rick Rule – Thoughts on the Art of Speculating and on Gold. Video – 8:16 minutes
In this short Video Rule presents his case for gold but, more importantly for our teaching moment, Rule discusses how as a speculator, he uses the news flow buy low and sell higher. As a speculator he is not defining timelines. In general, it is safe to assume five years is his working timeline. For this period, he expects a three to ten times return on his investment.
Peter Zeihan: No Hope for China to Survive. Video 10 minutes
In this short video, Zeihan is merciless on China’s ability to survive much less grow more powerful. As examples he uses is that Australia could bring China to its knees and second without support from the USA, China would not have prospered over the past twenty years.
Don Durrett – Price targets on SilverCrest (SILV)*and Discovery Silver (DSVSF)*
Durrett writes a newsletter focused on the metal mining industry. In June 2022 article he lists three of his favorite development stages companies. Discovery Silver and SilverCrest, two of LOTM’s favorite companies, were mentioned. The benefit of following Durrett is the consistency of his methodology in valuing a company. Durrett assumes price for silver in his valuing the future price of a company, once it is in its production stage. Durrett assumes a future price for silver of $75 per ounce. Today’s price of silver is $19.44. there has been a shortfall in new silver Vs demand for silver for more than five years. Durrett feels silver will make a big move higher. An entertaining video on the silver shortage with Andrew Maguire from 12 days ago. The move in silver sounds dramatic. I concur with Durrett that it is well within the supply and demand dynamics that exists today. I have seem much higher numbers from industry insiders.
On the June 1 date, Durrett’s projected for
- SilverCrest, priced then at $7.27 (now $5.44), up 455%.
- Discovery, priced then at $1.05 (now $0.77), up 1,100%.
Vizsla Silver (VZLA)*: A Gem Below the Radar
Mentioning Silver, I couldn’t resist mentioning one of the hottest discoveries of high grade silver core samples that is being ignored by the market – Vizsla Silver. Core samples of 1,000 grams (one kilo) per ton of material is “bonanza” grade. Vizsla is consistently finding core samples above 1,000 g/t. Link to press releases at their website. Vizsla has three brokers who have a ‘strong buy” on the stock. These are good name brokers. H.C. Wainwright, Roth Capital and Raymond James. At the same time there isn’t much press other than Vizsla’s PR (very good by the way) talking up the company. If you are a potential buyer or own the shares this is a good thing assuming you want to build your position. When silver is “hot,” that’s when the third party P.R. will appear. Now is the quite before the storm and a great time to be position building. There will be a new resource estimate released before the end of this year. I cannot say the report will move the stock, but it will be a very good report. You might consider buying your position before that report is public.
StoneCo (STNE)* – negative comment by Motley Fool – Positive comment by Morgan Stanley.
September 8, 2022 – A few years ago, Berkshire did something that it rarely does and invested in a high-growth business that had just made its public debut. While the investment wasn’t made by Buffett himself, Berkshire added shares of Brazil-based fintech StoneCo (STNE).
For a while, StoneCo was one of the best performers in Berkshire’s portfolio, but the stock has been absolutely hammered in the recent downturn, with shares down by more than 90% from the highs. And while the business still has lots of potential, it’s also become much riskier. The company reported a hefty net loss in the second quarter, compared with a profit a year ago, and growth has slowed down tremendously. Inflation is higher in StoneCo’s market than it is in the United States, and a recession could cause a sharp decline in consumer spending. Plus, StoneCo’s CFO recently decided to leave the company.
To be sure, StoneCo could end up being a home run for patient investors. If recession fears subside, growth could rebound. The company is slowly rolling out its credit card business, which could be a massive revenue driver long term. But there’s too much that can go wrong in the near term, so I’m staying on the sidelines.
LOTM Comment: If you do not find negative opinions on a company, you are likely over-paying for the stock. Best “value pricing” is achieved when the news is negative and best sale price is achieved when all the news is good. Refer to the story link from Rick Rule in this document.
A Morgan Stanley research report dated 8/30/2022 has an over-weight opinion on StoneCo, $16 target, a 2022 year-end eps of $0.21 and a 2023 year-end eps of $0.50 per share.
Our LOTM view is that STNE is emerging from a basing chart pattern but will be limited in its upward price movement – for the next twelve months. We believe the price will be volatile within a range bound by $10.00 plus or minus and $15.00 plus or minus. Within this trading range one can work the shares through trading, position building tactics or use cash secured put selling or covered call writing to generate cash flow. Link to Finviz STNE page.
Written September 21, 2022, by Tom Linzmeier for Tom’s Blog at www.LivingOffTheMarket.com
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* An account related to LOTM holds a position in this security.
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