Are Sirius Minerals PLC, AFC Energy plc And LGO Energy PLC Set To Soar?

Are these 3 stocks worth buying right now? Sirius Minerals PLC (LON: SXX), AFC Energy plc (LON: AFC) and LGO Energy PLC (LON: LGO)

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

This week was a huge moment for Sirius Minerals (LSE: SXX), the global potash industry and the UK mining sector. That’s because the company received the final go-ahead to press on with building its potash mine in Yorkshire, with it obtaining the final permits from authorities.

This will allow it to build the first new mine in the UK in over 45 years and it is set to become the largest potash mine in the world. As such, it is a major project which has the potential to supply fertiliser on a vast scale. And, with the crop studies being undertaken by Sirius Minerals showing that its polyhalite fertiliser offers a more resilient crop, demand could prove to be relatively strong once production commences.

Of course, before then there is a lot of hard work to do. Clearly, the world’s largest potash mine is likely to cost £billions and, while the project is relatively enticing, Sirius Minerals may have some difficulty in obtaining the necessary capital at the desired rate and within its chosen timeframe. That’s at least partly because sentiment in the wider mining sector is rather downbeat and investors may choose to give preference to established, profitable companies rather than new mines.

Despite this, Sirius Minerals holds considerable long term potential and, for less risk averse investors, it remains a company with relatively high long term growth potential.

The same is true for alkaline fuel cell producer AFC Energy (LSE: AFC). It continues to make encouraging progress with its eleven step plan, with in being on-track to deliver its first commercial full-scale operation of the KORE system in Germany by the end of 2015. Upon completion, AFC is set to turn its focus to developing further commercial agreements, with it having already signed agreements to deploy its technology in Korea and in the Middle East as the world continues to shift to using cleaner and more sustainable sources of energy.

Despite it being on track with its programme, shares in AFC Energy have disappointed in recent months. For example, they have fallen by 42% in the last three months despite encouraging news flow. A possible reason for this is profit taking, with AFC Energy’s shares having risen by 464% in the year to July and being capable of further gains over the medium to long term. Although relatively risky, the potential for growth remains strong.

Meanwhile, shares in oil producer LGO Energy (LSE: LGO) have declined by 75% in the last six months and the key reason for that is a disappointing update regarding its Goudron Field, released earlier this week. It stated that the company will experience significant cost implications from a mechanical problem which was encountered in September and reported to the market on 18 September. Since then, unsuccessful recovery attempts and other costs totalling approximately $1.9m have been incurred, with LGO Energy also being potentially liable for the cost of the lost downhole equipment of approximately $1.5m.

Furthermore, the net oil pay observed in one of LGO Energy’s wells was exceptionally thick and the loss of anticipated production from the well is due to have a negative impact on the company’s cash flow forecasts. This has caused the stipulated liquidity ratios in the company’s borrowing agreements to drop below the required level and, while LGO Energy is in discussion with its lenders, in the meantime no further amounts can be drawn against its credit facility.

Clearly, the news is hugely disappointing and places additional uncertainty on the company’s long-term future. As a result, it may be prudent to watch, rather than buy, LGO at the present time, although it remains a company with a relatively appealing asset base and long-term growth potential.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens owns shares of AFC Energy. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Black father and two young daughters dancing at home
Investing Articles

1 FTSE 250 stock I own, and 1 I’d love to buy

Our writer explains why she’s eyeing up this FTSE 250 growth phenomenon, and may buy more shares in this property…

Read more »

View of Tower Bridge in Autumn
Investing Articles

The FTSE 100 is closing in on 8,000 points! Here’s what I’m buying before it’s too late!

As the FTSE 100 keeps gaining momentum, this Fool is on the lookout for bargains. Here's one stock he'd willingly…

Read more »

Investing Articles

3 ideas to help investors aim for a million-pound Stocks & Shares ISA

The UK has a growing number of Stocks and Shares ISA millionaires, and this plan may be one of the…

Read more »

Illustration of flames over a black background
Investing Articles

2 red-hot UK growth stocks to consider buying in April

These two growth stocks are performing well, but can they continue to deliver for investors through 2024 and beyond?

Read more »

Charticle

Is JD Sports Fashion one of the FTSE 100’s best value stocks? Here’s what the charts say!

The JD Sports Fashion share price remains a wild ride during the first quarter. Could it be one of the…

Read more »

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »