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That is why you should probably own this stock in an IRA or 401k. No taxes until withdrawal, and dividend is 3 or 4 times the amount you are required to withdraw at, I believe, age 73. Also if you reinvest at the current dividend rate, in a retirement account, you will double your investment in only 6 years.
Fantastic NY Bob. I had seen clips before but
Repurchases are dead money for a cash machine, unless they are holding the stock as treasury stock in order to expand and maintain growth. Kirkland is at the vanguard of mining technology. They should be using its cash for exploration, or purchases of other gold mines, or related companies. The 17+ PE should actually be in the 30s. This is a GROWTH company, and growth companies invest in themselves to increase or maintain their growth. They don't buy back their own stock, they buy good but smaller competitors.
JMO
1) Its bump yesterday was weak. 2) The warrants will create a downward pull until the execution time expires. 3) The shorts are attacking like a shiver of sharks. If you are a trader definitely sell. If you have confidence in this stock's future either 1) Sell all and buy back at hopefully a lower level. 2) Sell a major part. or 3) Hold on for a wild and bumpy ride.
That being said I firmly believe this company has an extremely bright future. Hydrogen fuel is the only fuel that can be produced without a high environmental impact (Iceland has been producing hydrogen fuel with geothermal for decades), AND the only waste product is pure water. This IS the energy source of the future, and NIKOLA has the patents.
Dilution is a four letter word in the stock market. It is almost as bad as litigation and reverse split. I had a mining stock that lost almost half its value after purchasing another company at steep discount with an all stock. Most investors only saw that there would be 30% more stock outstanding ("dilution"). Any way, I am almost 100% certain that we will see a bounce because of what I posted before... The stock market almost ALWAYS OVER-REACTS!
JMHO
I would think so. Over the years I have noticed that the stock market almost ALWAYS OVER-REACTS. The warrants were in the original prospectus of the merge company in expectation of doing the Nikola IPO. Soooo the 5% dilution through warrants (some of which I own) should have already been taken into account.
I take this as an opportunity to add to my position, since a 5% (already known) dilution should never result in 20% decrease in price.
A good portion of the increase is through the Detour purchase. Otherwise it looks like a 8% to 15% increase. With less that a 40% dilution Detour is a great purchase, especially when you consider the probable conversion to deep mining in the future. This is a tech and growth company based on its innovative processes. Therefore, they should continue to expand through acquisitions and assimilation
I really do believe that for KL, the buyback of stock is a very questionable alternative for share/shareholder value. Kl has a double digit growth in every phase of their business, and the Detour purchase probably insured a continuation of this for at least a few years.
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Therefore, they should return value in implementing a policy that directly results in returns to shareholders.
The first is to continue to hoard cash, and maybe take on some debt at incredibly low interest rates, in order to purchase more small but profitable mining companies. With the societal circumstances at this time, I am sure some gold mining companies are dirt cheap. With Kl's methods of operations in deep mining, the margins and yields appear to be much higher than any other gold miner.
Next is to consider going into other forms of mining. This is much more risky, since it would require a whole new learning curve for KL. For instance, knowing that rare earths are going to be needed (and could become expensive) if the China cold war occurs. MP Materials (a private company that bought Molycorp) is now producing rare earths at a profit. The problem is that rare earth minerals and metals almost require open mining. What about platinum or silver? This one is better than buybacks, but might slow the double digit growth.
The last, and most direct method of improving shareholder value is through dividends.If KL can buy back 10% of their stock, they can instead give a 5% dividend and expand with the remainder. I would not recommend this, since I believe that KL is the leader in their methods of getting the most gold for the buck.
I have been investing for almost 60 years, and I have never seen a buyback have anything near an increase in shareholder value for the amount spent. KL needs to do what they do best. Expand through acquisitions and convert the bought companies to KL's way of mining. This will insure continued growth and increases in shareholder value for the future.
JMHO
I do not believe that buying back your own stock is the best (or anywhere near the best) use of funds. All it really does is increase the amount of the treasury stock. On the other hand I can see the reasoning from recent happenings, 1st) The stock is cheap (but so are all metal commodity stocks). 2nd) After the Detour purchase the stock got lambasted because the investors perceived the transaction as a 40% stock dilution.
However, we all know that these are not good reasons. I would rather see KL use their excess funds to either buy additional mines/mining companies or,
speeding up the process of converting the Detour mine into the KL model mine. Come on guys, you do mining best!!! Take this opportunity to compound growth by spreading your "franchise"!
JMHO
It also helps that Zacks came out with a "strong buy" today, their best stock rating.
Probably for a couple of reasons. First two of their mines are lessening in production, even though they are not expecting further erosion. Along with this, the mine that continues to increase annually is not projected to increase in 2020. This is shown by their statement that they are going to increase production by 600,000 ounces post merger. This is the same amount produced by Detour last year. In other words, a lot of the pricing was based on continued growth, which will be muted until KL starts getting similar production and margins from Detour that they experience from the other mines.
Another reason was that the market ALWAYS overreacts!!!!
The third reason is that they did't beat the expectations by as much as in the past. This gave the speculators reason to sell, and the stock short position a reason to expand.
We already knew that this was probably going to happen. Hopefully Kirkland can change the Detour to deep mining and increase their production to an annual $900K to a million ounces in a short time.
I got the info from an article I read on Yahoo finance, except for the initial after hours price variances.
After hours are all over the place from +55 cents to -65 cents and several in between. Zacks is over their neutral rating, and have come back with a 2 or a buy. They expect around a 46% increase in earnings yr over yr. That is 3% lower than their recent estimates, and they admit that KL has consistently beat their estimates by 11%. Anyway, things are looking at this point, pretty rosy.
I believe that Kirkland will be fine for the short run with earnings up over 40% year to year... In fact I expect a blow out quarter again because of the great increases in gold price over the last year (that is expected to continue). The "short term" future concerns me though. Detour needs to be converted to deep mining instead of pit mining, and the sooner the better. I believe the first quarter after the merger may even show less earnings per share, which will continue until Detour reflects efficiencies similar to Kirkland's. JMHO
Good analysis NY BOB. I agree with everything except for part of the reason KL is tanking. I believe many KL shareholders looked at the merger as a dilution of the stock, without an increase in income as the major reason. After all Detour seemed to always be at or near break even. Anyway, JMHO
KL's growth rate of 15% to 20% per year could (in most cases) support more than the present 18.4 PE ratio. With revenue growth rates like that, I have seen companies manage a 40%+ PE ratio. Gold has also increased over $200 per ounce in the last year. ($1,330 Feb 20 2019 futures to $1,550+ Feb 2020 futures). This has a +$200 effect on revenue margin for each ounce produced!!!
The only bad news is the silver to gold ratio, which is very high at 83+ ounces of silver for every ounce of gold.
Given everything above, KL does not seem to be treated as a regular company. They are first and foremost being looked at as a gold miner; and everything else falls in line with the precious metals market except for the short term. "UNDERVALUED" which Yahoo has KL rated is an understatement for Kirkland Lake.
Sorry, hit the wrong key. May wealth be your partner (or at least one of them).
NYBob I agree with the $25,000, but for a different reason. Go to youtube and please watch 'Hidden Secrets of Money'. The 4th episode is the most interesting from an economic perspective, but they all make their point. They make a very good case that the future is going to be very, very painful. So, you need to start preparing. Even if things don't happen the way they say, others make similar predictions on the investments in gold and silver, like your video. May
The Detour merger looks like a great deal if KL can improve the efficiency of the new mine. I always thought that strip mining was cheaper than deep mining, until I went through some of Detour's numbers. They were making pennies (if that) for mining 600k ounces! I expect Kirkland Lake to begin a deep mining operation that maintains or exceeds Detour's past production with Kirkland-like margins and efficiencies of scale.
If this occurs Kirkland will have increased profit by around 60% with an approximate 33% delusion in the stock. KL has their work cut out for them though, since Detour has been in business, doing the same things, for a long time.
With the announced "merger" the shorts piled on. It might be a little squeeze today, though I would expect more out of a 4% increase.
I love the use KL makes of electric 40 ton trucks, electric extractors, and electric loaders. This means they can go deep, because of little if any need for expensive ventilation, and they can go as deep as they want. If they were using gas/diesel, they would be having to restrict the amount of work done during the day (gas fumes and carbon monoxide), and they would be forced to stay near the surface, or pay for ventilation at a prohibitive cost.
Nov 14, Zacks re-instituted their #1 rating of Kirkland Gold. See their posting on Yahoo. Also, we have great charts for the last 6 mos and yr. Do I see a cup and handle forming?
There is only one reason I can see that KL is down today. Zacks most recent posting has the stock as a #2 buy rather than a #1 strong buy in previous Yahoo posts.
AngloGold Ashanti Ltd reported increased profits of 52% even with a 3% decrease in production and higher normal expenses. The increase in earnings is directly the result of price increases in gold.
The report is due to be a blowout with the increases in gold prices in the last year (almost $90 per oz). This brings their net margin to around $300 per oz. or an increase in margin of a whopping 42% in yr over yr numbers! If I am also correct, they have grown production at a 15% to 18% clip.
Oh well, I am looking for a 50% increase in profits! With Victoria coming more available, can they expand production to keep a terrific growth rate going into the future?
Thank you National Bank (giving a neutral/market perform rating). Increased my position another 20% without having to pay a premium.
Thanks NY Bob! Looks like someone noticed the same as we did. New target of almost $53 US. It also helps that gold recovered to within $3 of yesterday's high, after retracting 50% earlier in the day as of the time of this post.
1st - BTW, what I love about KL is the yield of gold per ton. I don't know what method they use, or whether they are just lucky to find high yielding mines.
2nd - BTW, does anyone know whether KL is going to expand into rare earth, and strategic metal extraction? With China being the #1 producer of these by far, opportunity may be knocking to enter this type of mining. Also, there are a lot of super cheap companies in Australia and Canada that produce rare earths and strategic metals.
Gold increases to over$1500, probably increasing margins by 15-20% and KL tanks in a panic market. Oh well, we'll see the increases with the outlook and 3rd Quarter results.
Thank you nowlurking! I learned a lot today!
So far they are approved essentially for different surgeries. I wonder whether they have somewhat of a "non-compete" understanding. There is plenty of room for both.
Also, do you know of any company working on a remote surgical system?
TRXC is shadowing what ISRG should be doing at this point, popping! The only two approved and marketing robotic surgery companies in the USA; both with great growth and future potential.
Shadowing ISRG. The only two approved robotics for human surgeries.
The shorts are gathering/feeding like sharks.
I hope not. As I recall, that is one of the worst formations.
Revenue growth wasn't as great quarter over quarter, and this pastgrowth of revenue was a big reason we maintained a 45+ P/E. The stock is "maturing" and slowing down a little. This is still the best growth stock in the sector, and the only one on the cutting edge of many diverse sciences (including the leader in AI). It is a KEEPER, though it MIGHT not be quite as exciting as in the past. JMHO
By the way, I am talking revenue not profit. The margins keep the net income in the stratosphere as always.
The fantastic quarterly growth rate (in excess of 30%) has slowed this quarter to just over 15%. We still are in great shape, but the doubling of this stock over the next year (Like last year.) is doubtful. NVDA is still a great leader with almost unlimited potential (and possibly more +30% growth quarters).
OOPS I was thinking if ISRG when I sent that text. (Own both) . Please revise to $275 and $300 respectively. Thanks!!!!
If NVDA has similar growth in earnings, I would expect the next high to be around $475 for the second quarter, and a minimum of $499 by year end. The $500 mark is a really tough mental barrier...
A good article for Nvidia options. https://finance.yahoo.com/news/smarter-nvidia-corporation-play-potential-154823664.html