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Summary
- The S&P/TSX Capped materials index rose by 0.66% on Monday, while the broader S&P/TS Composite index was 0.81% higher.
- Source Energy Services Ltd., a White frac sand seller, rose 1.17% intraday at Monday’s close.
- Lundin Gold Inc., a gold exploration company, recorded intraday gains of 2.18% as at the close of trade on Monday.
On Monday, the broad market index, the S&P/TSX Composite, rose by 0.81% by the end of trade. Meanwhile, the S&P/TSX Capped materials index soared by 0.66% as at Monday’s close.
The materials sector is tightly linked to economic cycles. In a booming economy, the demand for raw materials and industrial products is typically high. Additionally, materials often act as hedges against inflation.
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Investing in the materials sector can also be a great way to carry out diversification in one’s investment portfolio. On that note, here are two minerals sector stocks that outperformed the market on Monday:
Source Energy Services Ltd. (TSX:SHLE)
Source Energy Services Ltd is a Canadian firm specializing in the manufacturing, provision, and delivery of Northern White frac sand. It also distributes various bulk materials used in completion processes.
For Q2 2023, Source Energy generated US$ 102.0 million in sand revenue, marking an US $8.4 million increase compared to Q2 2022. Attained a total revenue of US $126.9 million, representing a 14% rise from Q2 2022, which is the third-highest quarterly revenue since the inception of Source.
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Additionally, the company recorded a utilization rate of 82% for the Canadian Sahara fleet for the quarter. It also achieved a gross margin of US $24.9 million and an adjusted gross margin of US $30.2 million. These figures represent increases of 51% and 39%, individually, when compared to Q2 2022.
At Monday’s closing price of US$ 6.90, SHLE has a P/E ratio of 23.36x. Based on the day’s closing price, SHLE saw intraday gains of 1.17% and YTD gains of a whopping 283.33%.
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Lundin Gold Inc. (TSX: LUG)
Lundin Gold Inc. concentrates its efforts on operating the its gold project on Fruta del Norte and expanding its collection of mineral rights in Ecuador.
Excluding treatment and refining charges, the company earned US$ 244 million in revenue in Q2 2023. The costs of operating in cash were US$ 644 and US$ 802 per ounce of gold sold, respectively.
From its operations, the company generated US$ 162 million in cash flow. EBITDA amounted to US$ 149.9 million, and adjusted EBITDA reached US$ 149.6 million. The quarter’s net income stood at US$ 63.1 million. When excluding the derivative gain and related taxes, the adjusted earnings were US$ 59.4 million, equivalent to US$ 0.25 per share.
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At Monday’s closing price of US$ 16.9, LUG has a P/E ratio of 27.64x and a dividend yield of 3.19%. As at Monday’s close, LUG recorded intraday gains of 2.18% and YTD gains of 25.63%.
