Hi Gridcap. For what it's worth, I think brokers reports are usually not worth the paper they're written on. They're either based on old data and playing catchup, or covering their backsides, or got sentiment wrong, or spinning with some other objective in mind, or whatever. They occasionally have some interesting background, but I wouldn't trust their numbers for all the copper in the Carajas. You mentioned SIR...how many broker reports do you reckon were spouting a $5 target back when it was 5cents?
You've got to get to know the company yourself and figure, as best you can (and it's a Herculean task sometimes), what you think the earnings potential is, adjust it for risks, be prepared at this end of the market for curveballs and delays, keep reassessing and deciding if to stay or go, then repeat it all again. It's the only way I know of to succeed at this end, no easy street...but if anyone has found an easier way please tell me
In this specific case, with BP saying 11cents, that puts our market cap in the vicinity of $250m. Next year we'll be earning something like $40-50m, copper prices and construction not wobbling. Let's say stage 2 never happens, and stage 1 never goes beyond 12000 tonnes, and copper prices flatline...you're still paying only 5x earnings at 11cents. Not bad. Very very good when you factor back in all those upsides. No, it won't ever be a 100-bagger like SIR. But I think 4-6x is very achievable over the next few years, and if things all go right then double that.
My suspicion is the market will be slower to rerate the SP than most people think, but ultimately the earnings will come and the rest will be history.
Save yourself the 8hours over the weekend on K's posts, you'll never get the time back or get satisfaction, even if you were right. BPs lousy research is the issue IMHO.
Just my 2cents.
Cheers.
AVB Price at posting:
7.9¢ Sentiment: Buy Disclosure: Held
