Will Sirius Minerals plc Make You An ISA Millionaire?

This Fool runs the rule over Sirius Minerals (LON: SXX). Could the shares make you an ISA millionaire?

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Thousands of private investors start off with a dream of making millions on the stock market, enabling them to give up the hamster wheel of life and relax in the knowledge that they’ll never run out of cash.

Living the dream?

The harsh reality however, is that the average investor actually underperforms the market by around 3% annually. Even investors who’ve placed their hard-earned cash in some top performing funds can still find they’ve underperformed, not because of excessive charges, but because of moves in and out of the funds – usually at the wrong times.

This isn’t just a factor with funds. Even the most sophisticated investors can sell out of shares after they’ve doubled or tripled. Look at a couple of examples:

Passive income stocks: our picks

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

  • Firstly, and probably one of the most famous UK success stories is online fashion retailer ASOS. £1,000 invested 10 years ago would currently be worth £32,500.
  • Second, and probably not so well known is accesso Technology Group. That £1,000 invested here 10 years ago would now be worth a staggering £98,500!

However, as with funds, it’s unlikely that many investors would have ridden the roller-coaster constantly over the last decade in order to reap the rewards that have materialised.

And if we’re honest with ourselves, it’s highly unlikely that we’ll see that same sort of share price growth over the next 10 years – leaving investors to look elsewhere for the stars of tomorrow.

Potential multi-bagger?

So with a view to finding a company whose shares have the potential to make me many multiples of my initial investment I thought that I’d take a look at the developments over at Sirius Minerals plc (LSE: SXX) – a share that often causes much excitement among us private investors.

On 17 March the company released a DFS, or to those in the know a Definitive Feasibility study. It revealed there was indeed a world-class fertilizer business with the capacity for production of around 20m tonnes per annum (Mtpa) with initial installed capacity of 10Mtpa.

As can be seen from the chart below – the shares sold-off – but why?

Buy on the rumour – sell on the news?

As can also be seen from the chart, the shares more than doubled in price in the lead up to the actual report being released. So the decline in the share price could simply be traders locking in their profits and looking to buy back into the share more cheaply as investor interest ebbs and flows as is often the case with stocks such as these.

It could also be put down to the fact that there will need to be a significant outlay in order to access the $15bn net present value (NPV), rising to $27bn on commencement of production. The $3.5bn-plus cost to get the project to the production stage is many multiples of the current market cap of the company. Combine that with the proposed construction schedule, which equates to nearly five years before first production. That means initial production would hopefully start in early 2021 and full ramp-up to the 10 Mtpa production rate would be reached in late 2023 or early 2024. So profitability is a long way off and investors will see significant dilution and the company take on a fair amount of debt.

However, don’t buy any shares just yet

Because my colleague Mark Rogers – The Motley Fool UK’s Director of Investing – has released this special report.

It’s called ‘5 Stocks for Trying to Build Wealth After 50’.

And it’s yours, free.

Of course, the decade ahead looks hazardous. What with inflation recently hitting 40-year highs, a ‘cost of living crisis’ and threat of a new Cold War, knowing where to invest has never been trickier.

And yet, despite the UK stock market recently hitting a new all-time high, Mark and his team think many shares still trade at a substantial discount, offering savvy investors plenty of potential opportunities to strike.

That’s why now could be an ideal time to secure this valuable investment research.

Mark’s ‘Foolish’ analysts have scoured the markets low and high.

This special report reveals 5 of his favourite long-term ‘Buys’.

Please, don’t make any big decisions before seeing them.

Secure your FREE copy

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Dave Sullivan has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Up 20% in a month, should investors consider buying Marks & Spencer shares?

Shares in retailer Marks and Spencer have surged ahead over the last month, despite a cyberattack. Roland Head takes a…

Read more »

Charticle

Here are the latest growth and share price targets for Nvidia stock

Ben McPoland checks out the latest forecasts for Nvidia stock to assess whether it might be worth considering for a…

Read more »

Growth Shares

Yikes! This could be the most undervalued growth stock in the FTSE 100

Jon Smith flags up a growth stock with a low price-to-earnings ratio and a share price back at 2020 levels…

Read more »

Abstract bull climbing indicators on stock chart
Investing Articles

3 beaten-down FTSE 250 shares to consider buying before the next bull market

Paul Summers thinks brave investors should ponder buying some of the FTSE 250s poor performers before they recover strongly.

Read more »

Investing Articles

Gold prices soar while the Fresnillo share price slumps. What gives?

With a gold bull market in full swing, this Fool argues that the falling Fresnillo share price may not remain…

Read more »

Investing Articles

2 FTSE 100 shares I’m avoiding like the plague right now

While the FTSE remains packed with opportunity, many of the index's blue-chip shares could be at risk as trade tariffs…

Read more »

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

Here’s how an investor could aim for a million buying under 10 shares

Christopher Ruane explains why doing less, not more, of the right things could be the key to success as an…

Read more »

Investing Articles

Could this new risk cause a stock market crash?

Tariffs and a potential recession are two major stock market risks right now. But there’s another risk that concerns Edward…

Read more »