In this video we're talking about titanium dioxide, i know that's not the most exciting thing we can talk about trust me. You want to hear this because, as you notice, inflation is slowly creeping up and you have to figure out a way to bulletproof your portfolio against inflation. That is why we started a whole new project on our patreon and for channel members 30 companies in 30 days to bulletproof your portfolio against inflation. You can check it out and in this video i want to give you example of the sort of stuff we're doing on patreon by showing you one of the companies we're actually going to be talking about.

This company is called tronux and tronux holdings, which is the name of the company, is one of the best producers of titanium dioxide, which is actually used as a whitening material, whether it's paint paper manufacturing or even sunscreen the thing about titanium dioxide. I enjoy saying that name. So much is that it actually correlates very well with inflation, well-being and increased economic activity pretty much when the economy is booming, when the inflation is booming, titanium dioxide tends to outperform the market pretty simple, but because it's titanium dioxide and not the standard stuff that people Think about inflation. It flies under the radar, even though the share price actually increased.

Lately i'll show you what is still quite considerably undervalued, i'm going to show you my dcf and i'll. Show you why i think it's about 40 undervalued, despite the recent spike. You definitely want to stick around for this. My name is tom nash and i quit my corporate job as a senior financial analyst to break down companies for you there's one thing you need to know about me: i don't take from anybody.

So the first thing i'd like to do is take a look at what tip pranks has to say about this. What other analysts are saying and by the way, if you're interested, you can get a 10 off the premium license for the pranks? The link is below in my description. It's the only affiliate link. I actually have i absolutely love this company.

You should check it out. I want you to see a few important things about this right now on the screen you're, seeing the tip ranks home page. First of all, there's only five ratings for the stock, because it's again flying under the radar now look at the share price right now: 2338 trox now the minimum lowest price is 24, average is 27.8 and the high is 32. So, basically, according to the pranks, even at the bear case, this stock is already undervalued by about 60 cents now and, as you can see right here, the opinions are kind of split.

You have three analysts that saying that is: 37 24 11 undervalued. While you have two analysts that are saying that it is insanely overvalued, 23 74, oh 74 is harsh the thing about this company, though, as you can see right here, it's quite divisive. We have three analysts, absolutely in love with it. Two analysts that absolutely hate it.

Nobody seems to be indifferent and i think it creates a lot of opportunity, but i don't think i'm going to make my decision based on what these guys are saying. It's just interesting to see that it's quite divisive. However, of course, i did my own due diligence, which i share with you right here and i'll show you why i think i'm definitely on the bookcase here. So, first of all, let's start with the highlights: prox, that's the ticker.

It's a 3.5 billion dollar company by no means it's not a blue chip, it's not a facebook or google level company, but also it's not a penny stock. On the other hand, it's a very cyclical company because of what it actually does, but in our case that's actually fine. That is exactly what we're looking for going into inflation perfect now there are some people sorting it with about 4.4 short interest, which is not very low, but again, not very high kind of standard. Also, it's a dividend.

Stock expected yield is 1.37. That's kind of the main stuff about the company. Now i want to show you the real numbers. So as far as profitability, the gross profit isn't something to write home about 22.28.

But you got ta. Remember: that's a materials company, so you don't expect a lot of gross profit with this kind of business. However, the real shine comes out when you take a look at the net income margin. 32.6 percent.

Also, the ebitda margin is 22.51, which makes you realize that this gross profit is not really the problem here. This is a really nicely run company with 22.5 percent ebitda and 32 net income margin. I like it. So if you take a look at the stock momentum here on the screen, you might think that the company is overvalued 246 percent in the past year.

That is insane, however, as i'm about to show you, the valuation and the multiples are still quite low, and i still haven't showed you the dcf. I think this company is still somehow undervalued. Now, if you look at the values here, there's a pe to non-gaap valuation, which is totally out of this world, i think it's skewed by the way they do their accounting versus the non-gaap metrics. I actually don't want to take a look at this.

This is very skewed, but if you look at p gap, it's 3.6, which is considerably lower than their competitors, look at the other numbers. Here you have ev2 sales, 2.16, still undervalued. You have ev to ebitda 9.6 still undervalued. You have price to sales, 1.15, still undervalued in every single metric price, to sales, eve to ebitda and ev to sales and p gap.

It's under value. Now, that's the main thing. I want to show you now. If we take a look at the financials, the company is currently sitting on 760 million in cash, but the real number is actually much higher than that, because they have account receivable, which is pretty much cash, and i think the real number is probably 1.3 billion.

Realistically, this is pretty much cash now and in this type of company. You also have to add. In the inventory i mean, the inventory here is pretty much cash as well. These are materials.

So if you scroll all the way down here, you pretty much have 6.6 billion dollars in total assets and if you compare it to the total liabilities right here, so it's 4.8 in total abilities versus 6.6 in total assets. That's a very nice balance and, of course, there's no perfect companies and even this company has a blemish, a 3.5 billion debt, which is a lot but, as you can see right here, that's not anything new. The company has been operating in the high debt environment for pretty much forever since 2015, even before that so they're pretty much kind of standard high debt high leverage, i think in materials you have to because you have to pay for a lot of upfront stuff and As you can see right here, the numbers support that, because they always operated in a high dead environment. If you go all the way back to 2015, it's always a three billion that it's nothing unusual for this company, that's kind of their modus operandi, and i don't think it's a lot of issues i'll show you the cash flow in a second.

It seems okay and now, let's run quickly through the dcf, i've constructed this free cash flow in advance, just to keep things moving quickly. I use a ten percent discount rate, a four percent perpetual rate and nine point: six multiplier for the ebitda method and, of course, right here you can see the net that cash minus the debt. We have a lot of debt here and, as you can see, it's going to drag down the valuations based on these numbers right now, that's what i'm getting and now, let's get to the thing you'll want to see, which is my target price, so my target price Based on this, dcf is 34 compared to the current price of 23.4. It's a 45 upside now.

This is predicated on a massive pattern of growth for this company over the next few years, which is actually going to be triggered by inflation. Increased demand, increased supply chain issues, a lot of the things we're seeing right now, which is also transitory, but also permanent. I believe that inflation is going to get worse. I believe that economy is going to reopen up and it's going to be insane.

I believe that this thing is actually going to push the share price way higher than it is right now, if that doesn't happen, if the pandemic comes back, if we don't reopen, if inflation doesn't come and we basically are gucci for the next five years, this price Target is irrelevant; it only makes sense if you believe that inflation is going to increase and economies are going to boom and reopen that's the case. I think this manufacturer of raw materials is going to be a great inflation plan to actually bulletproof your portfolio against inflation and get you better returns versus the market. Now, if you want to learn more about inflation-proof stocks, if you want to participate in a 30 stocks in 30 days against inflation check out our patreon page, the link is going to be below. You can also sign up as a channel member and get access to the same, identical perks, check it out.

It's five bucks per month. You can grab the list and check out right away. You don't have to stay and i'll see you guys in the next video a huge shout out to the channel members and the patrons currently for making this possible. Thank you guys so much.

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