The Motley Fool

Is Zanaga Iron Ore Co Ltd a once-in-a-lifetime opportunity to make a million?

In the last three months, shares in Zanaga Iron Ore (LSE: ZIOC) have risen 225%. That’s a stunning performance which shows that investors are becoming increasingly positive about the prospects for the business. However, could such a sudden rise be followed by an equally fast fall? Or does the stock have the potential to help its investors become millionaires?

Improving outlook

Positive news flow has been the key reason for the rise in the Zanaga share price in recent months. The company announced at the same time as its first-half results that there may be the potential for production in the near term. It is considering a small-scale, early production start-up project. This could transform the company from being an exploration-focused business to also having production capacity. This may help to de-risk the company’s outlook, as well as provide an improved financial outlook due to the revenue that may be generated from the project.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Clearly, there is no certainty that production will commence over the medium term. And the company’s share price in the short run is set to be closely linked to how the potential production angle pans out. However, with the prospects for the iron ore industry having improved in recent months, Zanaga’s potential as a producer and as an exploration company could be significant.

Certainly, its share price is likely to remain volatile. Its small size and uncertain outlook mean that investor sentiment could change rapidly. However, for investors who are less risk-averse and who are upbeat about the prospects for the wider mining sector, it could be a means of adding diversification as well as upbeat capital growth prospects to their portfolios for the long run.

High risks

As mentioned, Zanaga appears to be a relatively high-risk share to own at the present time. Also offering high risks but for a different reason is specialist filtration and environmental technologies group Porvair (LSE: PRV). The company reported a positive trading update on Friday which showed that revenue growth in the year to 30 November was 6%. Underlying revenue growth was 11% overall, 13% in the Microfiltration division and 1% in the Metals Filtration division.

Encouragingly, the company’s earnings are forecast to be ahead of management expectations. This helped to push the shares as much as 9% higher following the release of the trading update. However, they now trade on a price-to-earnings (P/E) ratio of 24, which suggests that they may be overvalued. Furthermore, with earnings due to rise by just 3% in the current year, their price-to-earnings growth (PEG) ratio of 8 seems excessively high.

As such, now may be the right time for investors to avoid Porvair. While its performance from a business perspective may continue to be positive, it lacks a margin of safety. This means that its risk/reward ratio may be unfavourable.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Peter Stephens has no position in any shares mentioned. The Motley Fool UK owns shares of Porvair. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Where to invest £1,000 right now

Renowned stock-picker Mark Rogers and his select team of expert analysts at The Motley Fool UK have just revealed 6 "Best Buy" shares that they believe UK investors should consider buying NOW.

So if you’re looking for more top stock ideas to try and best position your portfolio in this market, then I have some good news for your today -- because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.