Sibanye Stillwater Limited (SBSW) | Daily Alert April 26
SBSW is a South Africa-based producer of precious metals that develops and extracts mineral properties. Its diverse portfolio includes platinum metal operations in the United States and South Africa, gold operations and projects in South Africa and copper, gold, and platinum metal exploration properties in North and South America. Sibanye is the largest primary producer of platinum, the second-largest primary producer of palladium and ranks third among global gold producers on a gold-equivalent basis.
What we like about SBSW is that it has been at the top of the list of mining stocks in terms of share price performance over the past year. In fact, its 190% spike over the past 52 weeks has vaulted the stock into the top 10% of all public companies for share price performance over the past year.
The company is also an earnings powerhouse, with EPS surging in its most recent quarter and year-over-year earnings per share (EPS) estimates for growth of more than 60% in fiscal 2021.
Technically speaking, SBSW has formed a very bullish cup-with-handle pattern over the past eight weeks. Moreover, today’s slight giveback means that there is a chance for us to get in on SBSW before it stages its next big move higher.
Let’s buy Sibanye Stillwater Limited at market, with a protective stop at $15.90.
For those willing to make a bigger bet, we recommend the SBSW July $22.50 call options (SBSW210716C00022500), which last traded for $1.10 and that expire on July 16.
Mark Skousen & Jim Woods, FMA Trader Alert, markskousen.com, Eagle Financial, 300 New Jersey Ave. NW, Suite 500, Washington, D.C. 20001, April 19, 2021
Franco-Nevada Corporation (FNV)| Daily Alert May 5
Franco-Nevada has expanded into iron ore, buying some of Vale’s outstanding Participating Debentures from the Brazilian government. The debentures provide holders with life-of-mine net sales royalties on Vales’s low-cost iron ore systems in Brazil and some gold and copper operations. The weighted life of the iron ore mines is 30 years with potential for extension for many decades. Based on current economics, the debentures return a 10% yield.
At the same time, Franco announced it had acquired a 9.9% investment in Labrador Iron Ore Royalty Corp., purchased over “a number of years” for an average cost of $14.72; the units are trading today at $38 a share. These investments diversify the commodity exposure and provide “a base of low-risk, long-life cash flow”, according to CEO Paul Brink.
Franco is a cornerstone holding for us: top management, diversified asset base and extensive pipeline, solid balance sheet all make it our go-to gold investment. Given the jump from $105 in the last two months, we are not chasing it. But it you do not own it, look for any opportunity to buy.
Adrian Day, Adrian Day’s Global Analyst, adriandayglobalanalyst.com, 410-224-8885, April 25, 2021
*Rio Tinto Group (RIO)
I recommend you target a new, diversified global materials giant for generous income and juicy potential gains. I’m talking about Rio Tinto Group (Rated “B-”). London-based Rio Tinto produces everything from iron ore and aluminum to copper, diamonds and titanium. It has more than 47,500 employees spread across 60 locations in 35 countries.
Among its far-flung operations are the large iron ore mining, rail transport and shipping facilities in Pilbara, Western Australia … the Oyu Tolgoi copper mine in Mongolia … the Argyle and Diavik rough diamond mines in Australia and Canada … and a long-running borate mine in California, which supplies a mineral used in fertilizer, glass and home insulation.
Rio Tinto managed to report a 3% rise in sales, 6% growth in cash flow from operations and a 20% increase in core earnings last year despite the COVID-19 pandemic. That’s because materials demand and pricing rose strongly in the second half of 2020 as stimulus kicked in.
Rio Tinto couldn’t avoid business hiccups entirely. Its aluminum results weren’t as strong as I’d like to see, and currency market movements put upward pressure on costs. But the firm’s overall outlook is solid. Net debt has been coming down. Rio Tinto’s U.S.-traded shares sport a dividend yield of almost 6%, courtesy of generous regular and special dividends (the firm pays out on a semiannual basis).
And our Weiss Ratings system upgraded the stock to “Buy” territory in December.
Buy a 2.5% position in Rio Tinto Group at the market.
Mike Larson, Safe Money Report, 1-877-934-7778, weissratings.com, April 2021
*Southwest Gas Holdings, Inc. (SWX)
Southwest Gas would seem to be a good candidate for a spinoff, combining a leading utility construction company Centuri with a solidly growing gas distribution utility (customer growth, 1.7%). Shares trade at just 16.6 times expected next 12 months earnings.
The Centuri unit has seen solid earnings momentum the past few years, realizing $90.5 million of incremental revenue this winter from emergency services alone. And with a solid base of regulated utility contacts, it’s easy to see higher US infrastructure spending directed at the electric industry flowing to its bottom line.
Management appears to be making very conservative assumptions for Centuri this year, with a 1% to 4 % increase in revenue and operating income of 5.3 to 5.8% of sales. And a real opportunity to grow faster may prompt at least a partial spinoff to raise needed capital.
Southwest is a buy up to 75.
Roger Conrad, Conrad’s Utility Investor, www.ConradsUtilityInvestor.com, 888-960-2759, May 2021