Part of the difficulty about being a genuine contrarian investor is that you have to go against the crowd. This means that when theres a buzz arounda particular stock, you studiously avoid investing. But as soon as nobody else is talking about the company, you should be looking to buy-in. Its counter-intuitive, but it works.
Sirius Minerals has been quietly progressing
Last year there was a lot of chatter about small-cap mining firm Sirius Minerals (LSE: SXX). For those who dont know the story so far, this business had discovered huge deposits of potash in the North Yorkshire Moors. This potash is akey, and highly valued,ingredient in fertilizer. All Sirius needs to do is mine and sell this mineral, and it should make a mint.
Thats why the share price rocketed to 23p in the spring of last year, as excitement among small investors reached fever pitch. Sirius shortly afterwards obtained planning permission for its potash mine. With that hurdle negotiated, the company seemed set fair to start mining, finally turning all that expectation into profits.
But since the summer of 2015 the excitementseems to have lessened. Arethere good reasons for this? Yes and no. The company is quietly progressing but there have been hiccups, including recent delays toa feasibility report that wont be out until March 2016. This report should reveal further details about Siriuss plans. The potash price has also fallen, along with the price of all commodities. But there have been no show-stoppers, and I expect Sirius to still make agood profit once mining gets under way.
Yet the Sirius share price has halved since last spring, falling to 12.25p. If youre looking to gain exposure to this mining play, there has never been a better time to buy.
GVC, one of the fastest-growing betting companiesglobally
Another fast-growing company with a falling share price thatI think has real potential is GVC (LSE: GVC), owner of the Sportingbet brand. This company reached a high of 492p in September 2015, but it has now fallen back to 428p.
The main news flow about GVC is that it has taken over another business thats growingrapidly, online betting companyBwin, whichis the firm behindFoxy Bingo and Partypoker. I expect the newly-formed concerns rapid expansion to make itone of the fastest-growing betting companies in the world. As such, at its currentvaluation, it looks cheap.
The share price has fallen since the acquisition, making this the ideal time to buy into GVC. I expect the market to push the companyhigher in the long-term, as the online betting sector continues to boom.
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Prabhat Sakya has no position in any shares mentioned. The Motley Fool UK has recommended GVC Holdings. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
