Amerigo Resources is a shining exception to almost all other penny stocks thanks to its stellar and lasting returns.
The firm has returned a stellar 225% gain to investors over the last 4 years. Compare that to the benchmark S&P Global Natural Resource index, up a mere 42.6% over the same time. (The S&P itself gained 59.2% over the last four years.)
Even more unheard of is the copper producer’s high and sustainable 7.4% dividend yield. We expect this well-resourced junior miner to add significantly to investor gains as the global economy rebounds from inflationary pressures and sluggish growth.
AMERIGO RESOURCES LTD. (Symbol ARG on Toronto) processes copper and molybdenum from the waste rock of the El Teniente mine in Chile. That site is the world’s largest copper operation. Amerigo also has other deals to process material at the nearby Colihues and Cauquenes tailings ponds.
Amerigo has continued to buy back a lot of its shares. Share buybacks reduce the number of shares outstanding. That boosts earnings per share since profit is divided among fewer shares. The improved per-share ratio makes the stock more attractive to investors.
This further spurs the share price.
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The company returned $14.6 million to shareholders in 2023 in dividend payments, as well as $2.6 million through the purchase of 2.3 million common shares. Amerigo’s shares yield a high 7.1%.
Meanwhile, due to its strong cash flow, the company has paid its first Performance Dividend of $0.04 a share. The dividend was paid on August 6, 2024. In the latest quarter, the company’s cash reserves reached targeted levels, allowing more than the equivalent of an additional quarterly dividend to be paid to shareholders.
The $0.04-a-share dividend is in addition to Amerigo’s regular $0.03 quarterly dividend.
Penny Stocks: Long-term copper demand is a major driver going forward for Amerigo Resources
Amerigo currently gets 94% of its revenue from processing copper. The remaining 6% comes from its output of molybdenum, which is used in steelmaking.
Amerigo reported lower copper production in the latest quarter.
The company’s copper production rose 2.9%. Specifically, output for the three months ended June 30, 2024, climbed to 14.0 million pounds (at a production cost of $1.96 per pound) from 13.6 million pounds (at a cost of $2.37) a year earlier.
After dropping to as low as $2.17 U.S. per pound in mid-March 2020, copper rose steadily to a record price of $5.02 on March 6, 2022. Fears of supply chain disruptions and historically low stockpiles amid rising copper demand drove prices higher.
However, copper prices then dropped—before climbing to a new high of $5.16 on May 20, 2024. Copper has since moved down to today’s price of $4.12. That’s due to concerns that high interest rates will continue to slow global economies. As well, investors worry about the pace of China’s economic recovery.
Longer term, the outlook for copper looks positive. From a supply standpoint, due to a lack of new mines, long-term copper shortages could result. And as economies recover, it will push up demand—and that includes demand from segments such as electric vehicles (EVs) and green-energy related operations.
Copper market fundamentals suggest continued strength going forward. The copper supply/demand imbalance also presents an investment opportunity for those interested in copper-mining stocks.
All these factors bode well for the company and its share price going forward.
Recommendation in Power Growth Investor: Amerigo Resources Ltd. is a buy for aggressive investors.
We hope you benefited from this analysis of Amerigo Resources Ltd. The company is just one of the top-performing stock picks of our Power Growth Investor newsletter.
Of course, not all our picks over the years have produced these kind of spectacular gains. Some, in fact, have led to losses. But all portfolios need superstar stocks like this to offset those inevitable losses.
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This post was originally published in April 2023 and is regularly updated.
