Why Canada Nickel Stock Jumped 10% Yesterday

Canada Nickel Company Inc. (TSXV:CNC) stock surged 10% to start this week after a promising batch of acquisitions.

| More on:
grow dividends

Image source: Getty Images

Canada Nickel (TSXV:CNC) is a Toronto-based company that explores and discovers nickel sulphide assets. Shares of Canada Nickel jumped 10% on November 22. The stock has increased 75% in 2021. What is behind the stock’s recent jump? Let’s jump in and find out.

Nickel prices have soared over the course of the pandemic

In early 2018, I’d looked at some of the top base metals stocks to snatch up in the middle of a broader bull market. Commodities have been on a tear since the beginning of 2021.

The spot price of nickel has climbed 23% in the year-to-date period. Will this momentum continue? Chinese research house Antaike recently projected that nickel prices will ease up in 2022. The global market is set to swing into a surplus on the back of improved production, as pandemic disruptions are expected to dissipate.

Canadians have wrestled with surging inflation in 2021. Indeed, inflation reached 4.7% in the month of October. This was the fastest rate of inflation since February 2003. Investors looking to hedge against rising prices may want to dip into the commodities space. This has proven to be a very good strategy over the course of this year. Indeed, Canada Nickel has climbed all the way back from a valuation below the $0.50 mark in early April 2020.

Here’s why Canada Nickel has surged in late November

This week, Canada Nickel announced that it had acquired 13 additional properties in 18 separate transactions. The move further consolidates its strong position in the Timmins, Ontario region. These acquired properties reportedly have target structures that are 40 times the scale of the company’s current main zone resource.

CEO Mark Selby was very enthusiastic about the deal. He hailed it as a “transformational milestone” that is on par with the discovery of its flagship Crawford property. Selby stated that this will drive Canada Nickel to “become a leader of the next generation of nickel supply — large, scalable, low carbon nickel supply.”

The company unveiled its third-quarter 2021 results on September 15. Canada Nickel is still in the exploration and discovery stage. It has delivered weak revenue growth in the first nine months of 2021. However, that does not mean that investors should dismiss this stock.

Canada Nickel has significantly expanded its total assets compared to the same period ending October 31, 2020. The Timmins property acquisitions has generated positive momentum for the nickel-focused stock.

Should you look to add this nickel stock right now?

Like any miner with small revenues and a focus on exploration and discovery, investors will need to embrace some measure of risk if they choose to jump on Canada Nickel. Moreover, there is limited financial data available to investors for a company that is still very young and only recently debuted on the TSX Venture exchange.

That said, I’m still bullish on base metals like nickel as we look ahead to the New Year. The recent move by Canada Nickel should spur investors to monitor this stock in the early part of this decade.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Investing

Silver coins fall into a piggy bank.
Tech Stocks

How to Turn a $500 TFSA or RRSP Into $50,000

Are you looking to convert a $500 TFSA into $50,000? A little discipline and patience can help you achieve it.…

Read more »

Pot stocks are a riskier investment
Cannabis Stocks

5 Things to Know About Cannabis Stocks Before 2023

Cannabis stocks like Canopy Growth (TSX:WEED) are struggling, but there are positives to draw on as well.

Read more »

STACKED COINS DEPICTING MONEY GROWTH
Stocks for Beginners

3 Best-in-Class Stocks to Build Long-Term Wealth

Looking for stocks that might create generational wealth over the long term? Here's a top growth, value, and income stock…

Read more »

TFSA and coins
Dividend Stocks

TFSA Couples: How to Invest for $777 of Passive Income Each Month

The TFSA or Tax-Free Savings Account can be used to buy and hold a portfolio of blue chip dividend stocks…

Read more »

A close up image of Canadian $20 Dollar bills
Dividend Stocks

Investing in the Stock Market Could Turn Your $1,000 Into $100,000: Here’s How

The stock market can convert a $1,000 regular investment into $100,000 without making too risky bets. Here’s a simple strategy…

Read more »

Bank Stocks

3 Top Stocks to Buy Now in a Once-in-a-Decade Opportunity

Given their discounted stock prices, these three quality stocks offer a once-in-a-decade buying opportunity.

Read more »

Various Canadian dollars in gray pants pocket
Stocks for Beginners

Here’s an Absolutely Brilliant Way to Earn Passive Income

Here’s a simple and unique way to earn passive income that does not involve working more, buying a property, or…

Read more »

Make a choice, path to success, sign
Stocks for Beginners

Canadian Investors: 2 Once-in-a-Generation Buying Opportunities

You can grab these two once-in-a-generation buying opportunities in Canada right now to get super rich in the long term.

Read more »