The 4-Letter Word That Could Kill You
Did you know that a particular type of milk has been linked to cancer? It's so dangerous that it's banned in more than 30 countries, but it's legal in the U.S.
You can tell if your milk is "contaminated" simply by looking for a specific four-letter word on its label.
If you see it on your jug of milk, I urge you to get rid of the milk immediately.
Click here to learn the specific four-letter word you need to look for. | |
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| Thursday, November 20, 2014 | Issue #2421 | |
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3 Hot Gold Stocks to Add to Your Watch List Sean Brodrick, Resource Strategist, The Oxford Club
 I was just in San Francisco attending the 49 North Resource Conference. The best thing about 49 North is the chance for one-on-one meetings with top executives of great precious metals companies.
And today, I'm going to share with you three gold producers from the conference that I think deserve a closer look at recent prices.
Wait, did I say gold? The yellow doormat? The precious metal that ain't so precious?
Listen, buckaroo, nothing lasts forever, including bear markets. And these three companies are ones you want in your stable when it's time to ride the bull.
I have to say the mood at the conference was pretty good. It helped that gold had recently rallied from its lows. Will this rally stick? As one attendee told me: "It sure feels like a bottom... of course, that's what we said last time."
Here are three companies I saw and talked to at the conference that I think are worth putting on your watch list.
Add This to Your Portfolio Now
64% gross margins. Ten years of record profits. Never-decreased dividend payments.
Best of all, the company I'm talking about is set to take over three huge markets that could add mountains of cash to its bottom line. This stock will not be available at its current price for long, as you can see here. | |
Franco-Nevada Corp. (NYSE: FNV) is a streaming and royalty company. That means it finances projects in return for the chance to buy gold at a cheap price (or collect a royalty). It also funds oil projects, but 80% of its investments are in precious metals.
Franco-Nevada shares are down along with the rest of the gold producers, but they haven't fallen nearly as far. As a result, it's now the fourth-largest gold producer in the world.
I talked to Stefan Axell, director of corporate affairs for Franco-Nevada. You can watch a video of a portion of that interview here.
Mr. Axell emphasized his strong belief that owning Franco-Nevada is much better than owning the SPDR Gold Shares (NYSE: GLD) or other gold bullion funds.
His reasoning is simple: A gold bullion fund will never be worth more than the gold it owns. Franco-Nevada, on the other hand, isn't getting credit for the gold it owns. But if the market starts to value the company fairly, shares could soar.
Mr. Axell says Franco-Nevada has 11 million "risk free" ounces in attributable reserves from its top gold projects. That gold would be worth $13.1 billion at recent prices. But Franco-Nevada has a market cap of only $8.4 billion.
What's more, Franco-Nevada has pieces (streams or royalties) of 38 producing gold mines, three platinum-group metals mines, six other minerals, and 137 producing oil and gas projects. And it's adding streams or royalties from new projects all the time. It's getting them at bargain prices too, since many of the banks that used to finance mines have left the field.
Franco-Nevada recently traded under $54 a share. I could see it rallying to $62 or higher in a hurry if gold moves meaningfully above $1,200.
Goldcorp (NYSE: GG) is an old favorite of mine. It has 10 mines around the Americas, including the high-grade, low-cost Red Lake Mine, and it's known as a low-cost producer. But Goldcorp disappointed investors in the most recent quarter and got pushed off a bridge as a result.
The company was hurt by lower gold prices and production at two mines in Mexico, and took a loss as it wrote down low-grade assets. It also said its 2014 production would come in at the low end of its forecast.
Now for the good news: The company expects all-in sustaining costs will come in at the low end of its guidance range of $950 to $1,000 per ounce for 2014. So it's making money even at gold's recent prices.
What's more, at the 49 North Conference, Goldcorp's Jeff Wilhoit told me some good news.
The company traditionally finishes strong in its fourth quarter, and this current quarter should be no different.
- The company's flagship mines are performing very well.
- It's adding two new projects. The Cerro Negro Mine in Argentina begins commercial production in the fourth quarter. And its Éléonore mine in Quebec will start commercial production in the first quarter of 2015. Commercial production is when things really start ramping up. Both projects are at the low end of Goldcorp's cost range.
- Also, five kilometers away from Goldcorp's Red Lake Mine, Canada's most prolific gold mine, the company has a new high-grade project that it is bringing into production.
- Finally, Goldcorp knows people are worried that it has priced its reserves too high (at $1,300 an ounce). While it's not disclosing what price it will use next year, it is aware of investors' concerns. And Mr. Wilhoit says the company will provide "sensitivities" to what its reserves might be worth at lower price.
Goldcorp is sitting on $376 million in cash, and as Mr. Wilhoit said, they've built the company to survive and thrive at lower gold prices. Also, Goldcorp recently traded at less than its book value, which means you can buy it for less than the company would be worth if it were broken up and sold off for parts.
This is another one that should ramp up if gold prices head higher.
You can watch part of my talk with Mr. Wilhoit here.
Agnico Eagle Mines (NYSE: AEM) is a premier miner trading at a discount. Its gold production is going up and its all-in costs are around $900 per ounce, so it's producing plenty of cash flow at recent gold prices. And yet it's about 40% below its 52-week highs.
I talked to David Smith of Agnico Eagle. He's the company's senior vice president of finance and chief financial officer. He joked that he didn't like it when Agnico trades like a value stock, but that's what it is doing now.
You can watch that interview here.
Mr. Smith pointed out that the company makes a point of operating in politically safe jurisdictions - Canada, Mexico and Finland - and it is making sure it grows per-share metrics including production and cash flow. It also has the highest reserve grade of any of its North American peers.
And talk about production growth - Agnico Eagle expects to produce 1.6 million ounces of gold next year. That's up from 1 million ounces just a few years ago.
Agnico Eagle is trading near its book value. This thing's a bargain.
Good investing,
Sean
P.S. I also met with several very compelling energy companies in San Francisco. And this afternoon, you can hear my chat with The Oxford Club's Dave Baumann as we discuss the hottest plays in the energy sector via a special online event hosted by The Oxford Club. This is an important discussion - and it begins at 2 p.m. ET, so you don't have much time left to register. Just click here. | |
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A Gold-Rush Style Boom
"The place went from desolate to booming. There are quite a few millionaires now."
"It's been the opportunity of a lifetime."
"It's unexpected. A blessing."
That's just a few of the things being said about a gold-rush-style boom generating "overnight millionaires" across the country.
Even Warren Buffett is benefiting from it. He generated a "record high stock price" thanks to this boom. To find out how you can get in on it and bring in profits as high as $127K per year, go here. | |
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This week PetSmart (Nasdaq: PETM) reported mixed quarterly results. Sales were unimpressive but profits did jump. The main reason shares are surging higher today is due to continued talks surrounding the company being taken private in the near future. Read On... | |
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It's up 19% since October 13. It pays a 6.6% dividend yield. And it's set up to soar on falling oil prices. Readers of Investment U's premium edition are discovering it today. Learn how to join them by clicking here. | | |
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Transportation stocks continue to hit fresh all-time highs. So the question is, how much further can they climb? The short answer: There is a lot more upside if you look at the price of the transports sector relative to its most important expense. Read On... | |
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