Robinhood Markets Inc

Robinhood Markets Inc (NASDAQ: HOOD) is the creator of the modern financial services platform. Moreover, it is one of the most popular online brokerage firms.

Investment Highlights – Watch at USD 34.94

• Around 16% of US-listed companies worth more than USD 10 billion declined on the first day of trading.
• The pioneer of zero-commission stock buying, HOOD, was expected to perform well driven by retail investors. However, the stock went down by around 9.13% from the offer price of USD 38.00 on the first day of trading.
• On the liquidity front, the current ratio had slightly declined from 1.25x during FY19 to 1.23x for FY20.

One Day Share Price Chart

 (Source: Refinitiv; Analysis done by Kalkine Group)

Considering the decline on the first day of trading, we have given a "WATCH" stance on Robinhood Markets Inc at the current market price of USD 34.94 (as on 30 July 2021, 11:20 AM ET), while we will suggest fresh buying after identifying growth catalysts for HOOD.

American Resources Corporation

American Resources Corporation (NASDAQ: AREC) is engaged in coal mining and coal processing operations, located in eastern Kentucky.

Investment Highlights – Speculative Buy at USD 2.15

• AREC had forecasted substantial growth in FY21 revenue and projected it to be ranging from USD 55 million to USD 75 million.
• The Company had managed to narrow down the net loss during FY20 as compared to FY19.
• AREC got succeeded in achieving 99.5% purity of Neodymium (rare earth element) from waste magnets.
• From a technical standpoint, the stock is hovering between the lower Bollinger band and middle Bollinger band, indicating an upside potential in the stock price.
• Moreover, the 14-day RSI (~39.81) is inching towards the oversold zone and supporting the upside potential in the stock price.

Key Risks

• The manufacturing PMI in the US had posted a decline for the first time in the last 11 months during June 2021.
• According to the consensus estimates, the Company would incur a net loss for the next three quarters.
• The fluctuation in commodity prices may hamper the growth prospects.

Recent News

On 20 July 2021, AREC stated that it had appointed Jeff Peterson as a senior member to strengthen the American Rare Earth division.

Q1 FY21 Financial Highlights for the three months period ended 31 March 2021 (as of 12 May 2021)

 (Source: Company Result)

• On the profitability front, the Company had posted a net loss of negative USD 0.14 per share during the period.
• The Company had incurred an interest expense of USD 491,113 during Q1 FY21.
• The Company had cash & cash equivalents of USD 7.09 million as of 31 March 2021.
  

One Year Share Price Chart

 (Source: Refinitiv; Analysis done by Kalkine Group)

Valuation Methodology: Price/Earnings Approach (NTM) (Illustrative)

Conclusion

The Company had announced the accelerated progress for the commercialization of its rare earth element ("REE") electrolysis processing technology. Moreover, the Company had announced a collaboration with Texas Tech University to enhance the implementation and cell development of the electrolysis facility. Furthermore, the strengthening of the balance sheet would provide AREC the required financial flexibility to achieve the growth plans. The stock made a 52-week High and Low of USD 8.02 and USD 1.15, respectively.

Considering the bright growth prospects, good financial outlook and valuation conducted above, we have given a "Speculative Buy" stance on American Resources Corporation at the current market price of USD 2.15 (as on 30 July 2021, 11:20 AM ET) with a lower-double digit upside potential based on 12.66x Price/NTM Earnings (approx.) on FY22E earnings per share (approx.).

*The reference data in this report has been partly sourced from REFINITIV.

*Depending upon the risk tolerance, investors may consider unwinding their positions in a respective stock once the estimated target price is reached.

Disclaimer

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