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Neo Materials is a very unique company. It is the global leader in the manufacture of materials for magnets used in micro-motors and one of the largest processors of rare earths in the world to make highly engineered materials. Its customers are mainly in the automotive, electronics and semiconductors as well as specialty chemicals industries. It is the best-positioned company to supply magnets for traction motors in the EV market and is building a new plant in Europe to supply European car manufacturers. The stock has come down with rare earth prices and is very depressed now trading at around $7, well below its Tangible Book Value. Yet Neo is very profitable, generates strong cash flow, has no debt, is buying back shares aggressively, pays a dividend of over six per cent, and trades at around four times EBITDA. A strategic buyer, Hastings Technology Metals, acquired 20 per cent of the company for $15 per share last year, and we wouldn’t be surprised if it or another mining company makes a bid for Neo (which was acquired for $1.3 billion in 2012 before going public again in 2018). With a market cap of only $300 million today, there’s considerable upside for Neo’s stock to triple or even quadruple over the next few years. stockchase.com
Deep value, with potential to triple or quadruple in a few years. Global leader in manufacturer of magnets used in micro motors. Highly engineered materials. Well positioned for the EV market. Rare earth prices have come down, so has the stock to well below tangible book value. Yield is 5.77%. Very profitable, strong free cashflow, no debt, buys back shares aggressively. Trades at 4x EBITDA. Would not be surprised by an eventual takeover.
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