Silver Lake Resources Ltd (ASX: SLR)

Silver Lake Resources Limited is an Australian based entity, which is engaged in the exploration, mine development, mine operations and the sale of gold and gold/copper concentrate in Australia.

Recommendation Rationale – SELL at AUD 1.065

• Profit Booking: SLR’s share price has surpassed the Resistance 2 provided in the previous report on 3 October 2022; and thus, it is offering a profit booking opportunity.
• Overvalued Multiples: On a forward 12-month basis – key valuation multiples (EV/EBITDA, Price/Earnings, and Price/Cash Flow) are higher than the average for the Basic Materials sector.
• Technical Standpoint: The momentum oscillator 14-day RSI (~67.95) is approaching the overbought zone; and thus, price can face retracement from the current levels.
• Profit Decline: During FY23, normalized profit before tax reduced to AU$58.1 million from AU$95.4 million in FY22.

SLR Daily Chart

 (Source: REFINITIV, Analysis by Kalkine Group)

Considering that the resistance level, and risks associated, it is prudent to book profit at the current levels. Hence, a ‘Sell’ recommendation is given on the stock at the current price of AUD 1.065 (as 2 November 2023, at 1:55 PM AEDT).

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and geopolitical issues prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is neither an indicator nor a guarantee of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is 2 November 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

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