Cassiar Gold Corp. (TSXV: GLDC, OTCQX: CGLCF)
Revitalizing the Cassiar Gold District in British Columbia, Canada
Investing is mostly about taking the brave first step and staying committed for the long term. There are times even a small investment in growth or undervalued companies can yield substantial returns over longer period. Take these two TSX stocks as examples：Torex Gold Resources (TSX:TXG) and NuVista Energy (TSX:NVA), from which a mere $500 can kickstart a potential journey to high returns.
Torex Gold Resources is a Canadian mid-tier gold producer with a market capitalisation of approximately C$1.7 billion and production assets in Mexico. With the company’s development project, Media Luna, scheduled to be completed later this year, the company expects productivity to increase and will generate positive free cash flow in 2025. Moreover, the project is expected to help the company extend the life of its assets beyond 2033.
Despite a planned one-month shutdown for Media Luna later this year for handover work, the company is on track to meet its annual gold production target of 400,000 to 450,000 ounces. Torex reported achieving record production in the first quarter of 2024 and expects its all-in sustaining costs to be in the range of $1,160 to $1,200 per ounce of gold. This suggests sustainable profitability, especially as the gold price rises above the record level of $2,300 per ounce in 2024. Torex stock currently trades at an attractive P/E ratio of 6.2. Forward price-to-earnings growth (PEG) is only 0.1, which means the stock is extremely undervalued, given the potential long-term earnings growth of gold stocks. According to legendary value investor Peter Lynch, a PEG ratio of 1.0 implies that the stock is reasonably valued, while ratios below 1.0 mean that the potential for future earnings growth is underappreciated.
NuVista Energy is a C$2.6 billion market cap oil and natural gas producer with a strong financial position, primarily extracting oil and gas owned in the Western Canadian Sedimentary Basin. Since 2018, the company has increased its production capacity each year and expects to produce between 83,000 and 87,000 barrels of oil equivalent per day (boe/d) in 2024, a significant increase from 2020’s 50,000 boe/d. Management is confident that the Company’s annual production will continue to grow at a rate of 10% to 15% per annum and reach 100,000 boe/d by 2026.
At a historical P/E of 7.8, NuVista Energy’s stock is clearly undervalued relative to the industry average P/E of 12. The forward P/E is even lower at 6. The stock trades at just 0.9 tangible book value, as the rest of the industry averages 5.1 its tangible book value. NuVista also maintains a low level of debt in its capital structure and has a history of share repurchases. Since 2022, the company has repurchased 29.7 million shares, reducing its total share count by nearly 10%. Management spends approximately 75% of its free cash flow annually on its share repurchase programme, and the continuation of this strategy means that the company’s future earnings and cash flow requirements will be reduced, increasing the fair value of the remaining common shares.
Overall, Torex Gold Resources and NuVista Energy shares offer potential opportunities for long-term investors. It would be best if investors can continue to conduct thorough research and consider a variety of other opportunities to broadly diversify their portfolios each time they enter into a new transaction.
