Rates are on the rise as inflation expectations pick up. In its latest meeting, the US Fed signaled that we can expect policy movement ahead in response to rising growth and inflation expectations.
And, in the latest fund manager survey from BofA, fund managers are more certain that growth and inflation will pick up in the months ahead than at any time in history. The survey also showed that money managers believe the number one tail risk for markets right now is rising inflation.
As a result, markets are increasingly rewarding bets that fare well in an inflationary growth context.
With that in mind, we take a look at several such stocks, including Pan American Silver Corp (NASDAQ: PAAS), Viking Energy Group Inc (OTC US: VKIN), and Intrepid Potash Inc (NYSE: IPI).
Pan American Silver Corp (NASDAQ: PAAS) frames itself as “the world’s second-largest primary silver producer”, providing enhanced exposure to silver through a diversified portfolio of assets, large reserves and growing production.
The company notes, “We own and operate mines in Mexico, Peru, Canada, Argentina and Bolivia. In addition, we own the Escobal mine in Guatemala that is currently not operating. Pan American has a 27-year history of operating in Latin America, earning an industry-leading reputation for operational excellence and corporate social responsibility.”
PAAS recently announced results for 28 additional holes drilled at the La Colorada skarn deposit and an update of the project development.
“Definition drilling continues to add confidence and scope to the skarn deposit, confirming wide, high-grade zones with intercepts up to 277-meter drill widths. Geological and resource modeling are currently underway to provide the foundation for a preliminary economic assessment,” said Christopher Emerson, Pan American’s Vice President Business Development and Geology. “The 65,000-meter annual drill program prioritizes infill drilling during the first half of 2021, moving to step-out and exploration drilling in the second half of the year.”
It will be interesting to see if the stock can break out of its recent sideways action. Over the past week, the stock is net flat, and looking for something new to spark things.
Pan American Silver managed to rope in revenues totaling $560.9M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 5.1%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($355.5M against $460.9M, respectively).
Viking Energy Group Inc (OTC US: VKIN) bills itself as an independent exploration and production company focused on acquiring, enhancing, and developing oil and natural gas properties in the Gulf Coast and Mid-Continent regions. It has assets in Texas, Louisiana, Mississippi, and Kansas.
It is also currently the majority-owned subsidiary of Camber Energy Inc (NYSEAMERICAN: CEI), and a merger agreement is in the works that could increase the value of both companies through geographic and operational synergies.
VKIN recently announced performance metrics, which continued to show tremendous promise. According to its filing, Viking recorded new top marks in topline performance, posting 2020 revenues above $40 million, which is up over 400% from 2018.
James Doris, President and Chief Executive Officer of both Camber and Viking, commented, “We are pleased with Viking’s results given the challenges faced in 2020. In many respects the year was about survival for E&P companies given the unprecedented price environment and market conditions, and not only did we endure thanks to the commitment and perseverance of our entire team we also managed to improve in key areas, including increasing overall revenues and reducing debt at the Viking level. We remain focused on executing on our strategy and forging a path toward profitability.”
Over the past month, shares of the stock have been pulling back into key support, which could offer oil investors an interesting opportunity.
Viking Energy Group Inc (OTCMKTS: VKIN) managed to rope in revenues totaling $8.8 million in overall sales during the company’s most recently reported quarterly financial data – a figure that represents a rate of top line growth of 16.9%, as compared to year-ago data in comparable terms, paired with nearly $8 million on hand in cash.
Intrepid Potash Inc (NYSE: IPI) frames itself as a diversified mineral company that delivers potassium, magnesium, sulfur, salt, and water products essential for customer success in agriculture, animal feed, and the oil and gas industry.
Intrepid is the only U.S. producer of muriate of potash, which is applied as an essential nutrient for healthy crop development, utilized in several industrial applications, and used as an ingredient in animal feed. In addition, Intrepid produces a specialty fertilizer, Trio, which delivers three key nutrients, potassium, magnesium, and sulfate, in a single particle. Intrepid also provides water, magnesium chloride, brine, and various oilfield products and services.
IPI recently announced the updates to its fertilizer pricing that offer important clues as to the company’s pricing power. For example, effective May 17, 2021, Intrepid increased its Trio® price by $20 per ton on all product grades. Trio® price is now posted at $100 per ton above the 2020 summer-fill value. In response to fill programs announced by competitors in early May, Intrepid increased its potash price by $20 per ton last week. Potash price is now posted at $150 per ton above the 2020 summer-fill value.
“Tightening supply and strong farmer economics have Intrepid on pace for record domestic deliveries of Trio® in the first half of 2021.” said Bob Jornayvaz, Intrepid’s Executive Chairman, President, and CEO. “At today’s commodity prices, Trio® continues to provide significant nutrient value to both row crops and chloride-sensitive crops such as citrus and potatoes. The potash fill program allowed for a limited order period for historic volumes and distributors are restocking warehouses ahead of what will likely be another strong fertilizer application in the second half of the year.”
If you’re long this stock, then you’re liking how the stock has responded to the announcement. IPI shares have been moving higher over the past week overall, pushing about 9% to the upside on above average trading volume.
Intrepid Potash generated sales of $71.5M, according to information released in the company’s most recent quarterly financial report. That adds up to a sequential quarter-over-quarter growth rate of 47.5% on the top line. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($36M against $78.9M, respectively).
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