Growth Focus: Independence Group NL (IGO)

by Patrick Taylor

Growth Focus: Independence Group NL (IGO)

Our primary focus here is capital gain, we will select our stocks from the ASX Top 500 All Ordinaries Index.

Some opportunities are worth waiting for and we have been doing just that with Independence Group NL (IGO), though now might be the time to take a closer look at the integrated miner as it breaks through major technical resistance, backed by strong fundamental performance and forecasting.

Founded in 2000 and headquartered in Perth, IGO is a miner and producer operating in WA, NT and Victoria with assets spread across nickel, gold, silver, copper, zinc and lithium. The company combines steady organic growth with a reasonably active acquisition strategy that has built a well-diversified exposure to a commodity basket that is performing well and has strong growth expectations going forward to 2020.

After sales and earnings decreased in 2016 the company has seen fundamentals steadily increase throughout the last year, with earnings lifting by 9% in 2017 alone. Analysts expect a return to strong growth in 2018 with sales set to double and earnings forecast to jump by around 160%, with further strong growth set to continue into 2019. This mirrors rising consensus target prices as set by analysts, which even though current pricing is running at a 10% premium, these aggregate valuations have risen by more than 15% in the last three months alone.

While IGO is a large company, with a market cap over $3B, it has had a volatile pricing history defined by large and long-running price trends. The share price has wound its way through three major price cycles over the last 15 years and has seen booms of more than 500% and 600% followed by busts greater than 70% and 80%, but when in trend it tends to stay in trend for years. Above even this dynamic is the current fascinating situation where the whole of the history just described is contained underneath one 11 year linear resistance line… which broke in January 2018.

We have seen price move up through that linear resistance line and work against structural resistance around $5 which broke this month and has successfully converted that old resistance into new support this week. We see good positive momentum across short, medium and long-term timeframes with good support directly underneath and attractive resistance targets stretching far above current pricing.

There is an added point of interest in that there is a significant short interest of over 10% (of market cap) which could provide some extra impetus to an already attractive prospect with high potential for further gains. While volatility should be expected to continue, the technical and fundamental picture is very attractive and IGO looks like it is indeed ready to go.


This report was produced by Taylor Securities Pty Ltd, which is a Corporate Authorised Representative (Number 414063) of Bespoke Portfolio Pty Ltd (AFSL 341991). Taylor Securities and Patrick Taylor (Representative number 414064) have made every effort to ensure that the information and material contained in this report is accurate and correct and has been obtained from reliable sources. However, no representation is made about the accuracy or completeness of the information and material and it should not be relied upon as a substitute for the exercise of independent judgment. Except to the extent required by law, Taylor Securities and Patrick Taylor does not accept any liability, including negligence, for any loss or damage arising from the use of, or reliance on, the material contained in this report. This report is for information purposes only and is not intended as an offer or solicitation with respect to the sale or purchase of any securities or financial products. The securities or financial products recommended by Taylor Securities and Patrick Taylor carry no guarantee with respect to return of capital or the market value of those securities or financial products. There are general risks associated with any investment in securities or financial products. Investors should be aware that these risks might result in loss of income and capital invested. Neither Taylor Securities and Patrick Taylor nor any of its associates guarantees the repayment of capital. WARNING: This report is intended to provide general financial product advice only. It has been prepared without having regarded to or taking into account any particular investor’s objectives, financial situation and/or needs. Accordingly, no recipients should rely on any recommendation (whether express or implied) contained in this document without obtaining specific advice from their advisers. All investors should therefore consider the appropriateness of the advice, in light of their own objectives, financial situation and/or needs, before acting on the advice. Where applicable, investors should obtain a copy of and consider the product disclosure statement for that product (if any) before making any decision.

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