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Editor’s note: My wife and I just had our first
child- an 8 lb 13 oz baby boy. I’m taking
some time off to spend some time with my wife and son. Today, I’ve
asked my boss, Ian Wyatt, to step in and write this issue of the Resource
Prospector. Ian has some exciting news about his favorite stock
holding… a small cap silver company. -Kevin
Ian here. If you asked my wife or my employees
what kind of investor I am, they’d probably tell you that I’m a
growth-oriented value investor.
I made my bones as an analyst over the past 12
years by focusing on small-cap companies for that very reason: I enjoy
doing the kind of in-depth research of undiscovered, small companies with
the potential for significant gains.
My research focuses on trying to uncover great
growth companies at attractive prices. Typically, this is pretty hard to
do. After all, once a company is well known to be a “growth stock”, then
investors pile in and the valuation soars.
But my goal is never to buy a “growth stock” after
it’s well known. As you probably know, when you buy these types of
companies ahead of the crowd, you have an excellent chance of doubling or
tripling your money in a very short period of time.
The potential for finding a 10 bagger – or a stock
that goes up over 1,000 percent – isn’t outside the realm of
possibilities. My best stock recommendation ever was for True
Religion (NYSE: TRLG), a denim retailer stock that returned
2,218% to subscribers of my Small Cap Investor Pro service in just over four
years.
That’s more than 22 times your money – and it
turned every $5,000 invested into over $110,000.
You don’t need more than a few of these kinds of
winners in order to build a substantial fortune that can fund your
retirement, pay for that vacation home, or put your kids through
college.
Today, the single largest stock holding in my
personal investment account is a small cap company that few investors
have ever heard of. No surprises there.
But you might be surprised to learn that it’s a
silver company.
Typically, you might think of silver companies as
depreciating assets – in that the longer they’re in business, the less
silver they have in the ground and the less their asset is
worth.
And that’s the case for many publicly traded
silver companies.
But in the specific case of small cap silver
companies in the early stages of exploration and development – it’s a
completely different story.
These companies – like all of my favorite small
caps – are largely ignored or undiscovered by institutional investors and
analysts. That’s because they don’t yet have any significant production.
And therefore, there are minimal revenues and almost never any earnings.
They’re extremely difficult to value when they’re this
small.
And in some cases, they’re literally months away
from incredible profitability as they bring their production on
line.
That’s when institutions and analysts pile into
these companies. And that’s when early investors can become incredibly
rich as the crowd discovers the stock.
Today, my largest stock holding is a tiny silver
company that’s still many months away from producing a single ounce of
silver. But that’s exactly why I’ve been accumulating a sizable position
in the stock right now.
At $37 an ounce silver, the company has an
estimated $2.3 billion of the metal sitting in the ground. But this
company has a market cap of under $400 million. So buying shares of this
company today is like buying the silver in the ground for about $5.50 an
ounce. It’s truly an astounding reserve – what’s been called the biggest
silver discovery in more than a decade!
Even if silver prices drop to $30 an ounce, this
company will be incredibly profitable over the coming years as their mine
starts to bring silver to market. With a cash-cost of less than $6 an
ounce, silver prices could go in the toilet and this company’s bottom
line would still be fine. With that kind of downside protection, it’s
tough to lose.
These types of opportunities only come around
about once a decade. So when I find a company with this type of resource,
I start digging.
I’ve been recommending shares of this small cap
silver company to subscribers of my SmallCapInvestor PRO newsletter for
many months. And in my personal investment account, I’ve built up a
sizeable position. In fact, this stock is my biggest single stock holding
in my investment portfolio.
I’ve workedvery closely with my small cap research
analyst Tyler Laundon, as well as Kevin McElroy, to put together an
exclusive report on this opportunity.
I invite you to get a copy
of my complete research report, titled Sierra Madre Silver Profits.
Inside this special report, you’ll get my in-depth research into silver
mining in Mexico, and find my full report on this small cap gem that
could see its shares soar in the coming months.