The only way to achieve life-changing stock returns is to buy great companies as microcaps, well before the market recognizes their greatness.
A portfolio of such holdings will look risky to untrained allocators, who will see only unprofitability, volatility and falling share prices, but market-tested investors, strong with the conviction of thorough due diligence, know to hold on through the noise to give their stocks’ evidence-based potential a chance to turn into shareholder value.
Executives behind three microcap stocks rich with this potential spoke with Stockhouse this past week about recent growth milestones:
Imagine Lithium
Imagine Lithium (TSXV:ILI) is a junior mining exploration company developing its flagship Jackpot lithium project near Nipigon, Ontario. The property houses known pegmatite showings with a historical resource of 2 million tons grading 1.09 per cent Li2O.
Since 2018, Imagine has provided shareholders with increasingly prospective drilling and sampling results, positioning it to release a maiden NI 43-101 mineral estimate after wrapping up its ongoing 2023 drilling campaign.
President J.C. St-Amour spoke with Stockhouse’s Brieanna McCutcheon about the company’s latest drilling developments, including a highlight drill hole of 14.35 m grading 1.22 per cent Li2O, as well as expectations of delineating a resource at Jackpot comparable to Rock Tech Lithium’s Georgia Lake spodumene project, which boasts 7.33 million tonnes grading 0.82 per cent Li2O.
Despite years of operational excellence building a firm case for an economical discovery, ILI shares have fallen by 54.55 per cent over the past five years, as 4-5 per cent yields on bonds and savings hinder investors’ appetite for the long-term holding periods required to benefit from microcap stocks. The company’s clear case for undervaluation is worth a deeper look.
Click here to read Imagine Lithium’s latest investor presentation.
INEO Tech
INEO Tech (TSXV:INEO) operates a digital advertising and analytics network through its Welcoming System of displays.
The Welcoming System occupies a differentiated position in the retail landscape by offering advertising and customer analytics, combined with theft-detecting sensors, allowing owners to monetize store entrances beyond what has been traditionally possible.
INEO’s patented platform uses artificial intelligence to deliver ads customized to each location based on analytics, allowing the company to collect recurring subscription revenue as it ramps up installations.
The company’s most recent sale was composed of 59 Welcome Systems and Welcoming Gates (a static display product with electronic article surveillance functionality) for Jumbo Cencosud, a Latin American supermarket operating more than 300 stores across South America.
CEO Kyle Hall joined Stockhouse’s Brieanna McCutcheon to discuss the sale.
Results for fiscal 2023 ended June 30 show that INEO’s expansion is continuing unabated, with revenue up 21 per cent year-over-year (YoY) and 2023 representing “the most deployments and installations of the INEO Welcoming System in the company’s history,” Greg Watkin, INEO’s chairman and founder, said in a statement. The Welcoming System currently boasts a presence across 23 U.S. states.
Revenue had been on a rapidly rising trend all year, up by 74 per cent YoY in fiscal Q1 2023, 50 per cent in fiscal Q2 2023 and 19 per cent in fiscal Q3 2023, before a 26 per cent drop in Q4 put an end to it, likely because of the individualized timelines of product rollouts.
With preparation for numerous deployments in 2024 and 2025 already underway, shares’ 53.57 per cent YoY loss seems like an overreaction from shareholders unable to look past net losses on the income statement toward the clear value-add and the rapid expansion taking place.
Click here to visit INEO Tech’s official website.
Leading Edge Materials
Our final microcap stock pick is Leading Edge Materials (TSXV:LEM), which is developing a portfolio of critical raw material projects in the European Union (E.U.). The company is targeting energy storage, mobility and clean energy markets though its 100-per-cent-owned Woxna graphite mine and anode project and Norra Karr rare earth element project in Sweden, as well as its 51 per cent ownership of the Bihor Sud nickel and cobalt exploration project in Romania.
The Norra Karr project‘s 2021 preliminary economic assessment estimates a 26-year mine life and a US$1.026 billion pre-tax 10 per cent NPV with a 30.8 per cent pre-tax internal rate of return. Its primary elements include dysprosium and terbium, which are required to produce permanent magnets for electric motors and wind turbines.
The Bihor Sud project yielded assay results, released in June 2023, as high as 30 per cent nickel and 4.7 per cent cobalt, supporting a large scale and high-grade potential. Prospectivity was further enhanced with chip samples of similar grades announced this month, and CEO Eric Krafft joined Stockhouse’s Brieanna McCutcheon to share all the details.
The Woxna graphite project, the lone exemplar in all of the E.U., has been under care and maintenance since 2015 because of uneconomical graphite prices, demonstrating management’s sound capital allocation skills. The mine holds a June 2021 NI 43-101 resource of 13.3 million tons at 7.83 per cent total contained graphite for 1,039.5 KT.
These properties each hold the promise of minimizing the E.U.’s reliance on China, the world’s top producer of critical raw materials, while generating shareholder value through rising demand for these materials as mass electrification takes hold across the globe. Shares of Leading Edge Materials are bucking this trend, having fallen by 54.84 per cent over the past five years, opening the door for active investors to verify and capitalize on what seems like an exponential opportunity.
Click here to read Leading Edge Materials’ latest investor presentation.
Join the discussion: Find out what everybody’s saying about these microcap stocks on the Imagine Lithium, INEO Tech and Leading Edge Materials Bullboards, and check out Stockhouse’s stock forums and message boards.
This is sponsored content issued on behalf of Imagine Lithium, INEO Tech and Leading Edge Materials, please see full disclaimer here.
