I remember a couple years ago a lot of mining stocks were selling at less than their book value. Now that I look back on those days, it's too bad I did not appreciate the opportunity that was right before me.
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In these days, you really have to research intently to find any mining stock that has a long track record, a decent balance sheet and still sells at book value or lower.
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But I did find 4 that qualified, and here is the first one, Cardero Resource Corp (CDY). CDY trades at .6X Book Value, has ZERO debt, $1.22 per share in CASH (but sells for $1.07) and can be found on the AMEX.
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Click on the charts to ENLARGE
This second miner is named Kobex Miners Inc (KXM). Kobex is actively looking for property to acquire for mining purposes in both South America and Canada, but as best I can tell, it does not currently have any property to mine.
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It does have cash, though. KXM trades at .9X Book Value, has ZERO debt, $0.99 per share in CASH (but sells for $0.84) and is also traded on the AMEX exchange.
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Our third miner is named US Silver Corp (USSIF). This Canadian company has its entire operation right here in the United States, in Idaho. I hesitated to include this stock as it trades on the OTC: Bulletin Board, but I personally have corresponded with and researched this company for the past three years and in my opinion, it is solid.
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This company does not hedge but is purely levered to the price movement of silver. The company has been profitable in the last several quarters and is picking up earnings momentum with a cost to produce silver at $12.50. This cost is expected to decline in coming quarters.
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If you agree with me that silver is likely to significantly outperform gold in the upcoming final 6 months of this C wave, it behooves a person to have some silver miners in their portfolio. Perhaps this one, or SLW or the silver miner ETF named SIL would be good choices.
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Oh, before I forget. US Silver trades right at Book Value, 10% of which is in cash and has ZERO debt.
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Finally our fourth bargain is Vista Gold Corp (VGZ). Vista trades at .95X Book Value, fully 40% of which is cash on the AMEX exchange.
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In my research I came across this, and I quote: "Vista Gold (AMEX:VGZ) has a potential upside of 1644.1% based on a current price of $1.36 and an average consensus analyst price target of $23.72." dated 8/05/10
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Folks, those of you who have gotten to know me, know that I buy and sell off what I see on the chart with the True Strength Index (TSI) and Money Flow Index (MFI) indicators. But if you are a more responsible investor than I, I encourage you to do your own research before buying one of these four - just so you can sleep at night and know that you have made a good investment for the longer term.
Why not buy all 4 in a mini portfolio :)
ReplyDeleteOnly issue I have with VGZ is the continual downtrend it has been in - even when gold was making new highs, this share couldn't catch a bid?
I was going to write that, but you did for me so thank you (buy all 4 in a mini portfolio).
ReplyDeleteI did some reading on what has held VGZ down of late. I am not a master of the content, but the jest is that they have mining property in some kind of Federal Land in Mexico and one political body there came up with a ruling that they were out of bounds environmentally and would not be allowed to mine. (May 2010)
Lawsuits and hearings then took place and though the last shoe has not dropped, my sense of the latest from the company was very optimistic.
The subtle shift in momentum that the TSI detected is perhaps this shift in investor psychology that is going to have to happen before an explosion in price to the upside. Just my opinion, of course.
Thanks for your post!
I was intrigued by Cardero's lack of debt so I took a look at their web site.
ReplyDeleteThey are exploring several copper/gold properties in South America. They made some money selling an iron deposit to a Chinese company. They have enough cash to last for 2 to 3 years. They haven't diluted their shares recently but I didn't see a timetable for building any mines which may mean share dilution in the future.
I am curious if they hope to be acquired by a major or if they are willing to build a mine.
Re: CDY
ReplyDelete"During fiscal 2009, the Company completed the sale of Pampa de Pongo Iron deposit to Nanjinzhao Group Co. Ltd. In June 2010, it acquired 49.5% interest in Coalhunter Mining Corporation."
ALSO:
"Cardero’s focus through 2009 is to realise the considerable value it believes is locked in the Company’s significant iron ore assets in the Marcona District of southern Peru, the Baja district of Mexico and in Minnesota, USA, while continuing to progress its base and precious metal exploration projects in Argentina and Mexico." 7/27/10