Cielo Waste (TSXV:CMC) rose 1394% YTD: Is the green stock worth buying?

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Cielo Waste (TSXV:CMC) rose 1394% YTD: Is the green stock worth buying?

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 Cielo Waste (TSXV:CMC) rose 1394% YTD: Is the green stock worth buying?
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  • Cielo Waste Solutions Corporation announced the repayment of an existing loan of C$ 12 million and the purchase of a 60-acre industrial site.
  • It witnessed a single-day stock price surge of 17 per cent and increased 1,394 per cent on a YTD basis.
  • The company is generating renewable fuel from waste.

Cielo Waste Solutions Corporation (TSXV: CMC) expanded by a whopping 17 per cent in a single day on August 24, 2021, and a total volume of 3.41 million shares exchanged hands on this day. The single-day jump came after the company announced the purchase of a 60-acre industrial site in Fort Saskatchewan, Alberta, and the repayment of its existing loan of C$ 12 million

The purchase of the asset was seen as a cost-saving deal as commented by the management, and also the repayment of the principal amount of C$ 1 million marks the completion of the existing loan.

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Also Read: 2 TSX Waste Management Stocks to Explore Amid COVID-19 surge

Cielo stock’s performance and financials

The C$ 819.37 million market cap waste management company refines construction and municipal waste, turning it into renewable energy and fuel. Its focus is to provide waste management solutions and renewable diesel.

Cielo is progressing fast to develop and commercialize its proprietary technology. The use of this technology enables turning landfill waste into high-quality renewable energy.

The stock closed at C$ 1.27 on Tuesday, August 24, and traded roughly 23 per cent below its 52-week high of C$ 1.65 (July 13, 2021). It traded nearly 3,529 per cent above its 52-week low of C$ 0.03 (August 28, 2020).

Following this massive surge, the waste management scrip expanded 222 per cent within six months and spiked up by 1,394 per cent in the last nine months. But over the past year, the stock price ballooned 3,529 per cent. On a year-to-date (YTD) basis, the stock price increased by 1,394 per cent.

The company incurred a net loss and comprehensive loss of C$ 2.41 million for the quarter ending January 31, 2021, an increase from a loss of C$ 2.11 million a year ago. An interest and accretion expense of C$ 0.36 million was incurred in the same quarter.

Cielo Waste Solutions incurred a net loss of C$ 6.15 million in FY20, up from a loss of C$ 2.76 million in FY19.

On the valuation metrics front, the company held a price-to-book (P/B) ratio of 63.5 and a debt-to-equity (D/E) ratio of 2.11 (on August 24)

Also Read: 3 Canadian waste management stocks to buy & hold through 2021

Is purchasing Ceilo stocks worth considering?

As per the latest report, the company purchased an industrial site spanning 60 acres and a 31,750-square-foot building. The company also repaid its existing loan of C$ 12 million and the final principal balance of C$ 1 million was paid immediately before the purchase of the industrial site. The industrial site is located in Alberta.

On August 4, 2021, Cielo announced the closure of a convertible debenture of C$ 4 million from its balance sheet. The proceeds were to be used for the factory-built in Fort Saskatchewan in the Alberta region.

The senior leadership of Cielo is marking its progress to reduce dependence on petroleum, thereby reducing the emissions of greenhouse gases (GHG). The company has engineered a new electric system that increases biomass feedstock and the production of renewable fuel, reducing the usage of sulfur.

The company collaborated with the University of Calgary to finalize the desulfurization and design process of the technology. The commercialization and the commissioning of the plant were done in FY20. The intended use of the plant is to reduce emissions and recover more from the stream of waste materials, reusing and sterilizing the oil extracted from the waste materials.

At the outbreak of the pandemic, the management decided to temporarily stop the plant's normal operations.

The company's management re-commissioned the plant on August 11, 2020, after modifying and adding new equipment to the plant. As per the management commentary, on January 27, 2021, new cooling equipment was added to the plant to cut down the temperature.

Bottom line:

The use of industrial and municipal waste to generate renewable fuel and the motive to reduce greenhouse gases can be seen as a positive move by investors.    


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