BUY Recommendation: Sandstorm Metals and Energy LTD (STTYF)
Jan 01, 2016
Key Investment Points
• Historically successful management
• Unique business model
• Highly undervalued
• Strong technical indicators
• Timing = OPPORTUNISTIC
• Competitors next to none!
Industry Overview“The Mining sector comprises establishments that
extract naturally occurring mineral solids, such as
coal and ores; liquid minerals, such as crude
petroleum; and gases, such as natural gas. The term
mining is used in the broad sense to include
quarrying, well operations, beneficiating (e.g.,
crushing, screening, washing, and flotation), and
other preparation customarily performed at the mine
site, or as a part of mining activity.”
THE DEPARTMENT OF LABOR
--Bureau of Statistics--
Industry Overview
• Strong yet volatile outlook for metals/mining industry
• Current focus continued growth through expanded production.
• The demand for metals/energy faces no foreseeable threats.
• Mining = incredibly capital intensive difficult MKT entry
•Only a handful of blue chip companies have the means to reach production.
•E&P(exploration and production) miners are often weeded out
altogether.
•The potential profits for these “junior miners” are rarely realized.
• Projects that lack funding are abandoned INCLUDING many
with fundamentally sound operational strategies.
•Against this economic setting, Sandstorm has spotted what it hopes to be a MORE than just
“golden” opportunity.
02/02/12 Original purchase at $1.43/
share
05/09/12 5:1 Reverse stock split
Adjusted Cost Basis $7.15
57.2% return over 9 months
82.7% annualized return
( exploration and production
Business Model
Refined Management
Streaming Method
Corporate Structure
Industry Dynamics
Gold StreamingONLY
DIVERSIFIED STREAMING
CopperPalladium
Natural GasCoalOil
“A Sandstorm investment maximizes investment
potential while minimizing
downside risks.”
(taken from SAND Buy Presentation)
YES right time = right now!!
Steady upward trend
Moving averages in ideal positions respective to one another and to price
Volume rising comfortably with price indicating growing trading/investment activity within Sandstorm Metals & Energy
We are looking for “broken stocks” rather than “broken companies”.
In this situation we have the following :
Strong ManagementProven Business ModelQuality Investor RelationsStrong Balance SheetFinancial Liquidity
an early stage company dabbling in a historically volatile industry!!!
PERCEPTION
of the avg investor
Markers of a fundamentally
sound company
Prev Close: 0.4852wk Range:
.24-.60
Avg Vol (3m):
781,652
Market Cap:
158.13M
Current Eval
118.7M
EPS (ttm): .01Div & Yield: N/AForward P/E: ***
Investment Information
2 Year Price Graph
SWOT Analysis
Strengths Unique streaming method Historical success in our portfolioExperienced exploration and development research teams Established Infrastructure ZERO debtLow overhead
Weaknesses Some projects are bound to be halted Sandstorm has the aforementioned “immunity” to price fluctuation. However, their project companies do not. Sandstorm profits rely on their success up to the point of production.
Opportunities Donner Metals scheduled for production Established Infrastructure Diversification of streamsPotential for new discoveriesLarge cash flows
ThreatsAlthough Sandstorm has the aforementioned “immunity” to price fluctuation, the companies it finances do not. Failure of selected projects = no stream to speak ofGovernment regulations and policies on commodities are susceptible to change
Sector : Industrials & Materials Industry Group: Investment Company Current Holdings: GE, XYL, SAND, UPS Target Sector Allocation: 8.23% Current Sector Allocation: 11.89% , $19,431.16
BUY 20,000 shares of STTYF at a limit price of $.50 ($10,000, approx. 2% of portfolio)
Holding Period/Exit Strategy: 2-3 years; consider selling if stock splits and reaches estimated peak, if price falls below $.30, or if fundamentals change dramatically
Portfolio Placement / Recommendation