We are heartened by the successes these companies have achieved in such a short time and remain confident that this marks the beginning of expanding business execution success (and increasing revenues) for all three.
We suggest that you consider share structure as both a backward-looking litmus test and as a forward-looking assessment of volatility. Share structure analysis provides the most benefits from the former and represents a relatively quick and easy means of gauging company strengths and weaknesses that can otherwise be assessed by more comprehensive analysis. If a microcap company’s share structure is tight and not displaying any red flags, it provides reasonable support (a Bayesian indication) that company management is aligned with shareholder interest.
TGM is fully capitalized and incentivized to move quickly, with its major shareholders in alignment with company initiatives, which the company has been executing flawlessly. We fully expect this to continue and note that even with the new investors, on a fully diluted basis, the company trades with only about 40 million shares, which will add booster power to the share price in the face of any new demand.
The two most powerful factors that will drive share price increases for small cap and microcap mining companies are a decline in gold reserves and lack of new gold discoveries. This is a result in part to the recent bear market in gold, which led to a decrease in exploration budgets. While these two factors represent a potential millstone to major producers they provide opportunity to the juniors.
Simply put, multiple expansion refers to the expansion of a stock’s price/earnings ratio based on investor willingness to place more value on the company’s earnings. This willingness, it needs be noted, can drive the stock price up all on its own. Consider the hypothetical J.R. Ewing Gold Company, which trades at $10 per share on a valuation of 10 times its $1 of earnings. Let’s say investor interest starts driving the share price up, and, even lacking any noteworthy news or developments, the stock rises to $25 and pushes the price/earnings ratio up to 25/1. If you’d been invested in the company at $10 per share, multiple expansion helped you more than double your money.
Not only will the addition of this new talent add exceptional levels of mining expertise to help drive successful exploration, but also strongly suggests that Newman Todd and Trillium are worth putting their reputations on the line. After all, such seasoned mining experts would not likely be attracted to or accept key roles in a fool’s gold exploration project.
The mere thought of selling can often stir one’s emotions even if it marks a grand-slam home run in capital gains. You might find it hard to let go of your position because you’ve likely invested time, as well as money, into it. You’ve gotten to know the company and have probably enjoyed following it on its journey towards success and profitability.
Biogas industry observers note that a U.S. carbon bill or comprehensive climate change legislation would serve as a national catalyst to “supercharge” the growth of RNG and the biogas industry. While this is highly unlikely under the current administration, a potential carbon-game-changing election fast approaches.
Few, if any, large cap companies will organically double their revenues within a few years, but plenty of microcaps are always in the running to double, triple, and even grow their revenues 10-fold. After all, those Fortune 500 companies were small themselves at one time, and many managed to make their microcap and small cap investors rich.
