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4 Stocks to Buy That Get Revenue From Surprising Places

We’re all quick to analyze stocks to buy at face value without ever considering how they generate revenue. But that’s a critical oversight. Not only…

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This article was originally published by Investor Place

We’re all quick to analyze stocks to buy at face value without ever considering how they generate revenue. But that’s a critical oversight. Not only is it important for investors to understand how their holdings make revenue in the present, it’s also important for investors to know how they plan to do so in the future. If you don’t consider where all the money is coming from now, you may be holding onto a stock and thinking it’s a winner without entirely understanding the trajectory of the underlying company.

For this list, I’ve identified a few stocks to buy that have recently pivoted into lucrative markets — and that will most likely expand into those very same markets moving forward. These names own different sizes of footholds in those “sub-markets.” That said, I’ve looked at all of them out of isolation and have ensured they are feasible conviction plays.

So, without further ado, let’s look at how these promising names rake in revenue. Here are the four picks I’ve found:

  • Ford (NYSE:F)
  • Carvana (NYSE:CVNA)
  • Barrick Gold (NYSE:GOLD)
  • Embraer (NYSE:ERJ)

Stocks to Buy: Ford (F)

Source: JuliusKielaitis / Shutterstock.com

First up on this list of stocks to buy, Ford has experienced a fantastic year with more than 120% in stock gains year-to-date (YTD). Adding to its recent cyclical support is the electric vehicle (EV) hype. Ford’s E-Transit is sold out. Meanwhile, the F-150 Lightning has over 160,000 reservations.

The market is clearly pricing in the automotive side of the company here. However, it has yet to discover Ford’s credit segment, which produced around 8% of the firm’s revenue in its latest financial quarter.

This automotive giant openly admits that it provides high-yielding loans to consumers with less than perfect credit scores. However, although this may sound bad, it’s actually a massive value-add for Ford. The segment contributes to a vertically integrated model where sales commence at excess speed and transaction costs are reduced with repossessions being resold through the company’s own second-hand division.

F stock is undervalued relative to its peers. The stock is trading at trailing price-earnings (P/E) and trailing price-sales (P/S) discounts of 25.2% and 55.8%, respectively. That leads me to believe there’s scope for stock gains, especially when considering the current economic tailwinds.

Carvana (CVNA)

Carvana (CVNA) logo on white object in foreground as well as a high-rise building in the backgroundSource: Jonathan Weiss / Shutterstock.com

Carvana’s “vending machine” business model has proven to be a massive success of late. The next pick on this list of stocks to buy, the company is a pioneer in the integrated online vehicle sales department. It has gained significant recognition from buyers for its user-friendly platform.

Carvana has similar parallels to Ford. How so? Well, it generates revenue from loan origination as well. The company doesn’t openly state the size of its credit department and includes it under other revenue in its financial statements. However, investors should consider Carvana’s easy-to-pass credit facility as a massive value-add to the company’s core business sales.

In a world where quantitative easing seems to be the norm, companies like Carvana — offering integrated credit facilities — will undoubtedly benefit.

From a valuation vantage point, CVNA stock’s growth metrics stand out. Reinvestment is evident considering year-over-year (YOY) capital expenditure (capex) growth of 102.7%. This figure is well accommodated by earnings growth, conveyed by nearly 124% revenue growth.

Stocks to Buy: Barrick Gold (GOLD)

How to Play Barrick Gold Stock Ahead of Today's EarningsSource: Piotr Swat / Shutterstock.com

Being the second-largest gold producer on the planet isn’t an easy feat. Barrick Gold is managed by South African CEO Mark Bristow and the company is running as smooth as silk at the moment. However, many don’t realize that roughly 10% of this mining house’s production is actually generated from copper exploits.

Given this fact, there’s a lot of scope for Barrick to pivot into the copper space at some point in order to facilitate EV demand. Although the firm has invested heavily in recent times, it’s also embarking on increasing production from its copper mines in Zambia, Chile and Saudi Arabia.

GOLD stock is currently undervalued with a P/E discount to the other gold miners. If Barrick ends up adding more copper to its production cycle, we’ll be looking at one of the optimal materials stocks to buy.

Embraer (ERJ)

a close-up shot of an airplane engineSource: frank_peters / Shutterstock.com

Last up on this list of stocks to buy is ERJ stock. Those who follow Embraer will know how sleek and attractive this Brazilian company’s private jets are. Embraer has delivered 54 executive jets YTD. However, many still don’t know that the company has also delivered a significant amount of commercial jets.

How many? Year-to-date, Embraer has delivered 32 commercial jets and anticipates commercial deliveries of 45 to 50 by the end of 2021. In addition, the company has taken order of three of its E175 jets from a Nigerian airline, Overland Airways. This amounts to $897 million worth of revenue, which will probably be recognized in the fourth quarter of this year.

Embraer is undervalued relative to its normalized five-year average. ERJ stock is trading at a trailing P/S discount of nearly 82% and a price-cash flow discount of 73.2%. This means that the current stock price is still well below Embraer’s financial growth.

On the date of publication, Steve Booyens held long positions in GOLD. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Steve Booyens co-founded Pearl Gray Equity and Research in 2020 and has been responsible for equity research and PR ever since. Before founding the firm, Steve spent time working in various finance roles in London and South Africa, and his articles are published on various reputable web pages such as Seeking Alpha, Benzinga, Gurufocus, and Yahoo Finance. Steve’s content for InvestorPlace includes stock recommendations, with occasional articles on crowdfunding, cryptocurrency, and ESG.

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Author: Steve Booyens

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Ground Breakers: Costs rise for ASX gold miners as inflation bites

Gold miners have endured an arduous 2021 in equity markets. While cash has been easy to come by and deals … Read More
The post Ground Breakers: Costs…

Gold miners have endured an arduous 2021 in equity markets.

While cash has been easy to come by and deals are being done, most gold producers have been hit by poor sentiment as prices have struggled to break out.

Over the past year the All Ordinaries Gold Index has sagged around 20%.

Although most are still making good money, rising costs and the impact of inflation and labour challenges are also hitting miners in the hip pocket.

Metals Focus says the global average all in sustaining cost for gold miners hit its highest level since 2013 in the September quarter, rising 3.6% quarter on quarter to US$1123/oz.

Costs are on the rise for gold producers
Pic: Metals Focus

Australian miners were the worst off when it came to cost pressures, with costs in Australia climbing by an average of 13.1%.

Global AISC margins fell by 9% QoQ to US$667/oz, with Australia’s sliding 18%, Canada’s dropping 5% and Russia’s falling 7%.

Margins remain high historically speaking, and 94% of gold operations tracked by Metals Focus remain profitable.

“As might be expected, increasing costs and a lower gold price have squeezed margins in the September quarter,” they said.

“However it is worth noting that their margins are still substantially higher than in previous years.”

“Despite the relatively healthy margins, the lower gold price and rising costs are putting pressure on higher cost operators,” Metals Focus said.

“While the proportion of output that is profitable remains high at 94%, it has fallen from 98% in Q2.21. A number of operations and projects are already under strategic review with regards to increasing costs.”

Costs are up for goldies for the fourth straight quarter
A few more gold miners are touching the margins. Pic: Metals Focus

“If cost inflation persists and margins diminish even further it is likely that development project approvals will be delayed and also possible that the highest cost production of more marginal producers could potentially be closed.”

Although global average head grades rose 0.5% (5% in Australia), inflationary pressures including crude oil prices, rising salaries amid Covid restrictions, labour shortages and turnover, and the cost of equipment due to supply chain issues drove up operating costs for the fourth straight quarter.

Markets reacted badly this morning to news of the spread of the omicron coronavirus variant around the world, with materials sliding 1.19% this morning.

Chalice soars on new Julimar discovery

Market darling is a phrase that doesn’t quite cut it with Chalice Mining (ASX:CHN), which is up 60 times over since making the Gonneville nickel-copper-PGE discovery 70km north of Perth early last year.

Shares jumped more than 4% this morning after Chalice announced another discovery at Julimar, where last month it declared Gonneville the world’s biggest nickel sulphide discovery in 20 years and Australia’s first major platinum group elements resource.

The new mineralised intrusion is an ultramafic unit to the west of Gonneville, separated by around 70m of metasediments.

Located immediately south of the 6.5km Hartog anomaly, Chalice struck 3m at 2g/t palladium, 0.3g/t platinum, 0.6% nickel, 0.5% copper and 0.05% cobalt for a 1.7% nickel equivalent from 68m in one hole.

The second mineralised intercept struck 2m at 1.8g/t Pd, 0.2g/t Pt, 0.6% Ni, 0.5% Cu and 0.06% Co for a 1.9%NiEq from 139.2m.

The discovery did not show up on EM, “highlighting the potential for further blind discoveries” according to Chalice.

While Chalice has already drilled around 180,000m at Julimar, part of its value proposition is the idea that more will be found with the Gonneville resource accounting for just 7% of the 26km strike of the Julimar complex.

It has submitted a conservation management plan to get at the Hartog target, which will be a bit more thorny because unlike previous drilling which has been located on private farmland, Hartog lies beneath the Julimar State Forest.

Chalice says its CMP for drilling the Hartog-Baudin targets is sitting with the WA Government and it expects approvals shortly.

Chalice Mining share price today:

 

The post Ground Breakers: Costs rise for ASX gold miners as inflation bites appeared first on Stockhead.




Author: Josh Chiat

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QMines tops the class with second resource update just a few months after listing

Special Report: In just the six short months since making its debut on the ASX, QMines has delivered its second … Read More
The post QMines tops the…

In just the six short months since making its debut on the ASX, QMines has delivered its second resource estimate for the Mt Chalmers copper-gold project, which is 38% higher than the previous estimate and largely in the higher confidence measured and indicated categories.

QMines (ASX:QML) has delivered an updated resource for its flagship Mt Chalmers project in Queensland of 5.8 million tonnes at 1.7% for 101,000 tonnes of contained copper equivalent, which includes for the first time measured and indicated resources.

Significantly, 78% of the updated resource falls into the higher confidence measured and indicated categories. This is important because it gives an explorer sufficient information on geology and grade continuity to support mine planning and allows the definition of a reserve.

The updated resource is not far off the 120,000 tonnes that respected Australian investment firm Shaw and Partners forecast for the latest resource upgrade in a research note in early October.

Shaw and Partners, however, anticipated the updated resource would still be 100% inferred. This attracted an increased 72c price target from the investment firm which is a nearly 90% premium to the 38c share price QMines is trading at currently.

QMines share price chart (ASX:QML)


 

So the fact that such a large chunk of the resource is in the measured and indicated categories is a big leap in terms of confidence in the resource and should be a positive signal to the market of QMines’ ability to over-deliver against the target.

“As the company only listed in May 2021, it is a fantastic achievement to be delivering a resource upgrade for our shareholders in such a short period of time,” executive chairman Andrew Sparke said.

“It is very pleasing to see that the upgraded resource has substantially grown in both size and confidence level, with the measured and indicated categories now comprising 78% of the overall resource.”

Offering further exploration upside, Sparke says QMines has identified several volcanic-hosted massive sulphide (VHMS) prospects outside the known resource, which bodes well for further resource upgrades and the potential for future development.

A world class mine in the making

Mt Chalmers is already considered one of the world’s highest-grade gold-rich VHMS systems.

QMines has previously demonstrated the significant size potential and high-grade nature of the deposit, with recent peak grades of from a 15-hole, 2,182m diamond drilling program including 5.3% copper, 11.75 grams per tonne (g/t) gold, 243g/t silver, 33% zinc and 19% lead.

Those results, which were reported just last week, follow close on the heels of ‘bonanza’ grade copper, gold, silver, lead and zinc intercepts announced in October.

A major 30,000m drilling program continues unabated, with a third resource upgrade planned for the first half of 2022.

QMines

 

This article was developed in collaboration with QMines, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

The post QMines tops the class with second resource update just a few months after listing appeared first on Stockhead.






Author: Special Report

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Miramar finds ‘very large’ gold footprint at Glandore project

Special Report: Miramar has outlined shallow supergene gold anomalism over almost 5 kilometres of strike and across multiple targets at … Read More
The…

Miramar has outlined shallow supergene gold anomalism over almost 5 kilometres of strike and across multiple targets at its Glandore project in WA.

Multiple holes from the lake aircore drilling across the expanded Glandore East footprint returned and/or ended in results >0.25 g/t gold including hole GDAC037 which intersected 6m at 0.62 g/t from 12m and ended in 2m at 1.04 g/t.

Hole GDAC061 intersected 4m at 0.46 g/t and 4m at 0.61 g/t – and is approximately 400m south of historical aircore holes which intersected 6m at 1.33 g/t and 9m at 1.10 g/t (EOH).

The Glandore East footprint now extends for over 3km towards historic gold workings and remains open.

Follow up drilling planned in the new year

Miramar Resources’ (ASX:M2R) executive chairman Allan Kelly, said the recent lake drilling had identified a very substantial gold system at Glandore and greatly increased the potential for the discovery of gold mineralisation including that like the nearby Majestic and Trojan deposits.

“Our first pass lake drilling has outlined coherent supergene gold anomalism within multiple targets over almost five kilometres of strike which is a considerable proportion of the entire project area,” he said.

Miramar Resources
Glandore Project showing recent drilling and historical holes.

“Today’s results indicate the presence for multiple NE-trending mineralised structures within the granodiorite pluton extending over a significant strike length, along with coherent gold mineralisation across several other targets which will need to be followed up early in the new year.

“Gold mineralisation at Majestic and Trojan is also hosted in NE-striking structures within granitic intrusions, so our recent results indicate significant potential for a similar discovery at Glandore.”

The company will now plan for follow-up aircore drilling in the new year, and then plan for diamond drilling.

 


 

 

This article was developed in collaboration with Miramar Resources Limited, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

The post Miramar finds ‘very large’ gold footprint at Glandore project appeared first on Stockhead.



Author: Special Report

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