Legendary resource investor Rick Rule tells In the Money with Amber Kanwar about three very different stocks he’s buying right now: Sprott (SII.TO), the go-to brand for precious metals exposure; EMX Royalty (EMX), a fast-growing junior royalty company with a powerful merger story; and ExxonMobil (XOM), his low-risk bet on the future of energy. Together, they showcase how Rick is positioning for what he sees as a long runway ahead for commodities.
Pro Picks is brought to you by ATB Financial. With $62 billion in assets, ATB Financial is powering possibilities for more than 820,000 financial services clients in Alberta and beyond. ATB’s Capital Markets arm is a full-service investment dealer that offers investment and corporate banking, sales and trading, institutional research, and risk management. Visit www.ATB.com/inthemoney for more information.
Sprott Inc. is a leading asset manager specializing in precious metals and natural resources.
- Precious Metals Bull Market Exposure: Rick believes we’re in a precious metals bull market, and Sprott, as a brand name in this space, stands to benefit significantly. Its assets under management (AUM) have doubled in 2.5 years, driving management fees higher while costs remain controlled.
- Strong Financial Position: Sprott generates substantial free cash flow, has paid off all debt, and offers investors a dividend. Rick suggests owning Sprott allows investors to benefit from its entire portfolio of products rather than paying fees for individual funds.
- Takeover Potential: Rick suspects Sprott’s AUM could grow from ~$40 billion to $100 billion USD in 3-4 years, making it an attractive acquisition target for major players like BlackRock or Credit Suisse seeking a natural resources franchise.
EMX Royalty Corp. (EMX)
EMX Royalty is a smaller-cap ($675M) company in the metal mining royalty and streaming sector.
- Undervaluation Being Corrected: EMX was trading at a significant discount to its intrinsic value, which is now being arbitraged away. A merger with Elemental Royalties enhances its commercial acumen and access to London capital markets.
- Exploration Expertise and Royalty Generation: EMX’s unique ability to generate royalties through third-party-funded exploration, combined with its royalty over the Timok magmatic complex in Serbia (where Zijin Mining operates 16 rigs), positions it for rapid growth.
- Backing from Tether: The involvement of Tether, a major financial services player investing $100 million post-merger, provides EMX with capital and technological advantages, making it the fastest-growing junior royalty company.
Exxon Mobil Corp. (XOM)
- Undervalued Opportunity: Rick sees Exxon trading at half its net present value, driven by misguided market assumptions about peak oil demand by 2032. He believes oil demand will persist far longer, making Exxon a bargain.
- Superior Capital Allocation: Exxon is the best capital allocator in the oil industry, with a major discovery in Guyana and a $60 billion acquisition of Pioneer to bolster its reserves, unlike competitors underinvesting in sustaining capital.
- Resilience to Political Risks: Unlike Canadian peers facing regulatory headwinds, Exxon’s global scale and U.S. base make it less vulnerable to political constraints, enhancing its stability and growth potential.
Don’t miss our next episode! Leader of the meme traders Eric Jackson joins us to discuss his next big idea! Email your questions to questions@inthemoneypod.com
