Word broke on Monday morning that the Metals Company (TMC) has been approved to raise gross proceeds of as little as $27 million or up to $38 million through a registered direct offering.
The company specializes in deep-sea floor mining, pulling low-impact battery metals from seafloor polymetallic nodules. And after struggling to retain its footing in the stock market since 2021, this news could be its saving grace.
Certain investors have agreed to a securities purchase of around 13.46 million common shares of TMC stock without par value. The agreement also includes Class A warrants to purchase up to 6.73 million more shares of common stock.
With a price of $2/share, the shares being sold are at an 82% premium to where TMC actually sat at the time of this news – just over $1.10/share. Since then, though, shares have popped to $1.40 so far today in Tuesday’s trading session.
CEO of the company Gerard Barron released a statement expressing his satisfaction over the deal. He says that despite the challenges of raising capital in tumultuous markets like what we face today, the size, quality, and value of the company’s resource portfolio have attracted a diverse range of shareholders. In other words, TMC is too good to ignore – according to Barron, at least.
When we last talked about the Metals Company this time last month, the stock had climbed 160% in just a few months. It had managed to surpass $2/share, but we expressed our doubts about continuing this trend.
Today, the stock appears to be in the midst of forming another rally though. TMC has gained more than 26% in the last week, much of which can be attributed to this news. So, is it worth buying TMC today?
We’ve refreshed our viewpoint through the VectorVest stock analysis software to see what’s changed – and have 3 things you need to see before you make your next move with this stock.
TMC Still Has Very Poor Upside Potential and Poor Safety, But the Timing is Poor Too Now
The VectorVest system issues a clear buy, sell, or hold recommendation for any given stock at any given time. It’s based on a proprietary stock rating system that boils down all you need to know into 3 simple ratings: relative value (RV), relative safety (RS), and relative timing (RT).
Each of these ratings sits on a simple scale of 0.00-2.00, with 1.00 being the average. Stocks above the average indicate better performance in a category and vice versa. As for TMC, here’s what we’ve found:
- Very Poor Upside Potential: The RV rating compares a stock’s long-term price appreciation potential (forecasted three years out) to AAA corporate bond rates and risk. This offers far superior insights than a simple comparison of price to value alone. As for TMC, though, the RV rating of 0.14 is very poor. That being said, it’s a slight improvement from last month.
- Poor Safety: From a risk standpoint, TMC still has poor safety with an RS rating of just 0.65. This rating is derived through an analysis of the company’s financial consistency & predictability, debt-to-equity ratio, and business longevity.
- Poor Timing: Where things have gotten worse for TMC is in the stock’s price trend. While the RT rating of 1.00 was right at the average last month, it’s slipped to just 0.50 - which is poor. This rating is based on the direction, dynamics, and magnitude of the stock’s price movement day over day, week over week, quarter over quarter, and year over year.
The overall VST rating of 0.49 is very poor for TMC. So, despite the buzz around raising $27m+ in capital, it’s fair to question whether this stock belongs in your portfolio.
Should you cut losses and move on if you’re currently invested? Or, is there any reason to buy this stock at a great value as it appears to be in the midst of reversing a poor price trend? Get a clear answer on your next move with TMC through a free stock analysis at VectorVest today.
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VectorVest advocates buying safe, undervalued stocks, rising in price. Even though TMC has popped 26% on news of raising capital, the stock has very poor upside potential with poor safety and timing.
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