A 4% gain in one month may not sound a lot, but if Sirius Minerals PLC (LON:SXX) (SXX.L) can continue to surge at this pace then it could lead to 60%+ returns over the course of a year. Therefore, it may be more significant than it appears at first glance.
In my view, there is scope for further gains to be delivered by the stock over the long run. Sure, the 4% gain in the last month could be erased relatively quickly, since the share price has been hugely volatile in recent months. However, the general trend could be an upward one because of the future prospects for Sirius Minerals.
Obviously, forecasts are extremely difficult to make over a long-term time horizon. However, it seems to be generally expected that world population will increase at a fairly fast pace over the coming decades. According to the UN, the world’s population could reach 9.7 billion from the current level of 7.2 billion by 2050.
On a practical level, additional people on earth will require additional food. This may put an already under pressure agricultural sector under even more strain, and may lead to additional demand for more effective fertilisers. This could be good news for Sirius Minerals because its POLY4 fertiliser may see demand increase over time.
While it may take many years for the company’s full potential to reveal itself, investors could begin to price in the opportunities which may be ahead for the business. This could mean that the stock gradually rises, which may be to a significant level in my view since it trades at one-tenth of its project NPV at this moment in time.
Therefore, with Sirius Minerals seeming to have a bright long term future, I’m optimistic about its investment outlook. Volatility could be high, but so could the returns in my view.