Recommendation: Speculative Buy
| Entry Date | Symbol | Recommendation | Entry Price (CAD) | Target 1 (CAD) | Target 2 (CAD) | Holding Duration | Potential Upside |
|---|---|---|---|---|---|---|---|
| 6 Aug, 24 | LGO | Speculative Buy | CAD 2.525 | CAD 3.0 | CAD 3.2 | 20 days | 26.7% |
Data Powered by EOD Historical Data (“EODHD”).
Largo Inc. engages in the development and sale of vanadium-based energy storage systems in Canada. The company operates through, Sales & Trading, Mine Properties, Corporate, Exploration and Evaluation Properties, and Largo Clean Energy and Largo Physical Vanadium Segments. Its products include VPURE+ vanadium flakes that are used in the production of master alloys and aerospace applications; VPURE vanadium flakes ferrovanadium and vanadium carbon nitride for the steel industry; and VPURE+ vanadium powder for catalyst applications. The company offers renewable energy storage solutions through Largo Clean Energy. Its products are sourced from vanadium deposits at the Maracás Menchen Mine in Brazil. The company was formerly known as Largo Resources Ltd. and changed its name to Largo Inc. in November 2021. The company was incorporated in 1988 and is headquartered in Toronto, Canada.
Increasing Cash Flow from Operating Activities: USD 14.83 mn in Q1 FY24 vs USD 4.95 mn in Q1 FY23
Enhanced Liquidity: Current Ratio of 2.58x in Q1 FY24 vs Industry Median of 2.52x
Decreasing Revenue Stream: Net Sales of USD 42.19 mn in Q1 FY24 vs USD 57.42 mn in Q1 FY23
Balance Sheet Risk: Debt-Equity of 0.33x in Q1 FY24 vs Industry Median of 0.22x
Inaccurate Mineral Reserve Estimates, Increasing Inflation, Lack of Diversification of Business, Declining Revenues, Ineffective VRFB Business Operations, etc.
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 2.525 | 2.24 | 3.0 | 3.2 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
On the daily chart, LGO stock prices are sustaining above the rising trendline support level and continuously taking support from the trendline. The recent upside movement in the stock is backed by increasing volumes, further supporting a positive bias. The next resistance level is plotted around CAD 3.00, and the stock may test that level in the short term (2-4 weeks).
As per the above-mentioned price action and technical analysis, Largo Inc. is looking technically well-placed on the chart, and a ‘Speculative Buy’ recommendation has been given on the stock.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Basic Materials Industry: Other Industrial Metals & Mining
| Company | Change (CAD) | Price (CAD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| LGO Largo Resources Ltd |
0.05 2.09% | 2.44 | - | 24.10 | 1.28 | 0.78 | 1.28 | 47.95 |
| IVN Ivanhoe Mines Ltd. |
0.50 2.97% | 17.35 | 109.35 | 21.37 | - | 3.68 | 130.80 | |
| FIL Filo Mining Corp |
0.31 0.99% | 31.69 | - | - | - | 100.26 | -44.2126 | |
| FOM Foran Mining Corporation |
-0.02 0.51% | 3.92 | - | - | - | 2.29 | -131.2641 | |
| NGEX NGEx Minerals Ltd. |
-0.1 0.75% | 13.22 | - | - | - | - |
Data Powered by EOD Historical Data (“EODHD”).
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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