Is Pan Global Resources Inc (CVE:PGZ) Cheap And High Growth?
Pan Global Resources Inc (TSXV:PGZ), a CA$18.65M small-cap, is a metals and mining operating in an industry which can be affected by shifts in the housing market, as many produced raw materials are components of construction projects. Basic material analysts are forecasting for the entire industry, negative growth in the upcoming year , and an overall negative growth rate in the next couple of years. Unsuprisingly, this is below the growth rate of the Canadian stock market as a whole. In this article, I’ll take you through the sector growth expectations, and also determine whether Pan Global Resources is a laggard or leader relative to its basic materials sector peers. Check out our latest analysis for Pan Global Resources
What’s the catalyst for Pan Global Resources’s sector growth?
As a whole, the basic materials sector seems like it has reached maturity in its life cycle. Companies appear to be highly competitive and consolidation seems to be a natural trend. However, the industry is still facing many emerging trends including the reduction of waste, raw material inflation, and innovation in global supply chain management. Over the past year, the industry saw growth in the forties, beating the Canadian market growth of 13.30%. Pan Global Resources lags the pack with its sustained negative earnings over the past couple of years. The company’s outlook seems uncertain, with a lack of analyst coverage, which doesn’t boost our confidence in the stock. This lack of growth and transparency means Pan Global Resources may be trading cheaper than its peers.
Is Pan Global Resources and the sector relatively cheap?
The metals and mining industry is trading at a PE ratio of 10.94x, below the broader Canadian stock market PE of 16.29x. This means the industry, on average, is relatively undervalued compared to the wider market – a potential mispricing opportunity here! Though, the industry returned a similar 7.31% on equities compared to the market’s 9.22%. Since Pan Global Resources’s earnings doesn’t seem to reflect its true value, its PE ratio isn’t very useful. A loose alternative to gauge Pan Global Resources’s value is to assume the stock should be relatively in-line with its industry.
Next Steps:
Pan Global Resources has been a metals and mining industry laggard in the past year. If Pan Global Resources has been on your watchlist for a while, now may be a good time to dig deeper into the stock. Although it delivered lower growth relative to its materials peers in the near term, the market may be pessimistic on the stock, leading to a potential undervaluation. However, before you make a decision on the stock, I suggest you look at Pan Global Resources’s fundamentals in order to build a holistic investment thesis.
1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
2. Historical Track Record: What has PGZ’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Pan Global Resources? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
