Defense Metals Corp. (DEFN:TSX.V; DFMTF:OTCQB; 35D:FSE) produces Rare Earths in the Americas, so you would think its stock would be doing well, but a glance at its year-to-date chart below shows that it has been in quite a severe decline from its February peak. While a part of the reason for this is simply it reacting back in a normal manner following a strong runup early in the year, the latter part of it is doubtless largely due to heavy funding involving a huge 48 million share private placement.
The price of the stock in this placement was CA$0.26, so the price has overshot to the downside since it is now at about CA$0.22. This, therefore, looks like a very good point to pick up the stock since the depression caused by large funding of this nature is temporary, and the funding was closed late last month and clearly, after funding of this magnitude, investors need not fear another one for a long time.
On the chart, we also see that it is currently oversold, at the bottom of our provisional channel, and some way below a still rising 200-day moving average, all of which points to at least a relief rally shortly.
It's also worth us taking a quick look at the longer-term 3-year chart on which we see that the overall trend in Defense Metals has been neutral for nearly two years, and we can also see that the downtrend of recent months has brought it back down into a broad zone of strong support at cyclical lows, which is normally a good place to buy.
Finally, with the world now tipping in the direction of a major war, it is a gross understatement to say that demand for the company's product looks set to be robust and continue to get stronger. So its stock should be a good investment.
Defense Metals' website.
Defense Metals Corp. closed at CA$0.215, $0.16 at 1.22 pm EDT on 8 June 8, 2023.
Originally published on clivemaund.com on June 8, 2023, at 1:30 pm EDT.
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The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maund's opinions are his own, and are not a recommendation or an offer to buy or sell securities. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications. Although a qualified and experienced stock market analyst, Clive Maund is not a Registered Securities Advisor. Therefore Mr. Maund's opinions on the market and stocks can only be construed as a solicitation to buy and sell securities when they are subject to the prior approval and endorsement of a Registered Securities Advisor operating in accordance with the appropriate regulations in your area of jurisdiction.
