Making Bold Prediction I was always aware of the overperformance of streamers but never really understood exactly why they deserved such a rich premium overvaluation by the market especially based on traditional CFPS valuations. Then I recently watched some interviews of Nolan Watson and I was awed by the overwhelming presence of his integrity and always trying to do the right thing especially for such a young executive. I then thought here is an odd shining gem of a fellow in a sector marred by a sea of shady characters resembling more like lumps of coals. If there was any "honest" executive that you can trust to run a public company in the mining sector then it has got to be this guy. The other enlightening relevation was figuring out that money to a streamer becomes more valuable in their hands than in the hands of a regular mining company due to their ability to turn around and multiply its face value with further streaming deals. It starts out small but eventually becomes a huge unstoppable money making juggernaut snowball.
I passed on SLW and SSL because even though there might be further money to be made, I think their current valuations are at a point where it becomes more challenging to continue growth at such a rapid rate. SND having been knocked down due to some ill timed moves in coal and nat gas still provides huge opportunity if you believe in the streaming business model and have faith in management lead by NW.
Now I looked at the chart of SND. The action recently has obviously been bullish due to the popularity of streamers lately as well as the great performance of their sister company SSL along with increased media publicity and awareness. In one month time the sp doubled from 25 to about 50 cents before consolidating to 44-45 cents and embarking on another upleg to 60 cents and now consolidating again to as low as 52 cents. If you break down the move since the low of mid-Sep in more detail: you can see the spike from 25 cents to 34 cents (+36%) in 4 days, 4-day consolidation with low of 31 cents (-9% from 34 cents high), upleg to 51 cents (+65% from 31 cents low) in 9 days, 8-day consolidation with low of 43 cents (-16% from 51 cents high), upleg to 60 cents (+40%) in 6 days, and now currently in a 4-day consolidation with a low of 52 cents (-13%).
Visually what it looks like from the 25 cents spike low reversal in mid-Sep is a big flagpole to 50 cents, a flag consolidation to low of 43 cents, and typically in a strong bull run you will see a similar continued move after a breakout from the top of the flag which is about 45 cents and this implies another doubling in price to 90 cents if it can breakout from this current consolidation. I can see four distinct hammers (i.e. candlestick pattern): the spike low to just below 25 cents in mid-Sep, the consolidation to 31 cents in late-Sep, the consolidation to 43 cents in mid-Oct, and the current consolidation to 52 cents just yesterday. In the three prior hammers the price began another significant upleg shortly afterwards.
If this current consolidation is to mirror the quick 4-day one in late Sept then possibly a +65% gain (i.e. 85 cents) from 52 cents can occur quite quickly. If instead it matches what occurs to be occuring in the more detailed breakdown analysis above, then maybe it has a slightly longer consolidation period of say 12 days this time (i.e. the sequence of 4-days, 8-days, etc) and possibly a slightly higher percentage upside of say 72% (measured from 52 cents low) over a longer period of about 13 days (i.e. the sequence of 4-days and 6-days for the two similar up moves, then 9-days for the extended move and +50% is about 13 days) for the upcoming projected next leg up which implies a target of 90 cents.
This would suggest the present consolidation ends before the middle of this month and the 90 cents target is reached either before the end of this month or early Dec! This also implies that the short six weeks expiry Dec warrants currently way out of the money will finish well in the money before expiry and the company will then get the $100+M funds from exercision. What this means is the warrants could result in a potential 20-bagger in one month if the stars align for this company. If the stock can double in value in just one month and still be regarded as undervalued then there is no reason why it could not double again in price to put it closer to fair value. You have to look at the warrants like a short term option play. I have not gone through the calcs but any stock that has recently doubled in price in one month has extremely high beta and typically awarded a high volatility premium in option valuation and theoretical breakeven price of 70 cents is only +27% move from 55 cents which is entirely within the realm of possibility. If you look at other high beta USA option situations with even just one month expiry I would argue they typically sell for way more than just 1 cent.
The only twist to these hypothetical scenarios is that if the current consolidation is extended to 12 days then the amount of downside pain reached thus far at 52 cents or -13% does not match the prior pain of -16%. So maybe there exists one more down move for a -20% total move from the 60 cents high which implies 48 cents. But yesterday's 57 to 52 back to 56 cents hammer is quite a convincing reversal already ...