Is Lynas (LYC) a falling knife?
LYC was $11.09 inapril 2022. Now 5.95. Did have various issues in Malaysia but thought sorted but down 16% this calendar year. Like to think a bottom not far off but maybe a falling knife?
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Answer
Hi Brian,
The kneejerk reaction is it certainly looks & feels like it with the stock still around its 3-year low. We exited the stock in November in our Emerging Companies Portfolio with its further 10-15~% decline vindicating the move. In similar fashion to the lithium/ESG space we believe the stocks looking for a low but we must remain cognisant that its a volatile beast in a downtrend suffering under the risk of increasing production out of China. The stock is cash flow positive (just) and carries a strong balance sheet.
- LYC comes with significant risk but we like the stock into weakness under $6, but it’s more a trading stock.
