The New Year has begun and it's time to look at what could be one of the best stocks to buy in 2022. One thing we saw happen last year is that the inflation trend became undeniable. At the start of last year there were some who mistakenly said that inflation would be "transitory." But by the Fall that phrase vanished from the Federal Reserve and now everyone knows inflation is real. That means that inflation related investments should do well this year.
Commodities and gold and silver are at the top of the list. Gold spent last year consolidating in a big range and by the end of the year started to tick back up. The thing is that consolidation phase has been going on for so long that few people are paying attention to gold right now. That is bringing opportunities to buy mining stocks cheap before a higher gold price could take them up to a much higher price from where they are trading at now.
I own big cap mining caps and small cap mining stocks, but when gold goes up the mining stocks that tend to go up the most are small cap producing mining stocks. That's where my top stock pick for the month, Inca One Gold, comes in. It trades as INCA on the Canadian stock exchange and as INCAF on the US OTC, which is where I bought my shares.
The stock is cheap because it has a market cap of less than $10 million USD. In gold bull runs almost all small cap gold stocks get to markets cap of around $25 million USD. I like buying stocks when they are this cheap.
However, unlike most small cap gold stocks, Inca One Gold generates nice revenue, because it produces gold. In fact it has sold over one hundred and twenty-five million dollars worth of gold in the past six years.
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 with the capability to increase that production.
Here is a picture of one of its mills.
What Inca One Gold does is operate this mill as a full-service milling facility, with weighing, sampling and metallurgical test facilities on site, along with crushing, grinding and carbon-leaching circuits, full material handling, desorption, smelting and tailings disposal facilities. The Company purchases gold-bearing material at discount to spot prices from legal small-scale miners after careful and systematic testing. Mineral is either stockpiled or processed to produces loaded carbon which is desorbed and smelted on site to produce its own gold dore. The company then sells the gold on the world market and even sells some ounces of the gold online itself, which is pretty cool.
They have their own bullion store and shareholders can even buy gold from them at a discount, cheaper than what they'll get typically from a regular gold dealer.
In its last quarterly report the company reported gold sales of $9.7 million USD. It reported that the sales represented "an all time high for any third Quarter, surpassing the Company’s previous best third quarter by 13% and the prior Q2 2021 sales by 26% (US$7.7 million). The strong sales performance was driven by the continued quality and quantity of gold bearing material delivered to both plants fueling production.
More importantly, it revealed that it increased its gold production by 17% from the second quarter with a 26% sales boost. “I am delighted to see the continued increases in ore supply fueling our record production and sales pace,” stated Inca One President and CEO, Edward Kelly. “I would like to thank our Peruvian team for setting additional records in both ore purchases and ore processing. We have deployed working capital effectively and I am excited to see the operational results for the remaining months in 2021.”
The stock is in a good position on its chart for an entry point, as it is not that far from its December low. With small cap stocks there is a seasonal trend where they often trade weak into the end of the year and then rally once the New Years passes in a "January effect." Check out the chart yourself.
You can find the whole company PDF presentation with full details with this link here.
This looks like a no brainer buy for me right now. The stock took a dip in early December when the new virus variant impacted a lot of stocks and stabilized into the end of the year. I like it here.
Check out the quote and the charts here: Go INCA! Go INCAF!
-Mike Swanson
Disclosure: Mike Swanson owns shares of Inca One Gold. Because Inca One Gold 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 (01/04/2021). Wallstreetwindow.com, is owned by Timingwallstreet, Inc., which is being compensated by a third party (Leadgopher LLC DBA Pinnacle Ad Network) to conduct an investor awareness advertising and marketing campaign for Inca One Gold. This third party paid Timingwallstreet Inc., $13,500 to produce and disseminate this and other similar articles and send traffic to them through paid advertising campaigns for 30-days. This compensation should be viewed as a major conflict with our ability to be unbiased, more specifically: This communication is for entertainment purposes only. Never invest purely based on our communication. For more on trading risks read our policy statement by clicking here.
