warren buffett - undervalue stock and cgx
One of the strategies applied by Warren Buffett to build a huge fortune is buying undervalue stock, then selling at very high price when the stock recovers. But the key question is how to detect undervalue stocks ?
Is CGX an undervalue stock ? clearasmud, your "low risk with 60m$ cash at bank" prompts me to look further at CGX. You are right, it has 60m$ cash at bank, no debt while its mkt cap is about 56m$ (@ 0.47$/share).
CGX currently has dispute with Kyrgyz government about license at Taldy Bulak gold mine. (undervalue stock always has issues, otherwise its price wont go low). However, having 60m$ cash in bank, CGX has plenty of options to prosper in resource boom time.
"Speculation" of some scenarios might happen
- Dispute at Taldy Bulak gold mine is resolved favourably to CGX. The chance of this is slim as CGX already writes-off the project.
- Using 60m$ war chest, CGX is able to acquire new mines, taking over other prospecting gold stocks.
- CGX becomes the target of take-over/merger. 60m$ cash and other gold mines in exploration/development under its belt, CGX is look cheap to be taken over at current mkt cap (56m$)
- New management at CGX. They will have more active programs instead of letting 60m$ sleeping in the bank.
Remember the above are just speculations.
The down-side is limited as the bad news at Taldy Bulak is already priced in. clearasmud, you are right, "low risk". That might be the reason why Fidelity is suddenly investing million $ in CGX in the last couple of weeks.
NB : I am not qualified to give advices to others to buy/sell shares. The above is just my personal opinions and as such am not responsible whatsoever for anyone buying or selling shares based on my opnions.
CGX Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
