Which way will it go? The question on every investor’s mind is particularly important for a company that seems like it could go either way with Griffin Mining. A company with solid fundamentals and production, with a focus on their Caijiaying Project is subject to the complications of mining zinc in a country that can swiftly change laws and the rules on a dime. So far, there have not been any issues, and China’s efforts at controlling the COVID-19 pandemic within its own borders have been beneficial to every producer in the region. The lack of restrictions as the country continues to open up has been good for the domestic economy and everyone doing business within their borders.
Griffin has not had to cut back on production and with the rising price of zinc at a tailwind pushing their bottom line along, the future seems bright. With the stock price climbing slowly and sitting around $140 right now, investors continue to wonder whether the time is right to buy. 2021 has been a good start for the stock and has climbed from a start at $117 to the current price consistently over the past two and a half months. The momentum that good news and good numbers have had for the stock means it has been able to creep up to near the all-time high of $159 a share. Investors are watching this level as an idea that it has the momentum to keep climbing higher and create a longer-sustaining leg up.
Taking emotion out of it, Griffin does well when taking into account some important financial and technical measures of quality and momentum. Investors know that high-quality stocks are resilient, consistent cash-generating businesses that compound returns over time for all stakeholders beyond equity-holders. The long-term commitment to their Chinese operation has meant a focus on quality and commitment to the project beyond extraction and into the development of exploration projects.
The stock has largely reflected investor sentiment related to this focus on quality, and the strong momentum in the price and the company’s earning is a good indicator of a positive trend that may continue. As a stable, growing company that often accelerates in sales and earnings, Griffin has a strong and consistently improving financial history with no signs of accountancy or bankruptcy risk. The company is not just an explorer with hopes of future profit, but a reliable producer creating shareholder value and stakeholder value where they operate.
The company has built solid momentum in a few key areas, like the share price and earnings growth. It is trading close to its 52-week high and is outperforming the market. The market tends to vote with dollars, and the stock often reflects the performance of the company. One can gather a lot of insights by looking at the price history, particularly in the past four to five months. Shares have seen a 167.8% return relative to the market over the past 12 months. Market volatility like what was seen over the past year can be a major drag on momentum, but if the stock is strong (like this one), it is quick to recover (like it has).
The good times are rolling for Griffin Mining right now, and so relative to historical prices it may seem expensive. In good times companies often are, but in volatile markets, like we are likely to continue to see, some chances may come along to buy the stock at cheaper prices. However, if the stock breaks through the 52-week range at the top end, investors can count on consistent returns for years as momentum continues to build and the company continues to be rewarded for its performance.
Finding good companies and stocks that return profits year after year is a difficult task, but Griffin Mining has made it simpler. While these factors don’t guarantee future returns and some areas of concern still linger, the quality and momentum of this zinc miner are proving to be resilient and gaining momentum every week. The company looks set to be one to watch.
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|Lincoln Minerals Limited