Today is the first trading daily of June and it’s time to start this month with a bang. My top stock pick for April and May soared so a lot of people have been anticipating this new stock pick. It is Inca One Gold Corp, which trades as INCAF on the US OTC market and under the ticker symbol IO on the Canadian TSXV exchange. As you know I am very bullish on gold and believe that the best way to beat the markets from a stock trading perspective is to be in the best stocks in the best sectors that are already beating the market. And this brings us to small cap mining stocks.
Now first take a look at the chart for Inca One Gold. As you can see it is just now breaking out, but I believe this is just the start of a big run thanks to its fundamental metrics. As for price action the last time it broke out was when it went through 20 cents in April. It then doubled before that month was over. So as it breaks out now will it go up another 50% or even 100% from here before this month of June is over?
The thing is from a valuation perspective I believe this stock deserves to more than double. In bull markets most small cap exploration gold stocks reach market caps of $25 million USD. These are companies that do not produce gold, but do drilling of properties to prove up a deposit worthy of mining. Inca One though has a market cap of only $10 million USD and it produces gold!
The company operates two milling facilities in Peru that process gold ore from small scale artisan miners – the first public company granted the right to do so by the Peruvian government. Together they are capable of processing up to 450 tonnes of gold ore a day and put the company on track to produce over 25,000 ounces of gold a year.
On May 12 Inca One announced earnings for the first quarter. It revealed that the company produced 5,289 ounces of gold and generated over $7.7 million in gold sales. According to Yahoo Finance this gives the company’s stock a super low price to sales ratio of 0.24.
You see in the small cap world there are hidden pockets of opportunity like this when valuations are cheap. You can take a look at the corporate presentation for Inca One Gold by going here:
https://www.incaone.com/_resources/presentations/corporate-presentation.pdf
There is some interesting things that the company has announced recently that are also unique for mining stocks. I’ll do an update on them soon and will have more to say about this stock.
-Mike
Disclosure: Mike Swanson owns shares of Inca One Gold. Because it is a small cap stock with a market cap of less than $100 million he has put himself in a trading blackout on the stock and will not buy or sell a share of it for at least 30-days from the date of this post.
