Wednesday, May 12, 2010

Stillwater Mining SWC 'On The Radar'

As written in yesterday's blog, gold has been the 'investment dujour', followed by its cheaper cousin silver. How useful is gold in an industrial and recovering economy? Silver, palladium & platnium as well as copper have a more useful purpose. Yet its being hyped by the media. Looking at todays movers Gold ETF GLD was actually down -0.32%, Silver SLV +0.9%, Palladium PALL +1.69% and Platinum PPLT +2.72%.
Itz Pix portfolio currently has Yamana Gold (AUY) & Silver Wheaton (SLW) in the portfolio. Itz mentioned SWC on Twitter today being on the Itz Pix 'On The Radar' stock. Itz is suggesting buying or at least phasing into the this stock. Note, precious metal stocks could see a nearterm pullback off of this weeks euphoria. SWC was up over 6% today alone closing at $16.76. Palladium prices are set to rally this year on the back of a supply shortfall, low inventories and reviving world auto demand. >>Read

Company Profile:
Stillwater Mining Company, incorporated in 1992, is engaged in the development, extraction, processing, refining and marketing of palladium, platinum and associated metals (platinum group metals (PGMs)) from a geological formation in south central Montana known as the J-M Reef and from the recycling of spent catalytic converters. The Company conducts mining operations at the Stillwater Mine near Nye, Montana and at the East Boulder Mine near Big Timber, Montana. Ore extraction at both mines takes place within the J-M Reef. The Company operates a smelter and base metal refinery at Columbus, Montana, which improve the mined concentrates into a PGM-rich filter cake. Besides processing mine concentrates, the Company also recycles spent catalyst material at the smelter and base metal refinery to recover the contained PGMs palladium, platinum and rhodium. Form 10-Q >>LINK

*Forward P.E. of 10
*Average sales growth for the past 5 years has been 25%
*Total cash on hand 201 million
*Total debt 196 million
*% of shares held by insiders is a very healthy 52%
*% of shares held by institutional and mutual owners is 34% and this accounts for 72% of the float.

Global sources of Palladium are rather limited. Over 80% of the world’s Palladium is concentrated in just two countries, Russia and South Africa, with Russia’s accounting for 50% of the total Palladium supply. However, production has started to fall again and to meet these supply shortfalls the Russian government has been selling Palladium from its stockpiles. This program has now come to an end and with it roughly 125,000 pounds of Palladium will suddenly vanish from the supply chain. This is going to shock the system (the shock process might already be underway) for taking out of the market such a huge amount of Palladium just when demand is rising is the perfect recipe to precipitate a run on Palladium as companies start to hoard supplies for fear of not having enough of the metal on hand. With Gold and now Silver coming under demand as investors exit the Euro along with recovering economies and increasing auto sales...not to neglect the massive amount of interest the New Palladium and Platinum ETF’s are creating. These two ETF’s are gobbling up huge amounts of Platinum and Palladium. SWC should be primed to double by year end.

On CNBC's Larry Kudlow there was a very interesting debate on gold.
What's behind the rush to buy gold, with John Rutledge, former Reagan Economic adviser and James DiGeorgia, Gold & Energy Advisor.

Several other videos from today....

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