The best investors know stock returns are never a matter of certainty; rather, they depend on filling your portfolio with high probabilities of success, some of which will fail, with the winners hopefully making enough of a difference to meet your financial goals.
The inexistence of a free lunch in investing is why due diligence plays such a key role in your stock market experience. All it takes are a few flyers gone wrong to spook someone into instruments like bonds, money markets and high-yield savings accounts, all of them paling in comparison to stocks’ long-term return of about 5 per cent above inflation from 1900-2018.
To build a portfolio of high-conviction positions, an investor must first compile a list of stocks whose initial attractiveness merits a deeper look. But given the thousands of issuers currently trading on major Canadian exchanges, the task is easier said than done.
This is why, to end off the week, I’ll briefly introduce three of the best undercovered Canadian stocks to keep on your radar, each of which boasts commendable operations and recent news in line with shareholder value creation.
Western Exploration is developing high-grade gold projects in Nevada
Western Exploration (TSXV:WEX) offers exposure to the Aura project, whose strong geological base and drilling to date contribute to its favorable prospects for long-term value.
The company is backed by a team well-versed in the mine development process, from grassroots discoveries, to brownfield development, to the engineering and financing needed to reach economical mineral production.
CEO Darcy Marud sat down with Stockhouse’s Coreena Robertson this week to discuss final assay results from 2023 core drilling in the Jarbidge rhyolite northeast of Aura’s Gravel Creek resource area. Highlight assays reached up to 257 g/t gold and 1,655 g/t silver in drillhole WG457, and 34.9 g/t gold and 2,800 g/t silver in drillhole WG456.
Structural interpretation of 2023 oriented core data and previous surface mapping substantiate significant resource expansion potential, as demonstrated by numerous intersecting structures containing high-grade epithermal gold and silver mineralization over 550 m by 350 m adjacent to the current Gravel Creek resource (245,571 gold equivalent (AuEq) ounces indicated and 442,814 oz. AuEq inferred). The company will also investigate two other anomalies on the property with eyes on increasing shareholder value, as discussed in a news release.
The Aura project also includes the Doby George deposit, which offers exposure to 407,000 oz. AuEq indicated and 118,000 oz. AuEq inferred backed by 827 drill holes, as well as Wood Gulch, a land package that stands at 104,543 oz. AuEq inferred, and boasts a pre-mining historical resource of 423,000 tons at 3.36 g/t gold and 23.65 g/t silver (Baker, 1990).
Western Exploration stock (TSXV:WEX) is down by 56.32 per cent year-over-year trading at C$0.83 per share.
Click here to continue your due diligence by reading Western Exploration’s latest investor presentation.
Grid Battery Metals has underperformed its considerable upside
Our second pick for best undercovered Canadian stock is Grid Battery Metals (TSXV:CELL), a mineral exploration company focused on metals for the electric vehicle market. Its main properties each have something for investors to hang their conviction on.
The Texas Spring property in Elko County, Nevada, is targeting a lithium clay deposit that adjoins the southern border of Surge Battery Metals’ (TSXV:NILI) Nevada North lithium project, which featured near-surface lithium-bearing clays averaging 3,254 ppm in 2022 drilling, a figure that has since surpassed 8,000 ppm during 2023 drilling.
The 640-ha Clayton Valley lithium project, also in Nevada, contains multiple layers of lithium-bearing volcanic ash thought to contribute to the lithium brines extracted by Albemarle, a US$15 billion market cap specialty chemicals company, as well as the formation of exposed lithium-rich clay deposits in the eastern Clayton Valley.
Finally, the company’s Grid Nickel project in British Columbia encompasses 5,000 hectares near FPX Nickel’s (TSXV:FPX) prefeasibility-stage Decar nickel project. Established mineralization includes cobalt and chromium, as well as nickel recorded in nickel sulphides and awaruite, an iron-nickel alloy.
After detailed sampling, trenching and initial drilling on Grid Nickel in 2023, the company recently completed an NI 43-101 technical report on the property. Upcoming exploration, guided by the report, includes field work on all three claim blocks to expand upon historical results, in addition to sampling and mapping of untested magnetic anomalies. The exploration, planned for 2024, will occur after Grid Battery Metals spins out its B.C. nickel assets as announced in September 2023.
CEO Tim Fernback sat down with Stockhouse’s Coreena Robertson earlier this week to comment on recent developments at Grid Nickel and the company’s profitable disposition of Surge Battery Metals shares.
Grid Battery Metals stock (TSXV:CELL) is up by 7.14 per cent year-over-year, but has lost 37.50 per cent since 2019.
Click here to read Grid Battery Metals’ latest investor presentation.
Mullen Group is a little-known Berkshire Hathaway disciple
Our final pick for best undercovered Canadian stock is Mullen Group (TSX:MTL), a serial acquirer that grew from a three-truck operation in the mid-1950s into one of Canada’s largest logistics providers. The company operates 40 business units across North America, each acquired with a focus on value and cash-flow generation, much like Warren Buffett’s fundamentals-based approach at his global conglomerate, Berkshire Hathaway.
Mullen management’s stellar track record, as evidenced by profitable operations during the past four years and the past five quarters, positions the company to take advantage of acquisitions as they present themselves, and to continue producing solid results regardless of the effects of the Bank of Canada’s monetary policy.
Carson Urlacher, Mullen’s senior accounting officer, joined Stockhouse’s Brieanna McCutcheon to speak about the company’s new $125 million credit agreement with PNC Bank Canada, which adds to its existing $100 million borrowing capacity with CIBC and $150 million with RBC, and further enhances balance sheet flexibility in the face of a cooling economy.
Mullen Group stock (TSX:MTL) is down by 10.32 per cent year-over-year, but has gained 10.45 per cent since 2019.
Click here to read Mullen Group’s latest investor presentation.
Join the discussion: Find out what everybody’s saying about the best under-the-radar Canadian stocks on the Western Exploration, Grid Battery Metals and Mullen Group Bullboards, and check out Stockhouse’s stock forums and message boards.
This is sponsored content issued on behalf of Western Exploration, Grid Battery Metals and Mullen Group, please see full disclaimer here.