The IKN Weekly recommends Atico Mining (ATY.v) as a buy and sets a six (not 12) month share price target of C$0.70 on the stock, representing a 59% upside from this weekend’s CAD$0.44. The price target is predicated on the main catalyst, which is that ATY will indeed be able to cover its debt repayment schedule during 2016 and once it has got to the end of the year, the market will re-rate the stock on its stronger fundamentals and proven capacity to make profits even at the current modest prices levels for copper. I’m going for a target based on a reasonable 1.2X price/book ratio once people see the balance sheet clean up, which may turn out to be a staging post for greater things. An eventual stock price in the mid-80s wouldn’t surprise me in the least.
What ATY offers today is a trading advantage, it’s clear to me after running the numbers that ATY isn’t in the type of uncertain financial position that most people assume. It’s going to file a weak looking set of 2q16 financials with sales and a bottom line loss that those who aren’t looking may consider a reason to sell or avoid, but the key to understanding this stock isn’t in the P+L, it’s the balance sheet (“it’s the economy, stupid”). If copper prices improve then so does this stock, that’s a given but even if they don’t, ATY‘s going to be just fine and that makes for a very low downside risk attached to an entry either today or when the 2q16 financials come out in mid-August. Low risk balanced against high potential reward is my kind of equation. I will buy some ATY.v in the week ahead and it will become part of the ‘Stocks to Follow’ list as from next weekend.
UPDATE: Here's a free offer that comes after receiving a suggestion from a reader. If anyone would like a free copy of the full 12 page report on Atico Mining (ATY.v) from IKN376, just send a mail into the usual address...
...and put "Atico Report Yes Please" in your title line. I'll send you over a PDF copy of the whole analysis by return (and unlike the scamsters at Stansberry Research or Casey Research you won't get a whole barrage of marketing mails from me afterwards, it'll just be that one and that's a promise).