Gold's powerful bull market has quickly entered overdrive. We are only two months into this bull market. The party has just started:
And yet, Investors are seriously underweight the group. Outside of the Yellow Metal and the Miners, there is a scarcity of pure plays available.
Enter A-Mark Precious Metals (AMRK).
We equate A-Mark to the Coinbase of the Gold market. It operates as the de-facto worldwide exchange offering Investors exposure to all areas of the gold market. A-Mark acts as the top wholesaler of precious metals, while also owning a number of Retail Investor-focused sites tailored to the buying/selling of gold bullion bars and coins – not to mention two mints:
A-Mark is fully hedged and earns a vig between what it pays for its bullion relative to the price its customers pay for its offerings.
When Gold is ripping, A-Mark’s business takes off. In this regard, Gold advanced roughly 8% in March. Typically, when Gold gets going it trends for quarters, if not, years.
There are many reasons why Gold is stampeding ahead and why we expect this trend to remain in place for a while, including:
Even if all of these issues simmered down, the Uber Bull Case for Gold ultimately goes back to there is just too much debt in the system.
We expect Investors to broaden their exposure to Gold and A-Mark stands to benefit from these new money flows.
AMRK is super cheap, trading for 0.1 of 1x 2025 Revenue Consensus.
AMRK is trading for 8x Forward Earnings.
Importantly, we see big upside over the next few quarters of earnings.
To wit, instead of EPS growing 57% YoY in its forthcoming June 2025 Fiscal Year, we see them doubling to $7.
Even a 9x P/E gets AMRK to $60+:
Encouragingly, our earnings projections mesh nicely with AMRK's super powerful technical pattern, with the low $40s a price zone that has served as an important top for years.
Once this long-term resistance gets decisively breached to the upside, we expect fireworks to ensue.
$60 is the long-term measured move:
Turning to the Monthly Chart, AMRK is on pace for its best monthly volume ever. The last time it traded this much volume, the stock went parabolic the following six months, advancing 120%:
Another positive data point: AMRK has a VERY FAVORABLE, TIGHT share structure which is similar to share structures present in some of our biggest Winners this year – POWL, ROOT and SMCI. Assuming All-Time Highs are breached, there will be a very limited amount of stock for Big Investors to buy into.
Finally, AMRK has a high Short Interest of 3M shares short. What are these guys playing for? They have overstayed their welcome. Short covering should help catalyze the move to and through All-Time Highs, another important catalyst that should unfold in the coming days and weeks.
In summary, there is a lot to like in AMRK. The stock is very cheap, even after advancing this week. As earnings inflect in the coming quarters, we attach 70% odds the stock heads to $60 by Q4 of this year.
Longer-term, this feels like a $100 stock. If the multiple were to re-rate to 14X, it's easy to see how the stock gets to this price level.
We plan to add to our existing position in AMRK on any/all dips to $37.5-$39. We will round out our full position on any close above $41.
STOP LOSS: We will use $35.5s as our stop, a level we do not think gets hit. Our stop is looser than typical on purpose. This is for good reason, as our Conviction Level is a 10.
AMRK is still super cheap, the thesis is riding a huge secular inflection and there is a limited supply of stock for buyers to move into.
On the upside, we will begin trimming our overweight position in our stock and options should AMRK advance to the mid-to-high $40s, into the $50s, and toward $60 in the coming weeks and months.
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Disclosure: We long AMRK stock and options. We may change our positioning at a moment’s notice, without notifying you of any such moves.
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In no shape or manner should the views expressed in this piece be considered investment advice. We reserve the right to change our positioning in our AMRK stock and options positions at a moment’s notice without updating you on any such change in opinion and positioning. That may be tomorrow, even before our price target is hit. Facts change, our opinions can change quickly too.
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