The stock gained 3.3% on the Toronto Stock Exchange (TSE), while the trading volume was more than impressive – 2.5M shares changed hands. In the end of the day, the buyers took advantage over the sellers and hence the surge in the price.
The steady advance of the stock over the last two years attracted investors’ attention this week. Yesterday, Amerigo was mentioned by two promoters – the well-known Mr Lebed and WallStreetGrand.com. The first believes that ARG could repeat the tremendous rise of CUM (Copper Mountain Mining). Mr Lebed states the shares could reach $5.95 one day!
The other promoter states that Amerigo is greatly undervalued and undiscovered at the moment and puts a stress on the solid financial condition of the company. The latter looks really solid indeed:
- In the end of 2010 Amerigo had over $35M in cash, one year before that this number was just $7.2M;
- As at Dec. 31, 2010 the company had working capital of $22.5M. Amerigo recorded a positive operating cash flow of $35M for 2010;
- The company reported revenue of $152M, net earnings of $15.4M and an operating profit of $26.3M for the last year. All these indicators have risen significantly in comparison with 2009. Only for the fourth quarter of 2010 the net income was $7.5M;
- In 2010, Amerigo produced 46.6M pounds of copper and 777.3M pounds of molybdenum.
- ARG is a dividend paying stock, which is not so common among Canadian mining companies. Only one week ago, Amerigo announced a semi-annual dividend of $0.02 per share, payable on May 5, 2011. Stockholders should be pleased!
If there is anything negative to be said about Amerigo, this is probably the large debt of $14.74M that the company had in the end of 2010.
Technically speaking, the last two candlesticks on the chart resemble a bearish shooting star pattern, which implies a possible decline in the share price. However, its reliability is relatively low and definitely requires confirmation.
