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analysis

On today’s Breakouts report, there are 94 stocks on the positive breakouts list (stocks with positive price momentum), and nine stocks are on the negative breakouts list (stocks with negative price momentum).

Discussed today is a stock that is on the positive breakouts list – Voyager Digital Ltd. (VOYG-T). For investors looking for a bitcoin play, this is a stock that investors may want to put on their radar screens.

The stock price can be extremely volatile, making large moves both up and down. Consequently, this stock is best suited for consideration by investors with a high risk tolerance within a diversified portfolio.

A brief outline on Voyager is provided below that may serve as a springboard for further fundamental research when conducting your own due diligence.

The company

Voyager Digital is a cryptocurrency broker with a platform that allows individuals to trade
bitcoin and ethereum as well as over 60 other cypto assets. In addition, through its recent acquisition and subsidiary, Coinify ApS, consumers and merchants are able to make transactions with its payment services available in over 150 countries.

One of management’s key objectives is to grow its customer base.

At a conference held in April, co-founder and chief executive officer Steve Ehrlich summarized four main reasons why the company’s customer base is growing so rapidly, “We obtain consumers from four different ways. We get the pure BTC [Bitcoin] investors. We get the yield seekers that are looking for interest on their coins. Those who just want to trade the Alt coins. And then those who want to come to Voyager because we are a cost conscious place to execute trades. As I noted, 40 to 45 basis points on Bitcoin compared to 200 basis points at most other places.”

In a move to increase the company’s brand visibility and increase its number of users on its Voyager Platform, Voyager announced that it entered into a five-year partnership with the National Basketball Association’s Dallas Mavericks, ateam owned by Mark Cuban, on Oct. 27. Mr. Cuban is a successful businessman who is an investor on the popular TV show Shark Tank.

The news release said, “Voyager and the Dallas Mavericks will work to make cryptocurrency more accessible through educational and community programs, global activations, and fan engagement promotions.”

In September, the company began trading on the Toronto Stock Exchange (TSX). Prior to that, shares traded on the Canadian Securities Exchange (CSE).

The company’s registered office is in Vancouver, while its head office is located in New York.

Investment thesis

  • Cryptocurrency play.
  • Growing acceptance of cryptocurrencies.
  • Positive industry fundamentals. More mainstream companies are accepting cryptocurrencies.
  • Rapid revenue and earnings growth is anticipated.
  • Growing user base and customer accounts. Conversion of users to funded accounts.
  • Potential catalyst: Geographical expansion. Currently, the company is only operating in most U.S. States. Management hopes to soon operate in Canada (awaiting approval from the Ontario Securities Commission). Management targets expansion into France where it has received a license with other European countries to follow (upon receipt of licenses/regulatory approvals).
  • Potential catalyst: Listing on a major U.S. exchange.
  • Key risks to consider include: 1) high share price volatility; 2) volatility in the price of cryptocurrencies; 3) growing pains as this company was just founded in 2018; 4) lacks a long track record given that it’s a newly created company; 5) company is not profitable yet; 6) new restrictive regulations; and 7) potential future equity raise to fund its growth.

Quarterly earnings

On Oct. 28, the company reported its fourth-quarter fiscal 2021 financial results (fiscal year-end is June 30). Revenue was US$109-million, up from US$708,000 reported during the same period last year. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) stood at US$21.2-million, up from a loss of US$4-million reported last year. Revenue per funded account was approximately US$55 in the quarter and the cost per new funded account was roughly US$20. As at June 30, the company’s assets under management totaled US$2.6-billion with over 600,000 funded accounts. Voyager had $193-million of cash and cash equivalents on its balance sheet at year-end.

On the earnings call, chief executive officer Steve Ehrlich spoke about management’s commitment to investing in the company’s future growth, “We’re looking to hire more developers, more product managers, obviously, more marketing, more service. Our goal is to double our size [staff size] over the next 6 to 9 months.” To put this in perspective, as of June 30, the company’s staff count totaled 141.

The company is expected to announce its first-quarter fiscal 2022 financial results on or around Nov. 15.

Returning capital to its shareholders

The company does not pay its shareholders a dividend.

Through a normal course issuer bid (NCIB), the company can repurchase up to 8,114,699 shares between Nov. 2, 2021 and Nov. 1, 2022.

Under its prior NCIB with the CSE, which started on May 30, 2021, the company repurchased 247,500 shares at a volume weighted average price per share of $18.93. The company was delisted on the CSE on Sept. 3 and began trading on the TSX on Sept. 7.

Analysts’ recommendations

This small-cap stock with a market capitalization of approximately $3.8-billion is covered by eight analysts. The stock has a unanimous buy recommendation.

The Canadian and U.S. firms providing research coverage on the company are: BTIG, Compass Point Research and Trading, Craig-Hallum, Eight Capital, Fundamental Research, H.C. Wainwright & Co. LLC., ISS-EVA, and Noble Financial.

Financial forecasts

The Street is forecasting robust revenue and earnings growth for the company.

According to Refinitiv, the consensus revenue estimate is US$424-million in fiscal 2022, up from US$175-million reported in fiscal 2021, and forecast to rise to US$777-million in fiscal 2023. The consensus adjusted EBITDA estimates are US$110-million in fiscal 2022, up from US$63-million reported in fiscal 2021, and $273-million in fiscal 2023. The consensus earnings per share estimates are 52 US cents and US$1.19, in fiscal 2022 and fiscal 2023, respectively. In fiscal 2021, the company reported a net loss per share of 39 US cents.

Valuation

According to Refinitiv, the stock is trading at a price-to-earnings multiple of 15.9 times the fiscal 2023 consensus estimate.

According to Bloomberg, the average 12-month target price is $28.92, implying the share price has 22 per cent upside potential over the next year. Individual target prices provided by six firms are as follows: $20, $28, two at $31 and three at US$25.

Insider transaction activity

Since the start of the second half of the year, there has not been any trading activity in the public market reported by insiders.

Chart watch

Year-to-date, the share price is up 375 per cent.

In recent days, the stock has experienced a parabolic move. On Oct. 26, the share price closed at $11.28. Over the following nine trading sessions, the stock price more than doubled – spiking 110 per cent! As a result, the stock is in overbought territory and may soon pullback in order to digest these gains. The relative strength index (RSI) is 78. Generally, an RSI reading at or above 70 reflects an overbought condition.

In terms of key resistance and support levels, the share price is hovering just below a ceiling of resistance around $25. Should the share price break above this level, the next major resistance level is around $30, and after that, around $37 (near its record high reached in April). Looking at the downside, there is technical support around $20, near its 200-day moving average (at $19.68). Failing that, there is support around $15, close to its 50-day moving average (at $15.23).

POSITIVE BREAKOUTSNov. 8 close
AAV-TAdvantage Oil & Gas Ltd $7.87
AXU-TAlexco Resource Corp. $2.47
ARX-TARC Resources Ltd $13.15
ATH-TAthabasca Oil Corp $1.45
ATA-TATS Automation Tooling Systems Inc $51.16
BLDP-TBallard Power Systems Inc $24.08
BMO-TBank of Montreal $139.03
BIGG-CNBIGG Digital Asssets Inc. $1.94
BSR-XBluestone Resources Inc. of Canada $1.75
BNE-TBonterra Energy Corp $7.15
BPF-U-TBoston Pizza Royalties Income Fund $15.76
BBU-U-TBrookfield Business Partners LP $61.60
BIP-U-TBrookfield Infrastructure Partners LP $75.95
BTB-U-TBTB Real Estate Investment Trust $4.21
CAE-TCAE Inc $41.90
CCO-TCameco Corp $34.97
GOOS-TCanada Goose Holdings Inc. $61.49
CWB-TCanadian Western Bank $41.02
CJ-TCardinal Energy Ltd $5.35
CLS-TCelestica Inc $13.81
CVE-TCenovus Energy Inc $16.25
CG-TCenterra Gold Inc $10.42
CIX-TCI Financial Corp $29.83
CGX-TCineplex Inc $15.18
CIGI-TColliers International Group Inc $182.98
CRON-TCronos Group Inc. $8.35
DML-TDenison Mines Corp $2.57
DRM-TDREAM Unlimited Corp $33.24
DPM-TDundee Precious Metals Inc $8.57
EDV-TEndeavour Mining Corp. $33.52
EDR-TEndeavour Silver Corp $6.63
EFR-TEnergy Fuels Inc $13.50
ERF-TEnerplus Corp $12.95
EXRO-TExro Technologies Inc. $3.93
FSZ-TFiera Capital Corp $10.80
FIL-TFilo Mining Corp. $12.71
FTT-TFinning International Inc $37.92
FCC-XFirst Cobalt Corp. $0.42
FR-TFirst Majestic Silver Corp $17.21
FVI-TFortuna Silver Mines Inc $6.41
FRU-TFreehold Royalties Ltd $12.62
GLXY-TGalaxy Digital Holdings Ltd. $42.22
GIL-TGildan Activewear Inc $51.44
GLO-TGlobal Atomic Corp. $4.64
GSC-TGolden Star Resources Ltd. $4.63
GMG-XGraphene Manufacturing Group Ltd. $4.45
GPV-XGreenPower Motor Company Inc. $20.00
HTL-XHamilton Thorne Ltd. $2.00
HDI-THardwoods Distribution Inc $47.58
HIVE-XHIVE Blockchain Technologies Ltd. $6.20
HUT-THut 8 Mining Corp. $19.80
IMG-TIAMGOLD Corp $3.81
IBG-TIBI Group Inc. $13.15
JWEL-TJamieson Wellness Inc. $39.83
KNT-TK92 Mining Inc. $7.58
KRR-TKarora Resources Inc. $4.79
KXS-TKinaxis Inc $210.12
LAC-TLithium Americas Corp $44.04
L-TLoblaw Cos Ltd $95.86
LA-XLos Andes Copper Ltd. $10.69
MPC-TMadison Pacific Properties Inc. $7.50
MAG-TMAG Silver Corp $26.06
MKP-TMCAN Mortgage Corp $19.05
ML-XMillennial Lithium Corp. $4.82
GRA-TNanoXplore Inc. $8.31
NXE-TNexGen Energy Ltd. $7.95
NVA-TNuVista Energy Ltd $6.93
OGC-TOceanaGold Corp $2.55
OPS-TOpsens Inc. $3.18
POU-TParamount Resources Ltd $23.90
PPL-TPembina Pipeline Corp $42.85
PIPE-TPipestone Energy Corp. $3.64
PZA-TPizza Pizza Royalty Corp $11.98
PIF-TPolaris Infrastructure Inc. $19.20
PVG-TPretium Resources Inc $15.10
RSI-TRogers Sugar Inc $5.71
SEA-TSeabridge Gold Inc $23.53
SIL-TSilverCrest Metals Inc. $11.42
ZZZ-TSleep Country Canada $38.39
SII-TSprott Inc $54.74
STN-TStantec Inc $69.37
SLF-TSun Life Financial Inc $71.51
TVE-TTamarack Valley Energy Ltd. $3.78
TVK-TTerraVest Capital Inc $27.78
TPZ-TTopaz Energy Corp. $18.64
TD-TToronto-Dominion Bank $91.77
TXP-TTouchstone Exploration Inc. $2.63
TOU-TTourmaline Oil Corp $47.85
VET-TVermilion Energy Inc $14.81
VB-TVersaBank $15.88
VGCX-TVictoria Gold Corp. $19.13
VOYG-TVoyager Digital Ltd. $23.73
WTE-TWestshore Terminals Investment Corp $27.99
ZEN-XZen Graphene Solutions Ltd. $6.36
Negative Breakouts
AT-TAcuityAds Holding Inc. $5.16
AQN-TAlgonquin Power & Utilities Corp $17.68
ORA-TAura Minerals Inc. $11.12
UFS-TDomtar Corp. $67.12
PAY-TPayfare Inc. $8.58
SMT-TSierra Metals Inc $2.08
TBL-TTaiga Building Products Ltd. $2.35
TUD-XTudor Gold Corp. $1.99
FORA-TVerticalScope Holdings Inc. $22.80

Source: Bloomberg and The Globe and Mail

This report is not an investment recommendation. The Breakouts file is a technical analysis screen intended to identify companies that are technically breaking out. In addition, this report highlights a company’s dividend policy, analysts’ recommendations, financial forecasts, and provides a brief technical analysis for a security to provide readers with more information.

If a stock appears on the positive breakouts list, this indicates positive price momentum, and that a company may be worthwhile for investors to look at the fundamentals in order to determine if the recent price strength is warranted and will continue. If a security appears on the negative breakouts list, this indicates negative price momentum, and may be indicative of either deteriorating fundamentals or perhaps indicates a buying opportunity.

Securities screened are from the S&P/TSX composite index, the S&P/TSX Small Cap index, as well as Canadian small cap stocks outside of these indexes that have a minimum market capitalization of $200-million.

A technical analysis screen does not replace fundamental analysis, but can help identify companies worth having a closer look at.

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