Updates on Financials, Technology, Energy, and Special Situations Companies Under Coverage
Atrium Mortgage Investment Corportation/TSX:AI
PR Title: Announces a $25M equity financing
Analyst Opinion: Positive - We believe this financing is indicative of a robust pipelines of mortgages. In Q2, Atrium recorded its highest-ever revenue for that quarter, and we anticipate record revenue in 2024. With cooling inflation and a softer jobs market, we expect further rate cuts, and an increase in AI's transaction volume over the next 12 months.
FRC Top Picks
The following table shows last month’s top five performers among our Top Picks. The top performer, Starcore International Mines, were up 23%. Starcore owns a gold mine in Mexico, and exploration projects in West Africa and B.C.
| Top Five Weekly Performers |
WoW Returns |
| Starcore International Mines Ltd. (SAM.TO) |
22.7% |
| Enterprise Group, Inc. (E.TO) |
13.5% |
| Western Exploration Inc. (WEX.V) |
9.9% |
| Transition Metals Corp.(XTM.V) |
8.3% |
| Lumina Gold Corp. (LUM.V) |
8.2% |
| * Past performance is not indicative of future performance (as of Sep 23, 2024) |
|
Source: FRC
Companies on our Top Picks list were up 10% YoY on average vs 3% for the benchmark (TSXV).
Performance by Sector
| Total Return |
1 Week |
1 mo |
3 mo |
6 mo |
1 yr |
3 yr |
Since launch |
| Mining |
1.1% |
-0.5% |
-8.6% |
4.1% |
1.8% |
-31.7% |
-6.6% |
| Cannabis |
N/A |
N/A |
N/A |
N/A |
N/A |
-54.4% |
-23.6% |
| Tech |
-3.8% |
-30.6% |
-19.4% |
-35.9% |
-45.7% |
-37.3% |
-4.7% |
| Special Situations (MIC) |
3.7% |
18.5% |
46.1% |
39.4% |
61.2% |
-23.8% |
6.6% |
| Private Companies |
N/A |
N/A |
N/A |
N/A |
6.7% |
20.5% |
30.5% |
| Portfolio (Total) |
1.0% |
1.6% |
1.8% |
6.7% |
10.1% |
-17.4% |
5.3% |
| Benchmark (Total) |
1.1% |
2.0% |
4.6% |
7.9% |
3.4% |
-32.6% |
-33.5% |
| Portfolio (Annualized) |
- |
- |
- |
- |
10.1% |
-6.2% |
0.5% |
| Benchmark (Annualized) |
- |
- |
- |
- |
3.4% |
-12.3% |
-3.7% |
| 1. Since the earliest initiating date of companies in the list of Top Picks (as of Sep 23, 2024) |
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| 2. Green (blue) indicates FRC's picks outperformed (underperformed) the benchmark. |
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| 3. Past performance is not indicative of future performance. |
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Market Updates and Insights: Mining
Last week, global equity markets were up 1.5% on average (up 1.1% in the previous week). The S&P 500 rose 1.6%, driven by an aggressive 50 bp rate cut from the Fed. While we anticipated a 25 to 50 bp cut, we leaned more towards 25 bp, expecting the Fed to proceed cautiously. The Bank of England (BoE) and the Bank of Japan (BoJ) kept their rates steady, as expected. Metal prices and the US$ were relatively flat, having surged in the previous week ahead of the anticipated Fed rate cut. Typically, rate cuts signal higher risk tolerance, and we anticipate capital will flow from large to small caps.
Source: FRC / Various
Last week, metal prices were up 0.8% on average (up 4.4% in the previous week).
Gold producer valuations were up 0.5% last week (up 11.2% in the prior week); base metal producers were up 4.2% last week (up 6.2% in the prior week). On average, gold producer valuations are 7% lower (previously 8%) than the past three instances when gold surpassed US$2k/oz.
Source: S&P Capital IQ & FRC
| |
|
16-Sep-24 |
23-Sep-24 |
| |
Gold Producers |
EV / R (forward) |
EV / EBITDA (forward) |
EV / R (forward) |
EV / EBITDA (forward) |
| |
|
|
|
|
|
| 1 |
Barrick |
3.46 |
7.07 |
3.42 |
7.00 |
| 2 |
Newmont |
3.78 |
8.31 |
3.82 |
8.40 |
| 3 |
Agnico Eagle |
5.27 |
9.57 |
5.25 |
9.53 |
| 4 |
AngloGold |
2.39 |
5.46 |
2.35 |
5.36 |
| 5 |
Kinross Gold |
2.83 |
5.96 |
2.78 |
5.86 |
| 6 |
Gold Fields |
2.85 |
5.60 |
3.02 |
5.95 |
| 7 |
Sibanye |
0.69 |
5.02 |
0.69 |
4.51 |
| 8 |
Hecla Mining |
5.29 |
14.54 |
5.26 |
14.45 |
| 9 |
B2Gold |
2.01 |
4.07 |
2.15 |
4.35 |
| 10 |
Alamos |
6.29 |
11.78 |
6.36 |
11.92 |
| 11 |
Harmony |
1.53 |
4.24 |
1.64 |
4.54 |
| 12 |
Eldorado Gold |
2.84 |
5.52 |
2.77 |
5.37 |
| |
Average (excl outliers) |
3.05 |
6.66 |
3.07 |
6.67 |
| |
Min |
0.69 |
4.07 |
0.69 |
4.35 |
| |
Industry (three year average) |
110.70 |
116.70 |
110.70 |
116.70 |
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Base Metal Producers |
EV / R (forward) |
EV / EBITDA (forward) |
EV / R (forward) |
EV / EBITDA (forward) |
| |
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| 1 |
BHP Group |
2.81 |
5.20 |
2.91 |
5.47 |
| 2 |
Rio Tinto |
2.10 |
4.67 |
2.18 |
4.88 |
| 3 |
South32 |
1.45 |
5.25 |
1.49 |
5.53 |
| 4 |
Glencore |
0.36 |
5.30 |
0.38 |
5.53 |
| 5 |
Anglo American |
1.80 |
5.38 |
1.84 |
5.57 |
| 6 |
Teck Resources |
3.49 |
8.54 |
3.63 |
8.88 |
| 7 |
First Quantum |
4.01 |
13.48 |
4.20 |
14.20 |
| |
Average (excl outliers) |
2.29 |
6.83 |
2.38 |
7.15 |
| |
Min |
0.36 |
4.67 |
0.38 |
4.88 |
| |
Max |
4.01 |
13.48 |
4.20 |
14.20 |
We are maintaining our metal price forecasts.
Market Updates and Insights: Cryptos
Prices of mainstream/popular cryptos were up 5.4% on average last week (down 0.2% in the previous week).
| September 23, 2024 |
|
|
| Cryptos |
WoW |
YoY |
| Bitcoin |
2% |
137% |
| Binance Coin |
9% |
190% |
| Cardano |
4% |
46% |
| Ethereum |
4% |
48% |
| Polkadot |
5% |
10% |
| XRP |
1% |
15% |
| Polygon |
7% |
-22% |
| Solana |
10% |
638% |
| Average |
5% |
133% |
| Min |
1% |
-22% |
| Max |
10% |
638% |
| |
|
|
| Indices |
| Canadian |
WoW |
YoY |
| BTCC |
7% |
134% |
| BTCX |
6% |
140% |
| EBIT |
6% |
137% |
| FBTC |
7% |
36% |
| |
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|
| U.S. |
WoW |
YoY |
| BITO |
7% |
42% |
| BTF |
10% |
70% |
| IBLC |
3% |
79% |
Source: FRC/Yahoo Finance
The global MCAP of cryptos is US$2.31T, up 3% MoM, and 112%YoY.
Total Crypto Market Cap Chart
Source: CoinGecko
Last week, BTC was up 2.4%, while the S&P 500 was up 1.6%. The U.S. 10-year treasury yield was up 0.12 pp.
Source: FRC/ Yahoo Finance
The global hash rate of BTC (defined as calculations performed per second/an indicator of network difficulty) is 636 exahashes per second (EH/s), up 1% WoW, but down 2% MoM. The increase in hash rates is negative for miners as their efficiency rates (BTC production per EH/s) are inversely linked to global hash rates.
Total Hash Rate (BTC)
The Realized HODL ratio (RHODL), which gauges the activity of short-term holders relative to long-term holders, was up 13% WoW, and 404% YoY. We interpret the increase in RHODL as a sign of strengthening demand.
Source: FRC/ Various
The table below summarizes the changes in key statistically significant factors influencing BTC prices, including the factors mentioned above. With four positive signals and one negative (compared to three positive and two negative in the previous week), we remain bullish on near-term BTC prices. Our model accurately predicted last week’s increase in prices.
* “↑” and “↓” indicate whether a parameter has increased or decreased
* Red (green) denotes a negative (positive) signal for BTC prices; black implies neutral.
Source: FRC
Companies operating in the crypto space are trading at an average EV/R of 4.6x (unchanged).
Source: S&P Capital IQ/FRC
| September 23, 2024 |
|
| Crypto Stocks |
EV/Revenue |
| Argo Blockchain |
2.1 |
| BIGG Digital |
4.6 |
| Bitcoin Well |
0.7 |
| Canaan Inc. |
1.3 |
| CleanSpark Inc. |
6.3 |
| Coinbase Global |
8.8 |
| Galaxy Digital Holdings |
N/A |
| HIVE Digital |
3.0 |
| Hut 8 Mining Corp. |
8.2 |
| Marathon Digital Holdings |
8.3 |
| Riot Platforms |
5.6 |
| SATO Technologies |
1.5 |
| |
|
| Average |
4.6 |
| Median |
4.6 |
| Min |
0.7 |
| Max |
8.8 |
Source: S&P Capital IQ/FRC
Market Updates and Insights: Artificial Intelligence/AI
Major AI indices are up 2% WoW on average (up 1% in the previous week), and 20% YoY.
| September 23, 2024 |
|
|
| AI Indices |
WoW |
YoY |
| First Trust Nasdaq AI and Robotics ETF |
2% |
6% |
| Global X Robotics & AI ETF |
2% |
27% |
| Global X AI & Technology ETF |
3% |
34% |
| iShares Robotics and AI Multisector ETF |
1% |
-3% |
| Roundhill Generative AI & Technology ETF |
2% |
35% |
| Average |
2% |
20% |
| Min |
1% |
-3% |
| Max |
3% |
35% |
Source: FRC/Various
The following table highlights some of the most popular large-cap AI stocks. Shares of these companies are up 1.6% WoW on average (up 1.9% in the previous week), and 91% YoY. Their average P/E is 34x (previously 33x) vs the NASDAQ-100 Index’s average of 32x (previously 31x).
| AI Stocks |
WoW |
YoY |
P/E |
| Arista Networks |
6% |
113% |
49.9 |
| Dell Technologies |
0% |
68% |
21.6 |
| Microsoft Corporation |
-2% |
36% |
36.9 |
| NVIDIA Corp |
-2% |
174% |
54.4 |
| Micron Technology |
6% |
36% |
n/a |
| Palantir Technologies |
3% |
168% |
n/a |
| Qualcomm |
-2% |
50% |
21.6 |
| Super Micro Computer (SMCI) |
2% |
86% |
22.8 |
| Taiwan Semiconductor Manufacturing |
3% |
86% |
27.3 |
| Average |
2% |
91% |
33.5 |
| Median |
2% |
86% |
27.3 |
| Min |
-2% |
36% |
21.6 |
| Max |
6% |
174% |
54.4 |
Source: FRC/Various
Key Developments:
- Last week, Constellation Energy (NASDAQ: CEG) entered into a 20-year power purchase agreement (PPA) with Microsoft, under which Microsoft will acquire energy from Constellation's Three Mile Island nuclear plant in Pennsylvania, to power its data centers in the state. With the AI revolution and exponential growth in data centers and energy requirements, tech companies are scrambling to secure long-term, stable energy sources. We anticipate that sectors such as uranium will see a significant increase in appetite from investors.
