The $50k Challenge Update 11 – 06/07/2020
Stock Code: LCD
Shares Purchased: 476,000
Share Price: 0.021
Reasons for Buying:
- Market Cap of $6.3m with $3.3m cash gives an enterprise value of only $3m.
- Quarterly outgoings on average are sub $100k so management are very frugal with their cash which is great.
- Top 20 shareholders as of the last annual report holding 57.6% of the register.
- Directors holding 30 million shares which is 10% of the register.
- No equity raises required for the foreseeable future.
- 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.
- LCD has a nice portfolio of gold leases and are also reviewing a number of advanced project acquisitions in the gold space.
- 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.
- Opportunity cost of waiting for the acquisition to come in
- 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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