Q: What is your opinion of VNP . JP Tardif feels this rare earth stock due to China trade restrictions will double in the next two years. Thanks for your analysis.
5i Research Answer:
VNP is up 111% in the past year, but it is important to note the company has not created long term value. It went public at $3 more than 16 years ago (now $3.90). Not a great return. Its high was above $13 in 2008. Debt is high, about 3X cash flow, and it is starting to improve earnings, with 50% growth expected next year. Insiders own 5%, the Caisse owns 18% and one fund owns 12%. Cash flow is improving and it is getting some broker upgrades. It is priced OK, and the momentum is improving. The sector (solar, rare earth) looks good. We are generally cautious on it given its weak history, but agree it looks better than it has for some time. It should be considered high risk, though.