Gold Resource Corp

Gold Resource Corp (AMEX: GORO) is a Mining Company which is engaged in the business of producing, developing and exploring gold and silver. The Company has operations in Nevada, Oaxaca and Mexico.

Investment Highlights – Gold Resource Corp – Speculative Buy at USD 2.95

• Despite the challenges presented by the covid-19 pandemic, the Company has shown strong growth in working capital and generated robust cash from operations.
• In the last one month, the Company delivered a positive return of ~4.61% and delivered higher returns compared to the negative return generated by benchmark Index (-14.81%).
• As per valuation metrics, EV/Sales & Price/Earnings multiples of the Gold Resources Corp are currently lower as compared to the corresponding multiples of the Metals & Mining industry. It reflects, shares are undervalued as compared to the industry.
• From the technical standpoint, shares were trading above the short-term support level of 20-day (USD 2.79) simple moving average prices, which reflects an uptrend in the stock and can increase further.

Key Risks

• Any change in regulations and government policies could affect the overall business of the Company.
• The Company is exposed to several operational risks associated with geological and weather conditions.

Financial Highlights – Q3 and 9M FY2020 (30 September 2020) (released on 2 November 2020)

(Source: Quarterly Report, Company Website) 

• In the third quarter of the financial year 2020, driven by higher doré sales, the net sales increased to $42,286 thousand (Q3 FY2019: $40,066 thousand). The sales for nine months period for FY2020 declined.
• The profitability margins improved in Q3 FY2020, reflecting higher sales, while profitability for 9M period declined, reflecting lower sales and higher mine cost of sales, general and admin expenses and exploration expenses.
• The cash balance as on 30 September 2020 increased to $31,313 thousand (31 December 2019: $11,076 thousand).

One Year Share Price Chart

(Source: Refinitiv, chart created by Kalkine Group)

Conclusion

The Company has shown an increase in financial performance in the third quarter of the financial year 2020, with higher revenue and profitability. While for nine months period, the financial performance declined significantly. GORO has a strong liquidity position and a well-positioned balance sheet. The Company’s cash from operating activities increased by 127% for 9M period, with a 120% increase in working capital. Gold Resource’s Isabella Pearl delivered record production in Q3 FY2020 of 7,847 gold ounces. Despite the impact of covid-19 on the world economy, the Company is focused on driving growth across the platform and executing business objectives. The stock made a 52-week low and high of USD 2.02 and USD 6.24, respectively.

Based on the factors discussed above, we have given a “Speculative Buy” recommendation on Gold Resource Corp at the closing price of USD 2.95 (as on 4 February 2021).

Interpace Biosciences Inc

Interpace Biosciences Inc (NASDAQ-CM: IDXG) is a pharmaceutical Company with a focus on development and commercialization of molecular diagnostic tests for early detection of cancer and using technology for personalized diagnosis and management of the patient.

Investment Highlights - Interpace Biosciences Inc – Speculative Buy at USD 5.06

• In the third quarter FY2020, the Company has effectively managed the marketing and admin expenses, which will help in loss reduction and will further improve operational performance in the near future.
• In the last three months, the Company delivered a significant return of ~71.53% and delivered higher returns compared to the benchmark Index.
• As per valuation metrics, EV/Sales multiple of the Interpace Biosciences Inc is currently lower as compared to the corresponding multiple of the Healthcare Providers & Services industry. It reflects, shares are undervalued as compared to the industry.
• From the technical standpoint, shares were trading above the short-term support level of 20-day (USD 4.24) simple moving average prices, which reflects an uptrend in the stock and can increase further.

Key Risks

• The Company needs to comply with stringent regulatory policies, and failure to do so could result in penalties and fines.
• The covid-19 outbreak has resulted in supply chain disruptions which will have a negative impact on the Company’s performance.

Financial Highlights – Q3 and 9M FY2020 (30 September 2020) (released on 20 January 2021)

(Source: Quarterly Report, Company Website) 

• In the third quarter and for nine months period of the financial year 2020, driven by increased reimbursement rate and higher clinical volumes, the revenue increased to $8,248 thousand and $22,752 thousand, respectively.
• The Company reported a net loss in Q3 and 9M FY2020, reflecting the higher cost of sales and increased amortization expenses related to acquisitions.
• The cash balance stood at $5,308 thousand as on 30 September 2020 (31 December 2019: $2,321 thousand).

One Year Share Price Chart

(Source: Refinitiv, chart created by Kalkine Group)

Conclusion

The Company has shown a slight improvement in financial performance in the third quarter of the financial year 2020. Both the top-line and the bottom-line performance improved, while profitability margins remained in the negative zone. Interpace Biosciences’ operational performance was not materially impacted by the impact of the covid-19 pandemic, while it resulted in the slowdown in demand for pharma services and clinical services. The Company has a well-positioned balance sheet and strong liquidity to tackle the short-term uncertainties created by coronavirus pandemic. The stock made a 52-week low and high of USD 2.57 and USD 11.00, respectively.

Based on the decent growth prospects, we have given a “Speculative Buy” recommendation on Interpace Biosciences Inc at the closing price of USD 5.06 (as on 4 February 2021).

*Dividend Yield may vary as per the stock price movement.

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