The $50k Challenge – Update 11

The $50k Challenge Update 11 – 06/07/2020

Stock Code: LCD
Shares Purchased: 476,000
Share Price: 0.021

Reasons for Buying:

  1. Market Cap of $6.3m with $3.3m cash gives an enterprise value of only $3m.
  2. Quarterly outgoings on average are sub $100k so management are very frugal with their cash which is great.
  3. Top 20 shareholders as of the last annual report holding 57.6% of the register.
  4. Directors holding 30 million shares which is 10% of the register.
  5. No equity raises required for the foreseeable future.
  6. Management compensation extremely low and all agreed to reduce pay by 33% due to impacts from COVID. The main way that directors make money is if the share price goes up and if they hit their performance milestones.
  7. LCD has a nice portfolio of gold leases and are also reviewing a number of advanced project acquisitions in the gold space.
  8. The risk/reward on this stock is phenomenal. Due to the extremely low EV and high cash levels the downside risk is approximately 25% – 30% with the upside potential is definitely in the multi bagger region if they can acquire an advanced gold project.

Risks:

  1. Opportunity cost of waiting for the acquisition to come in
  2. At the moment resources are firing but will need to keep on eye on this while the acquisition search is underway

To find out more about how I analyse stocks that fit the criteria of the $50k Challenge  check out my Penny Stock Investing course.

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