In the world of overlooked or under-the-radar Canadian growth stocks, The Metals Company (NASDAQ: TMC) is still one of my top picks for long-term investors.
My bullish view of this deep-sea mining company is relatively simple. With the rise of AI, machine learning, and so many other trends that rely on electrification, we’re going to need plenty more batteries. And with the geopolitical environment shifting significantly in recent years, finding companies that are based in North America is very important to the overall energy security discussion that regulators and lawmakers are pursuing.
Of course, looking at the chart above, it’s been a relatively bumpy ride for investors in this name thus far. Here’s why I think this recent dip from its peak is one worth buying.
Source: Getty Images
Is now the time to add exposure to this sector?
TMC and other North American-based metals companies have been on the rise of late. Part of this has to do with rising commodity prices overall. But a great deal of this move has to do with what I mentioned before — an increasing focus on domestic producers of key minerals used in the production of batteries and other technologies.
With TMC stock sinking from a recent high of more than $10 per share to around $5 per share of late (today’s surge has brought this stock close to the $6 level), we’ll have to see where TMC ends the year.
But I’m of the view that the long-term trends underpinning this sector are likely to continue. As more investors focus on alternative mining methods to get us the critical minerals we need, this is a company that could grab more of the spotlight over time.
How fast can TMC become profitable?
Given the fact that TMC is still in its very early stage of development, with initial expeditions showing strong results and some permitting activity bolstering its stock price, this is a company that’s still burning through plenty of cash.
That said, with more than $100 million in cash on its balance sheet, there’s ample runway for the company to initiate commercial operations.
I’d expect to see some initial losses out of the gate, as TMC ramps up production. But with most of the key pieces in place for this company to start deep-sea mining, and given the direction prices are headed for many of the key minerals the company mines, TMC is one stock I think is being overlooked relative to its overall potential.
Yes, this is an overlooked and speculative growth stock for investors to consider. But it’s a bet I’m definitely behind, given the company’s leverage to key growth trends and its positioning in a nascent market.
