Lesson From LAB Results Today......?
What to make of today's share price changes....?
LAB down 15.85% on disappointing assay results news
NFLD up 11.39% on no news
SIC down 3.16% on no news
NFG up 8.88% on no news
The following are my thoughts on the above:
LAB:
I think the share prices of some stocks with a lot of hype (LAB, NFLD) have strong future assay result news already built into the share price.
If they don't deliver (like LAB's results today), the shares drop, and if the next set of assay results don't come for weeks, the shares may remain in the doghouse (perhaps even go lower?) until they produce assay results that align with investor expectations or drop to a share price that is in line with what the company has actually delivered to date
If the next set of assay results also disappoint, who knows what the share price will do.....? Further, if LAB continues to flounder over the next sereral months or years, NFG might try a friendly takeover offer at a bargain price so they can put their drills to work and see if they can find a great zone somewhere along LAB's portion of Appleton (though I personally hope NFG doesn't attempt to take out LAB as NFG already has plenty of Appleton fault still left to explore on its own property, but Hennigh and Palisades are already involved with LAB, so this endgame is certainly possible......).
NFLD:
To my knowlege, this group hasn't provided any assay results to date. They hired a drilling contractor, they received drill permits, they may in be drilling at this time, but no assay results, Yet the shares closed up over 11% today and are up 34% in total over the past three trading days, with the only "news" being their May 6 press release indicating they ".....received full permitting from the Newfoundland and Labrador Government for drilling at the Jonathan’s Pond project".
Now, who thinks expectations are high for NFLD's first assay results? When NFLD does actually produce assay results, how outstanding do investors expect them to be (close to NFG's?) to justify the current share price (or whatever the share price will be sitting at when such results are made public?), and what do you think will happen if, like LAB, they disappoint.....?
SIC:
Has produced very good assay results to date and may follow up with more. However, their property does not sit on / along a fault, so expecting results similar to NFG's, while possible, are unlikely in my view. That said, they may in fact be undervalued. However, as long as NFG continues to be the superstar company in Central Newfoundland, NFG will likely suck the oxygen out of other players like SIC as long as NFG continues to produce mind-boggling assay results.
NFG:
Not surprising to me that NFG is up over 8% today. They have delivered on their assay results time and time again. LAB's disappointing results only reinforce the thesis that not every promising zone along the Appleton fault will produce outstanding results (at least initially) like Keats did.
Investors likely expect another set of NFG assay results by the middle of next week if not sooner, and LAB's results will only make NFG look even better if NFG can deliver results close to what they've been producing every 6 to 14 days for two months now.
No one knows for sure how things will play out for these four companies going forward, but talk and hype is cheap - it's results that count.