One business that caught my eye is Iofina (LSE:IOF), which specialises in the exploration and isolation of iodine as well as the production of speciality chemicals. At present, the company’s shares trade for 32p each and it has a market capitalisation just shy of £61m.

Here’s my take on the outlook for this penny stock.

A mineral in demand

Iodine is essential for human health. It plays a vital role in proper thyroid functioning and promoting hormone production for healthy metabolism. It’s estimated that up to a third of people worldwide are at risk of an iodine deficiency.

The price of iodine has risen steadily since early 2020, driven by demand for human health applications and X-ray contrast imaging agents. Analysts expect the market will continue to grow over the coming years.

This is good news for Iofina. The company has developed a method of extracting iodine from leftover brine in onshore oil and gas production. Its process is more environmentally friendly and cheaper than leaching nitrate ores mined from the Atacama Desert, which is the source of around 66% of the world’s iodine supply.

Strong financials

The company’s results for FY22 were encouraging. Revenue increased 8% to $42.2m and its average price per kilogram for sales of crystallised iodine rose 98% to an average of $71.20. In fact, the group saw improvement across a range of key metrics including EBITDA, profits, and cash flow.

In addition, the business also trimmed its net debt from $3m to $0.9m. This is a positive sign, considering Iofina’s balance sheet hasn’t always been this healthy. After rapid expansion in 2013, the share price had collapsed 98% by early 2016, weighed down by large debts and loss-making operations.

Regarding future expansion, the company’s focus is on expanding iodine production and its speciality chemicals business. It aims to develop new chemical compounds, reduce its reliance on its current oil and gas partners, and explore new geographic areas. It currently operates five extraction facilities in the Anadarko Basin in western Oklahoma.

Risks

Of course, Iofina is very exposed to iodine prices. Any turbulence in the market poses a clear risk if the company’s margins are squeezed as a result.

Moreover, although the firm has good relationships with energy companies operating in Oklahoma’s oil fields, there’s a limited number of fields that can be developed in the area. That said, the company isn’t near full capacity currently. Plus, it plans to diversify its revenue sources in the future.

Nonetheless, as things stand, this could potentially curtail long-term growth in the share price.

Why I’d buy this stock

Overall, it looks attractively valued to me and recent financial results have been very positive. If global demand for iodine continues to grow as the company expects, there’s considerable potential for the business to expand.

While I wouldn’t take too large a stake in any penny stock, given their volatile nature, this company could potentially help to boost my portfolio’s returns. If I had spare cash, I’d buy today.

The post 1 surging penny stock I’d buy today at 32p appeared first on The Motley Fool UK.

Still, if you do your research and spend time carefully choosing the most attractive small-caps, the returns available can be life changing.

Redt Energy (LSE: RED) is just one small-cap that may have the potential to revolutionise your portfolio’s returns. Formally known as Camco Clean Energy, Redt develops energy storage technologies, and while the company is still in its early stages, there’s been plenty of positive news flow over the past 12 months.

Redt is planning to ramp up the production of its liquid vanadium energy storage units over the next two years and as the company develops its manufacturing capacity, the cost of production per unit is expected to decrease considerably.

According to management, there’s already plenty of interest in the units from industrial groups, and City analysts expect big things over next two years. Sales of just £3.4m are expected this year but for 2017 analysts have pencilled-in sales of £18.5m, a staggering growth rate of over 400%. The City expects Redt’s pre-tax loss to narrow significantly over the next two years falling to £1.2m for 2017 with a profit expected in the years after.

With such an impressive growth rate on the cards, Redt could be one company to watch going forward.

Debt deal

The market seems pleased with a debt restructuring deal announced by Iofina (LSE: IOF) this morning with shares in the company rising by 10% in early trade. The restructuring deal will see the maturity date of Iofina’s existing convertible debts of $20m extended to 2 June 2019, and interest rates will be lowered from 6% to 5%. What’s more, to help with cash flows under the terms of the new agreement accrued interest will be rolled up into the loan principal so it can be paid at maturity.

Along with this new debt deal, one of Iofina’s existing creditors Stena Investment has agreed to extend an additional $10m credit line to the company to finance expansion plans. The details of this new credit deal are expected to be finalised within the next 30 days.

When it comes to small-cap investing, it’s often best to avoid the companies with high levels debt as if things don’t go to plan, shareholders will have to foot the bill for the company’s excessive spending. For example, right now if Iofina’s existing loans were converted, the debt would equate to around 45% of the group’s existing share capital.

A long way to go

Early-stage miner Amur Minerals (LSE: AMC) is another high-risk play. The company is still in the early stages of developing its nickel/copper Kun-Manie prospect in Far East Russia. Even though recent drilling results showed a higher grade of ore than was initially expected, Amur has a long road ahead of it before it can bring the mine into production. Indeed, last year the company informed the market that it would cost an estimated $312m to develop a permanent access road to the nearest suitable rail line for Kun-Maine.

With a market cap. of only £25m, Amur is facing the prospect of taking on a near-crippling amount of debt just to fund the construction of the access road.

The post 3 potential ten-baggers? Redt Energy plc, Iofina plc and Amur Minerals corporation appeared first on The Motley Fool UK.

Encouragingly, Premier Veterinary Group continues to rapidly grow the number of pets on its proprietary Pet Care Plan, with it investing heavily in the global expansion of the business. This will be aided by the disposal of the company’s veterinary clinics for £6.5m in December, with Premier Veterinary Group now being debt free and able to focus on core activities such as its Pet Care Plan and its veterinary pharmaceutical buying group businesses.

Clearly, today’s wider loss is disappointing for the company’s investors and this is reflected in the share price fall. However, with a clear strategy and a sound financial outlook, Premier Veterinary Group could be of further interest to risk-averse investors, but it may be prudent to await profitability before piling-in.

Price fall

Also falling heavily today are shares in Caza Oil & Gas (LSE: CAZA). They’re down by 15% despite there being no significant news released today by the company. Of course, Caza’s shares will be cancelled tomorrow (10 May) from trading on AIM after the company announced a share consolidation and cancellation on 3 May. This means that from 07:00 tomorrow, Caza will essentially become a private company after deciding to undergo a consolidation of 560,000,000 shares into one post-consolidation share, with Caza paying $0.00481 for each pre-consolidation share.

Clearly, the company has struggled to offer reason for cheer in the last year, with its shares falling by 95% during the period. And following its equity financing and debt restructuring, it believes that with common shareholders representing a tiny fraction of the total share capital of the business, it’s no longer appropriate for it to continue trading on AIM.

Up, up and away

Meanwhile, shares in Iofina (LSE: IOF) have soared by as much as 27% today after it released an encouraging set of results for the 2015 financial year. Iofina’s loss was reduced to $3.31m from $6.71m in the prior year as it was able to implement a number of cost reductions in the face of lower iodine prices. Furthermore, Iofina delivered record production at its IOsorb plants, with 569 metric tonnes of crystalline iodine being produced, which is a rise of 73% versus the previous year.

Looking ahead, further weakness in iodine prices could put more pressure on Iofina’s financial performance. However, with the business making progress with cost cuts as well as expanding its production capabilities, it may be of interest to less risk-averse investors. That’s especially the case since Iofina is forecast to move into profitability next year, which could boost investor sentiment yet further.

The post Why are Iofina plc (+27%), Premier Veterinary Group plc (-12%) and Caza Oil & Gas, Inc (-15%) among today’s major movers? appeared first on The Motley Fool UK.

An exciting year ahead

The release of the company’s full-year results could be the reason for this upturn in fortune for AFC’s share price. Although there appears to have been some profit taking immediately following the release, AFC’s results showed that the company continues to make encouraging progress. For example, last year it successfully tested multiple fuel cell stacks and completed milestone 10 of its POWER-UP programme. Furthermore, AFC has also signed heads of agreements with manufacturers and recently raised £3.6m through an oversubscribed placing.

Looking ahead, AFC is focused on the delivery of international contracts for the deployment of its fuel cell system and also on enhancing the operability of its fuel cell system. As such, 2016 could be another exciting year for the company and with cleaner fuels likely to become a more important part of the energy mix, AFC could be a worthwhile buy for less risk averse investors.

Better options elsewhere

Also rising today were shares in oil and gas engineering services business Plexus (LSE: POS) — they increased by 11%. Although there has been no significant news released by the company, its shares have soared by 26% in the last week alone. The latest piece of news released by the company was its interim results at the end of March where it outlined a plan to suspend dividend payments given the sharp reduction in exploration activity across the oil and gas sector.

While this may not be popular with many investors in the short run, the decision to suspend dividends seems to be a sensible one. That’s because it will help to shore up the financial standing of the business and could lead to a stronger company in the long run.

Looking ahead, Plexus is forecast to move into the red in the current year and to remain so in the following year. While it has the potential to turn its fortunes around, there appear to be better options available elsewhere in the oil and gas sector. Therefore, despite its recent share price run, Plexus does not seem to offer a sufficiently appealing risk/reward ratio to merit investment right now.7

On track to deliver

Meanwhile, shares in Iofina (LSE: IOF) were also among the major movers today, with them closing up a whopping 50%. This seems to be a carryover of yesterday’s performance when Iofina also rose significantly following the release of its first quarter update. It showed that the iodine explorer and producer remains on track to deliver its production guidance for the first-half of the year, with costs encouragingly being lower.

Looking ahead, Iofina’s dramatic share price rise could continue in the short run, although such a significant rise could also trigger a degree of profit taking. With Iofina forecast to move into profitability in the next financial year, investor sentiment could improve, although it remains a small and relatively high risk purchase at the present time.

The post Why Iofina plc, AFC Energy plc And Plexus Holdings PLC Are Among Today’s Major Movers appeared first on The Motley Fool UK.

Still digging

Raw materials goliath Vedanta Resources (LSE: VED) was recently dealing up over 2% in start-of-week trading after releasing exceptional production numbers.

The company churned out record quantities of copper cathodes, aluminium, silver and electricity between January and March, Vedanta reaping the fruits of improved efficiency, better ore grades and production expansions across its major commodity classes.

Also, Vedanta’s iron ore division finished the quarter with a production run rate of 800,000 tonnes per month, reflecting ongoing expansion work in Goa and the resolution of previous transport issues.

Major producers like Vedanta are hiking volumes to mitigate the impact of subdued commodity prices, of course, and to put higher-cost operators out of business. But such measures are casting a huge pall over future earnings as chronic supply/demand imbalances look set to persist.

The City expects Vedanta to punch losses of 128 US cents per share in the year to March 2016. And the firm is anticipated to remain in the red until fiscal 2018 at the earliest as commodity prices look set to languish. I believe the metals and energy giant is a risk too far at the present time.

Farming faller

The market was much less receptive to Carr’s Group (LSE: CARR) in Monday business, the diversified agricultural business dealing down 4% from Friday’s close at time of writing.

The company announced that pre-tax profit slipped 0.9% during September-February, to £10.5m, the result prompted by a 9.4% revenues decline.

Worryingly, Carr’s Group said “the UK agricultural market has suffered from the depressed farm gate milk and livestock prices and we expect this to continue through 2016 and 2017.”

These issues are expected to push earnings 1% lower in the period to August 2016, according to City forecasts, although a 3% rebound is anticipated for 2017. Sure, these figures produce relatively-low P/E ratings of 11.4 times and 11.1 times, respectively. But I believe today’s worrying market outlook could see brokers take the red pen to these earnings predictions.

Pumping higher

Iodine producer Iofina (LSE: IOF) has emerged as one of Monday’s big winners, the company shooting 89% higher from the end of last week.

Iofina announced that it had produced 124.6 metric tonnes of crystalline iodine between January and March. Although down from 127.9 metric tonnes during the corresponding 2015 period, the company had six of its IOsorb plants running last year compared with five during the last quarter.

Most promisingly, Iofina reaffirmed its target of producing 250-270 metric tonnes of iodine in the first half. And while the firm has seen iodine prices for large users fall below $25 per kilo, Iofina said that it “has seen recent signs of price stabilisation across the global iodine market.”

The City expects Iofina to record further losses in 2016 before bouncing into the black next year. However, 2017’s projection leaves the firm dealing on a P/E rating of 34.6 times. I reckon such a multiple remains far too heady given the still-patchy outlook for iodine values.

The post Should You Buy Vedanta Resources plc, Carr’s Group PLC & Iofina plc Today? appeared first on The Motley Fool UK.

The London-based business advised that like-for-like revenues had edged just 1% higher between April and September, to £37.7m. The impact of a weak euro, and what it described as “client budget weaknesses” caused first-half activity to slow, Creston noted, forcing the business to swallow a 73% pre-tax profit slump, to £1.1m.

The company has suffered from the impact of weaker trading by a small number of its larger retail and consumer tech clients, while changing advertising strategies from its healthcare customers has also hampered performance more recently.

On top of this, Creston endured a £2m impairment related to the closure of research arm FieldworkUK.com. All in all Creston now expects results for the 12 months to March 2016 to slightly miss previous predictions.

So is Creston a ‘buy’?

Well today’s news comes as somewhat of a shock, naturally. But more optimistic investors will point to Creston’s great track record of securing blue-chip customers and brands, a promising precursor to long-term growth. Indeed, the business signed up Logitech and Costa during the last six months, and Canon, Danone and Diageo all awarded Creston new work.

The City expects Creston to chalk up earnings growth of 6% and 5% for the years to 2016 and 2017 respectively, leaving the business dealing on ultra-cheap P/E ratings of 10 times and 9.5 times. When you factor in chunky dividend yields of 3.2% and 3.4% for these years, I believe current share price weakness could represent a lucrative dip-buying opportunity for patient investors.

Iodine play shaken up

Likewise, investor appetite for Iofina (LSE: IOF) has fallen off a cliff in Tuesday’s session, the iodine producer plunging to record lows before recovering some ground. Still, the business is currently trading at an 14% deficit to levels punched at Monday’s close.

Iofina advised that an earthquake close to one of its plants in northern Oklahoma has led the Oklahoma Corporation Commission to reduce water supply for chemical production. Although Iofina commented that “the ramifications for the Company’s iodine production are not certain,” it estimated that crystalline iodine output could fall by between 10% and 20% per year across its five facilities.

So is Iofina a ‘buy’?

Given that Iofina’s assessment of potential disruptions is unclear, cautious investors will take the company’s assertion that production should still hit 260 to 300 metric tonnes between July and December with a pinch of salt.

Iofina is already expected to extend its poor earnings story for a little while yet, and losses of 120 US cents per share are currently pencilled in for 2015. And although the City expects the business to finally bounce into the black next year, the impact of current production problems could easily put these projections to the sword.

The post Why Are Creston plc And Iofina plc Sinking Today? appeared first on The Motley Fool UK.

Tungsten (LSE: TUNG) and RM2 (LSE: RM2) are both falling this morning after the two companies issued interim trading updates. Pallet producer RM2’s trading update was the more disappointing of the two, and the market has reacted accordingly, sending the company’s shares down by as much as 30% in early trading. And it’s clear why the market has reacted in this way.

Based on feedback from customers, RM2 has decided to change the design of its pallets. Specifically, management has decided to change the friction coating method from powder coating to a gel-based system. This change has been made to address customers’ health, hygiene and safety needs as well as bringing efficiencies and cost savings to the manufacturing process.

However, while this change should benefit the company over the long term, RMs short-term production will take a hit. As a result, revenue and production numbers for the full year will be significantly below previous guidance. 

City analysts had been expecting RM2 to report revenues of £12.3m for 2015 and a pre-tax loss of £8.1m before breaking even during 2016. Production delays are likely to mean that it will now take longer for RM2 to generate a profit.

Still, demand for RM2’s pallets remains high and the group had $83m in cash at the end of 2014. So, there’s no clear reason to sell up just yet. 

Moving in the right direction 

The market has also reacted negatively to Tungsten’s relatively upbeat trading statement issued today. In a statement issued ahead of the company’s annual meeting, management revealed revenues were up 20% year-on-year during the first four months of the financial year. What’s more, all other key performance indicators seemed to be moving in the right direction.

Two new buyers had contracted to join the Tungsten Network in the period, and six existing buyers agreed contract renewals, at an average expected fee increase of 22%. Nearly 7,000 net additional e-invoicing suppliers were activated in the four-month period. 238 suppliers are now registered to use Tungsten Early Payment with 89 live.

After raising £17.5m earlier this year, Tungsten’s management believes that the company has sufficient cash resources to be able to deliver its current strategy. Management made the same statement a few months before the June capital raising. 

City analysts are expecting Tungsten to report a pre-tax loss of £18.3m for 2016 and a pre-tax loss of £5.3m for 2017. Based on these forecasts, Tungsten’s cash balance might not last long. 

Bright prospects 

Iofina’s (LSE: IOF) shares have slumped by more than 50% year-to-date, against the backdrop of challenging iodine market, where prices are below historical trends. Nevertheless, management has reacted quickly to the challenging environment by slashing costs and ramping up production.  

And thanks to these actions City analysts expect Iofina to report its maiden profit this year. Analysts are expecting a pre-tax profit of £0.1m for full-year 2015 on revenues of £16.8m. Earnings per share are expected to jump 641% during 2016 to 1.53p and on this basis Iofina is trading at a 2016 P/E of 12.5. If the company can meet these forecasts, it could be a great play for growth investors.

The post Could It Be Time To Sell Iofina plc, Tungsten Corp PLC And RM2 International SA? appeared first on The Motley Fool UK.

Three of today’s biggest fallers are banknote printer De La Rue (LSE: DLAR), iodine producer Iofina (LSE: IOF) and Irish oiler Providence Resources (LSE: PVR).

De La Rue

De La Rue’s shares fell by 9% to 500p on Wednesday morning, after the firm cut its dividend by 41% to 25p. The firm’s reported profits fell by 35% to £38.9m last year, while underlying earnings per share dropped 25% to 45.3p.

The problem seems to be that intense competition is driving down profit margins on bank note printing. De La Rue managed to achieve a 5% increase in print volumes last year, but only through “a tactical approach” to pricing. In other words, the firm lowered its prices to win more business.

However, today’s fall could mark the low point for De La Rue. It’s possible that the firm’s new chief executive, Martin Sutherland, is keen to get the bad news out of the way as quickly as possible.

What’s more, the firm’s shares now look quite reasonably priced. Based on today’s results, De La Rue is trading on an underlying P/E of 11.0 and a dividend yield of 5%. A rebound is possible.

Providence Resources

Irish oil explorer Providence struck it lucky with the Barryroe discovery in 2012, which has a mean oil-in-place estimate of around 1.8 billion barrels.

The problem is that Providence has been unable to secure a farm-out deal to finance the development of Barryroe.

Providence shares fell by another 9% this morning, after the firm admitted that it was still no closer to its goal. Although a provisional deal was agreed in February, it was dependent on the unidentified partner securing financing. This still hasn’t happened.

Providence shares have now fallen from a peak of almost 700p to just 25p. On the face of it, the shares offer value, but this company could also be a value trap.

At today’s oil price, Barryroe isn’t as attractive as it used to be. The firm has $24m of debt due for repayment over the next 12 months, and cash is tight, despite raising $28m through a placing earlier this year.

Providence shares are effectively a gamble on a farm-out deal. The firm has already failed to deliver for the last three years. I’d stay clear.

Iofina

Shares in iodine producer Iofina fell this morning, despite the firm reporting record revenue of $25.9m for 2014. One problem was that the firm also reported a record loss of $6.6m.

According to Iofina, iodine prices fell sharply last year. This meant that while Iofina’s production rose by 92% to 327.7 tonnes, revenue only rose by 35%. Iofina ended last year with just $7.0m in cash and $18.8m of debt, of which $15m is due for repayment in May 2017.

In today’s results, the firm said that earnings before interest, tax, depreciation and amortisation (EBITDA) were positive during the first quarter of 2015. However, it’s not clear to me whether this will translate into an operating profit, unless iodine prices improve.

The problems experienced by Iofina and Providence highlight how small commodity stocks can be the victims of market circumstances, even with good assets.

The post Why Are De La Rue plc, Iofina plc And Providence Resources PLC Tumbling Today? appeared first on The Motley Fool UK.

With this in mind, do these two small-caps fall into the former or the latter bracket? Are Iofina (LSE: IOF) and Gulf Keystone Petroleum (LSE: GKP) (NASDAQOTH: GFKSY.US) worth buying, or should they be  avoided at the present time?

Iofina

Iodine producer, Iofina, has seen its share price plummet by 7% today, after the company released a statement saying that it intends to delay publication of its final results until 25 May. The reason given for the delay is that the company needs more time to finalise the results, which appears to have spooked investors and could cause Iofina’s share price to come under further pressure between now and the release of the results.

Of course, Iofina’s most recent update showed that the company is making encouraging progress. For example, it said in mid-April that production had almost trebled in the first quarter of 2015 (versus the same quarter of the previous year), with March being a record month. Furthermore, it remained confident that the closure of one of its plants will not alter its production targets for the first half of the year.

However, Iofina also revealed in its most recent update that it took part in a hearing on February 19 with regards to an objection to its Montana water permit, with a ruling expected by June 6. This means that the end of May/start of June period looks set to be a crucial one for the business and, while it remains on-track to become a lower quartile cost iodine producer, it may be prudent to wait for the results and the outcome of the hearing before buying a slice of Iofina.

Gulf Keystone Petroleum

The major problem for investors in Gulf Keystone Petroleum is political risk, with this being a major factor in the company’s share price decline of 59% in the last year. And, while a low oil price is a challenge for the whole sector — and it looks set to remain at a relatively low ebb — realistically there is a decent chance that, over the medium to long term, the price of oil will increase beyond $60 per barrel.

However, the unrest in Iraq/Kurdistan may not be resolved in the short to medium term and, with Gulf Keystone having a balance sheet that is relatively highly leveraged, cash flow could become a problem in time. Certainly, the company is doing all of the right things and has a slick operation in Iraq/Kurdistan that is producing and selling oil — the problem, though, is receiving payment for it.

As such, and while Gulf Keystone could have a very bright future, now does not appear to be the perfect time to buy it. Moreover, with valuations in the oil sector being relatively low, there appear to be better opportunities elsewhere for capital gains over the medium to long term.

The post Is Now The Perfect Time To Buy Iofina plc And Gulf Keystone Petroleum Limited? appeared first on The Motley Fool UK.

Although we don’t believe in timing the market or panicking over every stock fluctuation, understanding how a business is performing, competing and changing is vital to sensible investment.

What: The share price of Iofina (LSE: IOF) — a company that specialises in the production of iodine and iodine specialty chemical derivatives — has rocketed 27% in trading so far this morning, following publication of an update on the company’s September production and the preliminary grant of a water permit in the State of Montana.

So What: Iofina says that there was a month-to-month production increase of 18.6%, which rose to 28 metric tonnes (MT) of crystallised iodine. That means that Iofina achieved its forecast monthly production target for September.

The company also announced that its wholly-owned subsidiary, Atlantis Water Solutions, has now been preliminarily granted a water permit by the State of Montana’s  Department of Natural Resources and Conservation.

The permit allows for diversion of  water  (which is expected to be used in Dawson, McCone, Richland, Roosevelt and Sheridan counties in Montana for the majority beneficial use by oil field services companies for oilfield development), development of a water diversion site, and construction of ten-bay fill station depot.

Now What: Having now met its monthly production target for September, the company reiterated its year-end forecast for the production of 325–350 MT of crystallized iodine.

Iofina says that the next stage of the water permit process is a brief “public notice” period and that unless there are any objections (which is says is unlikely), the preliminary permit will be granted until the Atlantis Water Depot is completed, followed by the granting of a final permit.

With regard to what it describes as the “non-core water project”, Iofina says that it will be looking for a joint venture partner, or specific project financing, exclusively within Atlantis Water Solutions, rather than funding it with Iofina’s current cash-on-hand.

President and CEO Dr. Tom Becker commented: 

“Our iodine production from our IOsorb plants continues to improve.  We remain focused on optimization of these plants and I am pleased with the results to date.”   

“The preliminary granting of Iofina’s water permit in Montana is a great accomplishment for the Company and we look forward to updating the market with regards to the future plans of our water division, Atlantis Water Solutions.“

Even with today’s massive rise, Iofina’s share price remains 67% down on this time in 2013, since when the AIM All-Share has only dropped 5%. And Iofina’s share price trails its index over five years, too, recording a 30% fall, compared with a 17.5% gain by the AIM All-Share.

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