PAN trade ideas
Annual report released. This stock is undervaluedPAF released their annual report today.
Positive
Yearly earnings up 63% , now PER is at about 4. This is incredible !!!
Insiders (CEO and financial executive) bought a lot of shares recently
Dividend will increase 28.5% (vote in November)
Stock buy-back announced (to be precised later)
Awaiting a lot of infrastructure developments and prospection results (incredibly huge gold concentration vein investigated since 1 year)
Strong graphical position, just above unbroken support (only momentarily broken by COVID crash)
Gold leverage
Penny stock that is at the moment not bought by big fish due to small market cap.
Negative
Yields forecast to increase ? But PAF has an incredibly low PER and reduced his debt a lot.
Operates in South Africa (country has inherent risk)
All in sustainable price for gold increased by 9% at $1260/oz
My target is graphical only (so medium term target), the true value of PAF (long term) is above 50 GBX.
Insiders double down on Pan African RessourcesThis is a long term play, this South African gold mine will double in 1 or 2 years. I know gold is in turmoil with yields forecast to increase, but this is priced in, it's the reason for the 35% drop. Stock market is euphoric, it is time to invest in value and hedge against inflation with gold mines.
CEO and Financial director already bought £1,2 million in November (at £0,25), they persist with £0,3 million on 31 March (at £0,16). Keep in mind they earn £1,6 million per year so this is 1 year of gross salary for them. Top executive buying is always a green flag.
Waiting for a lot of announcements that will be a catalyst this year (see last post about PAF).
Technically just above 2 resistance lines, it can't drop further and FED raising rates to 2.2 % this year is priced in.
PAF is shielded against the valuation bubble due to a PER of 7,5. Raised rates will have no effect on them since they repaid a lot of their debt (Debt to equity from 57% to 37% in a year).
South Africa being far from USA, Russia, China, and Middle East, it is shielded from war risks.
Target £0,30 within a year or 2. If gold surge I expect the stock to replicate gold's surge with a 3x or 4x leverage and will adjust my target.
Bull run will resume. Insider activity.- Gold mine operating in South Africa. Good leverage on gold.
- PAF is a penny stock with only 380 million of market cap, but planned to grow due to recent operations started in 2018 and coming to term. There is also a rumor they found a gold vein with extraordinary gold content a few month ago.
- Dividend is 3,5% and forcast to grow as they recently paid their debts.
- Good valuation, with a PER at about 12
- Insiders bought a lot of shares 3 weeks ago: CEO & Executive director, as well as the Financial Director & Executive Director each bought for 1 year of their respective income at £0,25 so at a higher price than now. This is highly encouraging.
Watch out:
- Brexit deal before 31 December. As its headquarters are in UK. Many stock saving plans like the French PEA provide tax exemptions to EU investments only.
For all these reasons I bought PAF and can recommend it to you. If Brexit is favorable to EU saving plans, I will double on my positions.
Pan African Resources - Digging for goldBuy Pan African Resources (PAF.L)
Pan African Resources PLC is a precious metals producer engaged in mining. The Company operates through six segments: Barberton Mines, located in Barberton South Africa, derives revenue from sale of gold to South African financial institutions; Evander Gold Mining Proprietary Limited and Evander Gold Mines Limited (collectively known as Evander Mines), located in Evander South Africa, derives revenue from sale of gold to South African financial institutions; Phoenix Platinum, located in North West province in South Africa, derives revenue from sale of platinum group element concentrate to Western Platinum Limited.
Market Cap: £224.46Million
Pan African Resources is trading in a sequence of higher highs and higher lows since July 2018. The shares topped out in August at 14.7p and have since corrected sharply lower. The correct move has stalled just in front of the 61.8% Fibonacci support level at 10.86p and now appears to be forming a wedge pattern. The move above resistance at 11.76p has confirmed the break of the wedge, which we believe could lead to more upside in the short to medium term.
Stop: 10.7p
Target 1: 14.7p
Target 2: 17.5p
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