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Three stocks under $1

James Dunn shares three prospects under $1.

There’s always good value somewhere to be found on the stock market – and sometimes, that value is not always in the numbers, but more in the “story”. Here are three prospects under $1 that I think look very appealing.

 

1. Bellevue Gold (BGL, 81 cents)

Market capitalisation: $835 million

Three-year total return: 10.5% a year

Analysts’ consensus price target: $1.475 (Thomson Reuters, two analysts), $1.40 (FN Arena, one analyst)

Bellevue Gold is getting closer to the breakthrough status of “producer,” with the company saying that its namesake mine, located near the Western Australian town of Leinster, should cough up its first gold in the June quarter of 2023.

That will be a big milestone for the market, because quite simply, Bellevue will be one of the best gold mines in the world. With a high resource grade of 6 grams per tonne (g/t) of gold and forecast production of 200,000 ounces a year (in years one to five) at an all-in sustaining cost (AISC) – a figure that incorporates not only the “cash cost” of production but all the costs that allow production to be sustained – of just $922 (US$655) an ounce. Over the initial eight-year mine life – which should be lengthened by further drilling and upgraded resource/reserve estimates – the estimated AISC is $1,014 an ounce. Mining analysts say those numbers would put Bellevue in an exclusive global club of only about seven other mines in tier-one mining jurisdictions with that kind of figure: clearly, if gold were to hold its ground anywhere near its present price of $2,600 an ounce – let alone get near its the all-time $A high of more than $2,850 an ounce, seen in August 2020 – Bellevue Gold’s margins would look fat indeed.

After striking a $200 million project loan facility deal with Macquarie Bank in December, in conjunction with its existing cash reserves of $173 million, Bellevue Gold is fully funded through to production and cashflow and will be able to maintain its multi-pronged exploration program, which will be conducted in parallel with project development.

The construction of the processing plant is expected to kick off in the third quarter of 2022. It might add to the investment case for many readers that Bellevue also plans to become Australia’s “greenest gold miner.” 

 

Bellevue Gold (BGL)

Source: nabtrade

 

2. Airtasker (ART, 72 cents)

Market capitalisation: $300 million

Three-year total return: n/a (listed March 2021)

Analysts’ consensus price target: $1.27 (one analyst)

Airtasker is an e-commerce marketplace for local services; another way to describe it is the service-on-demand platform for the “gig economy” connecting “customers,” people and businesses who need work done, with “taskers,” who are people and businesses who want that work. The platform allowing customers to post a job ad or service requirement, which is seen by Airtasker’s army of tradies and other professionals, who complete everyday tasks such as handyman jobs and domestic cleaning right through to tax consultancy and legal advice.

The idea is to deliver a simple online experience for the customers to use local services, and create flexible working opportunities and income for the taskers.

Airtasker boasts a marketplace of 4.3 million people and creates a new work opportunity approximately every 17 seconds. At January 2022, the company says it has created more than $1.7bn worth of work for its taskers.

Airtasker says the Australian market for local service industries is $52bn; its gross marketplace volume (GMV) figure is running at $153 million, meaning that it has captured 0.3% of its total addressable market (TAM) in Australia. While the company concedes that it has “a long way to go in Australia,” its half-year update, released in January, asked investors to contemplate replicating that market penetration of 0.3% in its two main overseas expansion targets, the US and the UK.

In the $70bn UK market, 0.3% would give ART $210 million worth of GMV. But in the $500bn US market, we’d be talking $1.5bn worth of GMV. That’s the potential that investors have to consider.

Airtasker kicked off in the US market in September last year, launching Kansas City, Dallas, Atlanta and Miami as its four “key cities.” The company is still in the first stage of marketplace development, which it calls “zero to one,” in which the focus is on creating a steadily increasing flow of job opportunities (posted tasks) in order to build tasker engagement, but growth has been “rapid”. In the UK and Ireland, where operations began in 2017 and 2019 respectively, Airtasker is in the second “one to 100” stage of marketplace development, in which it continues to drive posted tasks while increasing emphasis on tasker engagement and GMV. In the half-year to January 2022, GMV grew 12%.

Overall, at the half-year, GMV grew at 23.2% (up 39% for the quarter) and revenue rose by 16.6% (up 37.5% on the previous quarter). The average task price jumped 23%, to $255.

This prompted Airtasker to lift its second-half guidance. In May 2021, prior to lockdown, ART was guiding for FY22 GMV of $200 million, with $105 million coming in the second half – it now expects the second half to produce up to $110 million in the second half, giving full-year GMV of up to $194 million, equivalent to a pre-lockdown figure (for better comparison with the initial guidance) of $205 million–$208 million.

While analysts expect strong revenue growth in FY22 and FY23, breakthrough to profitability is not seen. That will have to wait. But broker Morgans – which was lead-manager and underwriter to the IPO – retains a price target of $1.27 on the stock. Growth in the US is going to be the big thing for investors to watch.

 

Airtasker (ART)

Source: nabtrade

 

3. Vmoto (VMT, 39.5 cents)

Market capitalisation: $111 million

Three-year total return: 91.4% a year

Analysts’ consensus price target: $1.05 (one analyst)

Electric scooter and moped company Vmoto is headquartered in Perth, with its own manufacturing plant in Nanjing, China, and design conducted in Australia and Europe. Vmoto produced its first prototype in 2009 and now sells 30,000 units a year around the world. When the prototype came out, the main market was going to be Asia, to capitalise on the Asian markets’ desire for cheap mobility; but now, Vmoto is firmly hitched to the ESG and net-zero-emissions tailwinds, at the forefront of the EV revolution. In particular, Vmoto is targeting the rapidly growing global markets in last-mile delivery and ride-sharing mobility.

Vmoto operates through three main brands: Vmoto (its own brand, aimed at the value market in Asia), E-Max (also a proprietary brand, targeting the international business-to-business [B2B] markets with a high-end premium product) and Super Soco (a partnership with Chinese group Soco Shanghai, that Vmoto sells into international business-to-customer [B2C] markets). Last year, the company has launched its new premium brand, VMOTO, under which it will supply high-quality products to international markets, focusing on Australia, Europe and the United States. This product line is led by the new VMOTO STASH electric bike. Under this strategy, Super Soco will remain the main entry-level brand. The company has also just exhibited a new B2B/Fleet product, temporarily named the “Concept F01” scooter.

Another big deal in 2021 was an agreement with Nasdaq-listed Italian-American electric scooter company Helbiz – whose focus is mainly on the “first-mile/last-mile” transportation problem of high-traffic urban areas – to expand its existing partnership. Vmoto will supply an additional 2,000 electric mopeds to Helbiz, to deploy in various cities in Italy.

In the fourth quarter of 2021, Vmoto sold a total of 7,410 units, bringing total unit sales for FY21 (Vmoto uses the calendar year as its financial year) to 31,275 units, up 33% on 2020 and a 57% increase on 2019. International unit sales for FY21 were a record 29,945 units, up 40% on 2020 and up 74% on 2019. About 93% of units were sold into international markets, with just under 7% of units sold into the Chinese market.

As a result, Vmoto expects to achieve FY21 net profit of between $7.5 million and $7.8 million, which would more than double the 2020 net profit of $3.7 million, and represent a record figure for the company. It has firm international orders of 12,488 units as at 31 December 2021, providing a very solid runway for 2022 sales. Vmoto is in good financial shape, with a net cash position of $18.6 million on the balance sheet, with no bank debt, as at 31 December 2021.

Vmoto looks to be a unique exposure on the ASX to the EV and lower-emissions trends – it isn’t widely covered at all by analysts, but it has built real substance and scale in its markets, and I think it’s a stock that’s got a lot of scope for further gain. Trading at 14.1 times expected 2021 earnings and 13.2 expected 2022 earnings, it appears to be nice value.

 

Vmoto (VMT)

Source: nabtrade

 

 

All prices and analysis at 14 February 2022. This information was produced by Switzer Financial Group Pty Ltd (ABN 24 112 294 649), which is an Australian Financial Services Licensee (Licence No. 286 531This material is intended to provide general advice only. It has been prepared without having regard to or taking into account any particular investor’s objectives, financial situation and/or needs. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice. This article does not reflect the views of WealthHub Securities Limited.


About the Author
James Dunn , Switzer Group

James Dunn is an author at Switzer Report, freelance finance journalist and media consultant. James was founding editor of Shares magazine, and formerly, the personal investment editor at The Australian. His first book, Share Investing for Dummies, was published by John Wiley & Co. in September 2002: a second edition was published in March 2007, and a third edition was published in April 2011. There have also been two editions of the mini-version, Getting Started in Shares for Dummies. James is also a regular finance commentator on Australian radio and television.