Worth a reread prior to the release of Q2-23 results
The following article was published on May 23, after the release of Q1-23.
Down More Than 50%: These 3 Beaten-Down Stocks Could Stage a Strong Rebound, Analysts Say
May 23, 2023 — 07:51 pm EDT
Written by Michael Marcus for TipRanks
Excerpt
Largo Resources (LGO) Last on our beaten-down list is Largo Resources, a leader in the move towards lowering carbon emissions and energy use in the sector. Specifically, Largo is a world leader in the production of vanadium batteries and sources its vanadium metal from the Maracas Menchen mine, which it owns. Located in Brazil, the mine contains high-grade vanadium deposits necessary for the production of vanadium batteries. These batteries offer a lifespan of 25+ years and provide a safe and efficient recycling process at the end of their life. Largo’s batteries are finding applications for long-term energy storage in the US energy industry.
Vanadium is considered a rare earth metal, and Largo’s mine is one of the world’s major sources. The company produces two main vanadium products from the mine. The first is VPURE+ Flakes, high-grade vanadium flakes with a purity level of 99% or higher, used in master alloy production. These flakes increase the strength-to-weight ratios of titanium alloys used in the aerospace industry. The second chief product from the mine is VPURE+ vanadium pentoxide powder. This product, also with a purity level of 99%, is used in catalyst and battery applications. Largo is working on improving its mine operations through infill drilling at its Campbell Pit project.
In addition to its vanadium operations, Largo is in the process of commissioning a major ilmenite concentration plant, planned for opening this year. Ilmenite is a titanium-iron oxide mineral with various uses, including the production of paints, inks, fabrics, plastics, paper, and even sunscreen and cosmetics. The company plans to complement its vanadium business with ilmenite production.
Regarding financial results, Largo reported revenues of $57.4 million in Q1 of this year, representing a 35% year-on-year increase and surpassing analyst forecasts by $3.27 million. The increase in revenue was attributed to higher vanadium prices in the global market However, the bottom line showed a net loss, with an EPS figure of -$0.02. While this was an improvement compared to the loss of 3 cents in the year-ago quarter, it fell 4 cents below expectations. The company reported solid vanadium production during Q1, extracting a total of 341,967 metric tons of ore from the ground, which marked a significant increase from the 303,652 metric tons produced in the same period last year.
In those last 12 months, however, Largo’s shares are down 56%.
That hasn’t bothered H.C. Wainwright analyst Heiko Ihle, who says of Largo: “We remain optimistic about Largo’s vanadium operations as market fundamentals continue to outline considerable long-term demand growth even though spot pricing has been quite lackluster as of late.”
Putting some numbers where his mouth is, Ihle gives LGO shares a $12 price target, suggesting ~208% upside in the next 12 months, and supporting his Buy rating. Overall, this stock has picked up 4 analyst reviews recently, and they favor Buys over Holds by a 3 to 1 margin – for a Strong Buy consensus rating. The stock is selling for $3.90, and its $8.80 average price target suggests it has room to grow ~126% in the year ahead.
https://www.nasdaq.com/articles/down-more-than-50%3A-these-3-beaten-down-stocks-could-stage-a-strong-rebound-analysts-say
https://www.tipranks.com/stocks/lgo/forecast