Two Hot Stocks With Big Upside That Investors Have Been Sleeping On

In May, we wrote about the potential of Anfield Energy Inc. (AEC) and in particular, its warrants (AEC.WT). The price of the warrants have since doubled to $0.04, but we remain quite bullish as we see multiple catalysts that could drive the stock and warrants up further. Along with AEC, Record Resources Inc. (REC.V) is another stock that has signed a very lucrative deal recently which offers significant upside. If you like our picks you can follow this blog by clicking the follow button on the top of the left hand panel. We have 1039 followers on here as well as 124 followers on our Canadian blog. You can also follow us on X @StockTradePicks which has over 5,000 followers.  

Anfield recently got uplisted to the NASDAQ, which has improved its visibility in the United States. This is part of the reason why we decided to write this update on the U.S.-focused blog instead of the Canadian one. Many uranium plays such as Uranium Energy Corp. (UEC), Denison Mines Corp. (DNN) and Energy Fuels Inc. (UUUU) have been making new 52-week highs, and AEC is no different. What makes Anfield stand out is that while those three aforementioned companies have valuations well over $1 billion, Anfield trades at around $140 million market cap at a $9.00 stock price. 

AEC's Shootaring Canyon Mill is one of the three uranium mills in the United States with the other two being owned by the much higher valued peers in UEC and UUUU. AEC first grabbed our attention on news of its Velvet-Wood uranium project in Utah getting accelerated approval from the Department of the Interior. It became the first uranium project to be approved by the U.S. government under President Trump’s emergency declaration to restore American energy independence. The project has an NPV $238 million U.S. and is just one of several uranium projects that AEC owns in the United States. Given that the U.S. consumes 50 million pounds of uranium annually but produces just 1% of it, AEC is in prime position to get accelerated approval on multiple projects. Its portfolio includes the Slick Rock Project, the West Slope Project and four other minor projects along with Velvet-Wood. We expect that financing for capex needs to get the projects up and running will be no issue given this environment.

At the time we wrote our previous piece, AEC was a penny stock. It since reverse split its stock 75 to 1 in order to facilitate the uplist to the NASDAQ. As a result, the float as sunk to 10 million with less than 16 million shares outstanding. It trades thinly with generally less than 100,000 in volume on both sides of the border. This profile makes it an ideal candidate to go on a massive meme stock or day trader run as a small amount of volume can really move the stock. Should several million shares trade in a day, we expect anywhere from a double to 10x mover like we have seen on many lightly traded IPO/recent uplists to the NASDAQ. The fact that it compares so well to uranium peers only helps the situation. 

We hold the warrants which trade exclusively on the TSX in Canada. They expire in May 2027 and had an initial strike price of $0.18. The rollback in the stock resulted in the warrants having an adjusted strike price of $13.50 and require 75 to exercise for one share. Should the stock hit $21.00 CAD, the warrants will intrinsically be worth $0.10, plus presumably some time value. While the warrants have doubled to $0.04 since we first wrote about Anfield, we feel that they still offer significant upside. A key factor to driving the value of the warrants would be the potential for options to be traded on Anfield's U.S. listing. The USD equivalent strike on the warrants is $9.75, meaning the warrants are just out of the money at a $9 stock price. For reference, a $15 call option on UEC expiring in January 2027 trades at $4. A $10 strike call option on AEC expiring at the same time likely trades at a similar price. Considering the 1/75th exercise ratio, exchange rate and slightly lower strike price and additional four months time value, AEC.wt's fair value under this situation would be $0.06 CAD. 

On September 12, REC.V shot up 175% from $0.02 to $0.055 on news of a joint venture with Reconnaissance Energy Africa Ltd. (RECO.V) and has continued to rise since with a stock price of $0.075 at the time of this writing. It has done so for good reason. This deal is ridiculously lucrative to REC, with the company acquiring a 20% working interest in the Ngulu Project in Gabon while bearing none of the costs.  The project highlights:

• Acquisition positions Record Resources as a significant West Africa E&P company.
• Fully carries Record Resources through the commitments on the Ngulu block through the initial four year concession period, including the drilling of a well to TD.
• Diversified portfolio with low-risk appraisal, development and exploration assets​.
• Near-term oil production potential could provide cashflow to fund exploration growth​.
• Capital-efficient entry terms include a large concession with minimal work phased over a four-year commitment.
• Advanced seismic reprocessing to unlock exploration upside while de-risking prospects.​
• PSC agreement, which covers 1,214 square kilometres and is roughly equivalent to 54 Gulf of Mexico blocks, is located in shallow offshore water in central Gabon.
• Ngulu is located on trend and offset to a number of sizeable producing fields, which range in size from 38 MMbbl up to 250 MMbbl.
• Existing oil discovery, the Loba field, was drilled in 1976 with 140 metres gross pay (70 metres net pay) provides for low-risk appraisal and development opportunities and near-term production.
• Loba field complex has potential production of ~20,000 Bbl/d (1)(2)(3)(4) based on offset fields.
• Significant exploration upside from an inventory of 28 mapped prospects (Lepidote Deep, Pompano Dentex Complex and the Palomite Complex) that are analogous to play types found in the Gulf of Mexico.
• Seismic reprocessing project to be undertaken to enhance imaging of prospects and reduce drilling risk.
• The consortium has committed during the initial four-year term to execute detailed geological and geophysical studies, advance 3D seismic reprocessing on an existing database and drill one well on the block.

"We are fully funded through the first phase of execution on a large oil and gas asset base with an existing oil discovery (near existing infrastructure), significant development upside and a large inventory of high-impact exploration plays in a proven oil-producing basin," said Michael Judson, Record's Chairman and CEO. "This opportunity in Gabon was identified by Record Resources who then deemed a strategic joint venture partnership with ReconAfrica was the best way forward to unlock shareholder value on this asset base. ReconAfrica is a highly experienced technical team and operator in Africa, and the Record team looks forward to an excellent partnership."

The existing Loba field itself has potential for 20,000 barrels per day. Since then, RECO raised $10 million in order to fund the project. REC is at a $8 million CAD market cap at $0.075 with no near term project expenditures, making the near-term dilution risk low. We think that REC should be at a minimum $20 million market cap, and we believe that it will get there in short order. 

Disclosure: We are long AEC.WT, REC.V