Can Sirius Minerals PLC, RM2 International SA & AFC Energy plc Grow Into World-Beaters?

Are investors set for stellar returns from Sirius Minerals PLC (LON:SXX), RM2 International SA (LON:RM2) and AFC Energy plc (LON:AFC)?

| More on:

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.

There are few betters ways to turbo-charge your long-term wealth than by getting in early on a company that develops into a big stock-market winner for decades to come.

Today, I’m looking at three companies that appear to have potential as world-beaters: Sirius Minerals (LSE: SXX), RM2 International (LSE: RM2) and AFC Energy (LSE: AFC).

Great long-term prospect

Sirius Minerals owns “the world’s largest and highest-grade polyhalite deposit”, and aims to become “a leading global multi-nutrient fertilizer producer”. Furthermore, the company forecasts impressively low operating costs, “delivering industry leading cash margins of 70% to 85%”, and, just for good measure, reckons the resource has a lifetime of “100+ years”.

Sirius has done a fantastic job of gaining planning approval for the project, which sits in the North York Moors National Park. Working towards first production in 2021, the company forecasts a capital funding requirement of $3.56m, the aim being for part to come from new equity but the majority from borrowing.

At a current share price of 15.5p, Sirius is valued in the market at about £350m. If management can do as good a job on the capital funding as it did on gaining planning approval, and if there aren’t too many setbacks or cost-overruns in construction, investors today could be looking at a great long-term prospect, even with a sizeable shareholder dilution in the first stage of funding.

One to watch

RM2 International is in the process of commercialising its innovative long-life composite pallet, together with tracking and management software, “to establish a disruptive presence in global pallet supply”.

However, the company has endured some setbacks and delays. Last September, management said it would be changing the pallet coating as a result of customer feedback, pushing back mass production into 2016. The delay necessitated a £30m placing. Today, RM2 has announced it will be shifting production to China. However, as a consequence of moving some of its manufacturing assets from its existing Canada base, the company “will fall well short of its 2016 production target”.

The business — valued at about £150m at the current 37.5p a share — still has the potential to deliver, but with the history of delays and a further fundraising looking like it’s in the offing, it may be prudent to watch this one for the time being.

Riskier proposition

AFC Energy describes itself as “the world’s leading developer of low-cost alkaline fuel cell technology”. The company is focused on large-scale industrial applications, and says its technology “has the potential to be the catalyst, which transforms the way in which industries of today produce energy for tomorrow”. The company has completed an ambitious programme to prove its technology at a gas plant in Germany — only marginally over schedule and marginally under the target output — and is currently busy optimising the system.

AFC is aiming for 1,000MW of capacity installed or under development by 2020, and so far has a 50MW project development agreement in Korea with an expected revenue to the company of £400m over 10 years.

At a current share price of 15p, AFC is valued by the market at £46m. I see a clean-energy technology company as an inherently riskier proposition than a potash mine or pallet manufacturer, but AFC does look to be an interesting prospect in this sector.

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.

G A Chester 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

6 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Google office headquarters
Investing Articles

1 reason I like buying S&P 500 shares – and 1 reason I don’t

Will this investor try to improve his potential returns by focusing more on S&P 500 shares instead of British ones?…

Read more »

Young woman holding up three fingers
Investing Articles

3 SIPP mistakes to avoid

Our writer explains a trio of potentially costly errors he tries to avoid making when investing his SIPP, on an…

Read more »

Smiling white woman holding iPhone with Airpods in ear
Investing Articles

Here’s how (and why) I’d start buying shares with £25 a week

Our writer uses his investment experience and current approach to explain how he would start buying shares on a limited…

Read more »

Aerial shot showing an aircraft shadow flying over an idyllic beach
Investing Articles

Here’s my 5-step approach to earning passive income of £500 a month

Christopher Ruane explains the handful of steps he uses to target hundreds of pounds in passive income each month.

Read more »

Investing Articles

2 UK shares I’ve been buying this week

From a value perspective, UK shares look attractive. But two in particular have been attracting Stephen Wright’s attention over the…

Read more »

Investing Articles

A lifelong second income for just £10 a week? Here’s how!

With a simple, structured approach to buying blue-chip dividend shares at attractive prices, our writer's building a second income for…

Read more »

Investing Articles

Here’s how I’d use a £20k Stocks and Shares ISA to help build generational wealth

Discover how our writer would aim to turn a £20k Stocks and Shares ISA into a sizeable nest egg by…

Read more »