Investment Ideas: Buy These Mining Stocks Right Now
30.04.2010 23:50
If you're a believer that the global recovery is for real, then it's time to be invested in the global mining stocks.
After a commodities rally pushed up metal prices in 2008, the recession and near-halt of industrial activity worldwide hit the miners hard. The result was that the mining stocks were kicked to the curb and left for dead by investors. Several companies that paid dividends cut them completely or to the bone. Earnings plunged.
But earnings reports by several miners in recent days show that there is light at the end of the tunnel. Earnings are beginning to rise again and, in some cases, dividends are being reinstated.
Metal Prices Soaring Again
It doesn't hurt that metal prices have regained much of their lost ground from the 2008 and 2009 sell-off.
Copper, for instance, has more than doubled over the last year. Platinum is up 134% off its October 2008 low. Gold is at 2010 highs at $1170 an ounce.
But rising production, and rising demand, is also at play in the earnings of the mining stocks. Many of them have also gotten more efficient, forcing operating margins higher.
Earnings Expected to Spike Higher on the Mining Stocks
With conditions improving across the global economy, the miners are perfectly situated to cash in. It could be a dream scenario for the mining companies: near record metal prices and rising demand.
If you take a snapshot of the earnings picture of the mining stocks, it might not look too great right now. So investors have to take a longer view and look out 12 months or more. If you do that, you'll see that the consensus estimates on the mining stocks are reversing the prior pattern of declines and are on the upswing.
This is an indicator that now could be the time to get into the mining stocks.
3 Mining Stocks To Buy Right Now
Gold Fields Limited (GFI) is a South African-based gold miner. One of its competitors, Barrick Gold, just reported profit which doubled. Gold Fields will report its earnings results on May 7.
Analysts are expecting big earnings growth. Earnings per share are expected to rise by 60% in fiscal 2010 and 44% in fiscal 2011.
Gold Fields is a Zacks #2 Rank (buy) stock.
You can see the bullish earnings consensus forecast going forward below.
Stillwater Mining Company (SWC) is a platinum and palladium miner. It mines in Montana in the only significant platinum mine in the United States and one of the few platinum mines outside of Russia and South Africa.
With platinum prices rebounding strongly, the earnings outlook is also starting to take off. Earnings per share are expected to be up by 2175% to 83 cents in 2010 after the company posted a 4 cent loss in 2009. But analysts are equally bullish about 2011, as earnings are again expected to rise another 79.3%.
Stillwater is a Zacks #1 Rank (strong buy) stock and is expected to report earnings.
Check out the optimistic earnings outlook for the rest of 2010 and beyond.
Vale Sa (VALE) is a Brazilian-based global mining giant with its hands in a wide swath of different commodities from iron ore to nickel to copper to fertilizers.
Its size and breadth makes it a little bit different play on the global recovery than Gold Fields and Stillwater as it is more dependent on the growth story of China and other emerging market countries.
Still, analysts are also expecting big things from Vale in 2010. Earnings per share are forecast to rise by 192% in 2010 and another 19.4% in 2011.
Vale is a Zacks #1 Rank (strong buy) stock. It is expected to report earnings on May 5.
Like the other mining stocks featured here, the earnings consensus outlook is bullish.
