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After The Fall, Huge Upside & Value In Gold/Silver Miners (GDX, SIL, ABX, GG, NEM, AU, KGC, AEM, GFI, AUY, IAG, HMY, EGO, RGLD, SLW, PAAS)

Administrator — Tue, 22 May 2012 14:44:10 +0000

Gold and silver have finally indicated that the free fall we saw over the last month may have at least stabilized. The markets are mixed today in the commodities and the miners and we admit that no one truly knows what is the bottom-dollar that these can hit and no one knows the real top-dollar that investors will pay in a rally. What we do know is that the sell-off has literally gutted many of the key players in gold and silver and there is huge upside and value here if the consensus analyst price targets for one year from now are anywhere near correct.

At issue may be a stock market stabilization, or perhaps it is a stabilization aimed solely at the commodities and those companies which profit from either the rise of commodity prices or the rise of the demand for those commodities. It was just yesterday evening that Dennis Gartman of the Gartman Letter was talking up gold miners as his method of choice to play the current bounce in gold.

To show just how much implied upside there is we found some large cap gold stocks that have upside of about 100% and many of the big players have implied upside of well over 50%. The key ETFs for these miners show just how widespread the damage was during the last sell-off. The Market Vectors Gold Miners ETF (AMEX: GDX) trades at $43.35 against a 52-week trading range of $39.08 to $66.98 and that is down about 35% as a group from the highs. The Global X Silver Miners ETF (AMEX: SIL) trades at $18.00 against a 52-week range of $16.54 to $29.05 and that is down almost 38% from its high in the last year.

We included the implied dividend yields but due to foreign issues and ADRs causing currency translations and due to some payouts not being quarter like U.S. companies do, we would urge you to only consider the dividend as a footnote and something you should be verifying on your own. Besides that, who buys gold (and silver) miners because of their dividend yields only?

We have evaluated the following large-cap gold stocks: Barrick Gold Corporation (NYSE: ABX); Goldcorp Inc. (NYSE: GG); Newmont Mining Corp. (NYSE: NEM); AngloGold Ashanti Ltd. (NYSE: AU); Kinross Gold Corporation (NYSE: KGC); Agnico-Eagle Mines Ltd. (NYSE: AEM); Gold Fields Ltd. (NYSE: GFI); Yamana Gold, Inc. (NYSE: AUY); IAMGOLD Corp. (NYSE: IAG); Harmony Gold Mining Co. Ltd. (NYSE: HMY); Eldorado Gold Corp. (NYSE: EGO); and Royal Gold, Inc. (NASDAQ: RGLD). We have covered also two of the larger silver players of Silver Wheaton Corp. (NYSE: SLW) and Pan American Silver Corp. (NASDAQ: PAAS).

Barrick Gold Corporation (NYSE: ABX) traded at $37.60 and has a market value of $37.6 billion. The consensus target price from Thomson Reuters is $59.10 and the 52-week range is $34.82 to $55.95. Barrick has a dividend yield of 2.2%. The implied upside to the consensus target: 57% but we would note that the target is above the 52-week high.

Goldcorp Inc. (NYSE: GG) traded at $34.90 with a market value of $28.2 billion. The consensus target price from Thomson Reuters is $60.42 and the 52-week trading range is $32.16 to $56.31. Goldcorp’s most recent yield was listed as 1.6%. The implied upside to the consensus target is 73% but we would note that the consensus target is still above the 52-week high.

Filed under: ADR, Commodities, Corporate Governance, ETF, Metals, Trading Alert, Value Investing Tagged: ABX, AEM, AU, AUY, EGO, GDX, GFI, GG, HMY, IAG, KGC, NEM, PAAS, RGLD, SIL, SLW

Royal Gold’s Reserves Grow Even as Results Lag (RGLD, ABX, KGC, NEM, GG, PAAS, GLD)

Paul Ausick — Thu, 03 May 2012 14:00:30 +0000

For those who believe that the price of gold is going to rise, Royal Gold Inc. (NASDAQ: RGLD) may be worth another look. Shares are essentially flat over the past 12 months, but the company’s results have been outstanding even though they slightly missed estimates for the company’s third fiscal quarter.

The company owns shares of production in mines operated by Barrick Gold Corp. (NYSE: ABX), Kinross Gold Corp. (NYSE: KGC), Newmont Mining Corp. (NYSE: NEM), Goldcorp Inc. (NYSE: GG), and Pan American Silver Corp. (NASDAQ: PAAS) among many others. The company gets a portion of production without the impact of rising costs on production, costs which have bedeviled the miners for some time now.

For the company’s third quarter EPS came in at $0.44 versus a consensus estimate of $0.45. Revenues rose to $69.6 million, compared with an estimate of $69 million. Royal Gold also reported an increase in its gold reserves this morning, from a previous total of 83.9 million ounces of gold and 12.4 billion ounces of silver to 84.5 million ounces of gold and 1.2 billion ounces of silver.

After applying the company’s royalty participation formula, Royal Gold claims its precious metals reserves increased 19% on a gold equivalent basis from December 2010 to December 2011.

The consensus estimate for 2012 EPS is $1.83, growing to $2.32 in 2013. The company’s dividend yield is just 1%, and an increase to the annual $0.15/share dividend would probably help the stock more than another gold strike.

Compared with the SPDR Gold Shares ETF (AMEX: GLD), Royal Gold comes up a little short, with five-year share-price growth of 101% compared with growth of 138% for the ETF.

Royal Gold’s shares hit an all-time high last September near $84 and it’s trading today at $59.65, down about -2.3% from last night’s close. The 52-week range is $55.00-$83.87. Year-to-date shares are down -11.6%, even after a jump above $75/share following a January at-the-market purchase of 4 million shares by Goldman Sachs. Shares could be available at a bargain price real soon now.

Paul Ausick

Filed under: Commodities, Earnings, Metals Tagged: ABX, GG, GLD, KGC, NEM, PAAS, RGLD

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Paul Ausick — Wed, 02 May 2012 20:09:45 +0000

The major US stock indexes opened lower this morning following dismal reports from Europe on manufacturing (our coverage here) and unemployment (more coverage here). The ADP report on US unemployment provided more gloomy news ahead of Friday’s official unemployment numbers (more coverage here). The US EIA petroleum inventory report helped push oil prices down (more coverage here), but the weak economic news ruled the day. Only the Nasdaq index has managed to pull into positive territory at all today, and that by less than 0.2% about an hour before closing. The US dollar index rose today, now up 0.39% at 79.130. The GSCI commodity index is up fractionally at 687.61, with commodities mostly lower on the rising dollar. Chicago wheat fell more than -4.5% to post the biggest loss of the day. WTI crude oil closed down -0.9% at $105.22/barrel, and Brent crude trades down -1.23% at $1118.19/barrel. Gold settled down -0.5% today, at $1,654.00/ounce.

The unofficial closing bells put the DJIA down nearly 11 points to 13,268.65 (-0.08%), the NASDAQ rose more than 9 points (0.31%) to 3,059.85, and the S&P 500 fell -0.25% or more than 3 points to 1,402.31.

There were several analyst upgrades and downgrades today, including Chesapeake Energy Corp. (NYSE: CHK) cut to ‘neutral’ at R.W. Baird; ConocoPhillips (NYSE: COP) cut to ‘underperform’ at BofA/ML and started as ‘overweight’ at JPMorgan; RadioShack (NYSE: RSH) raised to ‘buy’ at Auriga; STMicroelectronics NV (NYSE: STM) raised to ‘buy’ at Goldman Sachs and raised to ‘neutral’ at Citigroup; and Assurant Inc. (NYSE: AIZ) cut to ‘underperform’ at BofA/ML.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Barrick Gold Corp. (NYSE: ABX) is down -2.8% at $39.30 (more coverage here); Marathon Oil Corp. (NYSE: MRO) is down -4.4% at $28.85; Mastercard Inc. (NYSE: MA) is down -0.8% at $452.14; Allergan Inc. (NYSE: AGN) is down -4.3% at $92.29; Yamana Gold Inc. (NYSE: AUY) is down -2.6% at $14.36; Time Warner Inc. (NYSE: TWX) is down -1.6% at $37.30; The Clorox Co. (NYSE: CLX) is down -3.3% at $67.74; Rowan Companies Inc. (NYSE: RDC) is up 1.3% at $34.97; R.R. Donnelley & Sons Co. (NASDAQ: RRD) is down -7% at $11.79; Martha Stewart Living Omnimedia Inc. (NYSE: MSO) is down -1.2% at $3.41; and IAC/InterActiveCorp. (NASDAQ: IACI) is up 3.3% at $50.34 after posting a new 52-week high of $52.77 earlier today.

Tomorrow we get earnings from First Solar Inc. (NASDAQ: FSLR), Diana Shipping Inc. (NYSE: DSX), Corinthian Colleges Inc. (NASDAQ: COCO), Apache Corp. (NYSE: APA), Orbitz Worldwide Inc. (NYSE: OWW), and Western Refining Inc. (NYSE: WNR) among many others.

Other standouts from today include the following stocks:

Chesapeake Energy is down -13.5% at $16.95 after posting a new 52-week low of $15.86 earlier today. The natural gas producer reported weak results and more troubles for CEO Aubrey McClendon. More coverage here.

Comcast Corp. (NASDAQ: CMCSA) is down -1% at $30.29. The cable company reported good earnings this morning. More coverage here.

Savient Pharmaceuticals Inc. (NASDAQ: SVNT) is down -18.8% at $1.51. An analyst has said that the company insolvent. More coverage here.

Stay tuned for Thursday. Philadelphia Fed President Charles Plosser, Atlanta Fed President Dennis Lockhart, and San Francisco Fed President John Williams are speaking at a conference. We have noted the following events on the schedule (all times Eastern):

7:30 a.m. – Challenger job cut report
8:30 a.m. – New claims for unemployment benefits
8:30 a.m. – Productivity and costs report
10:00 a.m. – ISM non-manufacturing index
10:30 a.m. – EIA weekly natural gas storage report
4:30 p.m. – Federal Reserve balance sheet and money supply

Paul Ausick

Filed under: HI/LOW, Market Close Tagged: ABX, AGN, AIZ, APA, AUY, CHK, CLX, CMCSA, COCO, COP, DSX, FSLR, IACI, MA, MRO, MSO, OWW, RDC, RRD, RSH, STM, SVNT, TWX, WNR

Gold Miners in Flux (ABX, GG, NEM, KGC, AUY, FCX)

Paul Ausick — Wed, 02 May 2012 13:37:43 +0000

Gold has been trading in a fairly narrow range between $1,600-$1,700/ounce for the past two months after ending 2011 at around $1,525/ounce. Gold prices spiked to near $1,800/ounce in February, but none of this has helped gold mining stocks which are down anywhere from -20% to around -45% for the past 12 months.

Barrick Gold Corp. (NYSE: ABX), which reported quarterly results this morning, is just the latest casualty in the gold mining business. Goldcorp Inc. (NYSE: GG) missed estimates by a modest amount, and Newmont Mining Co. (NYSE: NEM) reported a modest beat for the quarter. Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) beat EPS estimates by nearly 12%, the best showing of the bunch so far. Yamana Gold Inc. (NYSE: AUY) missed estimates yesterday, and Kinross Gold Corp. (NYSE: KGC) won’t report first quarter results until next week.

Demand for bullion, from central banks and investment instruments like the SPDR Gold Shares ETF (AMEX: GLD) are driving the price of gold, but not driving it to great new highs. Equity markets have been strong in the first quarter of the year, and investors have been chasing returns rather than seeking the safe haven of gold.

For the miners themselves, costs are the constraint. Barrick, for example, realized an average gold price of $1,691/ounce in the first quarter, up from $1,389/ounce in the same period a year ago, an increase of more than 21%. Cash costs rose from $437/ounce a year ago to $545/ounce in the first quarter, more than 24%. Total production costs rose from $595 to $737 per ounce, a jump of nearly 24%.

Barrick reported total cash margin on gold of $1,146/ounce, while Goldcorp reported total cash margin of $1,456/ounce. Labor and regulatory issues contribute to higher costs, as do less productive ores. Then there are the rising costs of new exploration and development.

If investors continue to flock to equity markets, only central banks and jewelry makers are left to push demand for gold. That’s not a good position for the miners to be in.

Barrick’s announced a 33% increase in its quarterly dividend this morning, to $0.20/share. Goldcorp raised its quarterly dividend to $0.35/share earlier. Neither move will boost the dividend yield above 2% though — and even if it did, it probably wouldn’t be enough to lift the share prices much.

Barrick stock is down about -1.6% in the pre-market, at $39.80 in a 52-week range of $38.46-$55.95.

Paul Ausick

Filed under: Commodities, Earnings Tagged: ABX, AUY, FCX, GG, KGC, NEM

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Paul Ausick — Tue, 01 May 2012 20:03:50 +0000

The major US stock indexes opened flat this morning but started to move higher following the better-than-expected ISM report on manufacturing (our coverage here). Construction spending in the US was a bit lower, but not enough to quell the enthusiasm over the manufacturing report. The US dollar index rose slightly today, now up 0.056% at 78.820. The GSCI commodity index is up fractionally at 684.88, with commodities mostly lower on the rising dollar. Cocoa put up a big gain today, while orange juice posted another sharp decline. WTI crude oil closed up 1.2% at $106.16/barrel, and Brent crude trades up 0.17% at $119.67/barrel. Gold settled up 0.1% today, at $1,662.40/ounce.

The unofficial closing bells put the DJIA up nearly 67 points to 13,280.31 (0.5%), the NASDAQ rose about 4 points (0.13%) to 3,050.44, and the S&P 500 rose 0.57% or nearly 8 points to 1,405.89.

There were several analyst upgrades and downgrades today, including Watson Pharmaceuticals Inc. (NYSE: WPI) reiterated as ‘buy’ at Canaccord Genuity; AstraZeneca PLC (NYSE: AZN) raised to ‘neutral’ at BofA; Abercrombie & Fitch Co. (NYSE: ANF) raised to ‘buy’ at UBS; SunPower Corp. (NASDAQ: SPWR) raised to ‘buy’ at Citigroup; Yingli Green Energy Holdings Co. Ltd. (NYSE: YGE) raised to ‘buy’ at Citigroup; Costco Wholesale Corp. (NASDAQ: COST) cut to ‘hold’ at Deutsche Bank; and Meru Networks Inc. (NASDAQ: MERU) cut to ‘neutral’ at RW Baird.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Arch Coal Inc. (NYSE: ACI) is down -3.8% at $9.39 (more coverage here); Veeco Instruments Inc. (NASDAQ: VECO) is up 14.8% at $34.67 (more coverage here); Pep Boys – Manny, Moe & Jack (NYSE: PBY) is down -21.8% at $11.67 (more coverage here); Archer Daniels Midland Co. (NYSE: ADM) is up 7.9% at $33.25; Corn Products International Inc. (NYSE: CPO) is down -0.14% at $56.98; Avon Products Inc. (NYSE: AVP) is down -7.6% at $19.95; Domino’s Pizza Inc. (NYSE: DPZ) is down -9.6% at $34.18; Pfizer Inc. (NYSE: PFE) is down -0.14% at $22.87; and Valero Energy Corp. (NYSE: VLO) is up 0.9% at $24.92.

Tomorrow we get earnings from Barrick Gold Corp. (NYSE: ABX), JDS Uniphase Corp. (NASDAQ: JDSU), Marathon Oil Corp. (NYSE: MRO), First Solar Inc. (NASDAQ: FSLR), and Visa Inc. (NYSE: V).

Other standouts from today include the following stocks:

P.F. Chang’s China Bistro Inc. (NASDAQ: PFCB) is up 29.7% at $51.46. The company is being taken private in a deal worth $1.1 billion. More coverage here.

Delta Air Lines Inc. (NYSE: DAL) is up 0.8% at $11.05. The airlines bought an oil refinery from newly-public Phillips 66 (NYSE: PSX). More coverage here.

Chesapeake Energy Corp. (NYSE: CHK) is up 6.3% at $19.60. The company’s chairman will be replaced and the company reports earnings after markets close today. More coverage here.

Stay tuned for Wednesday. Fed Governor Daniel Tarullo and Richmond Fed President Jeffrey Lacker are giving speeches. We have noted the following events on the schedule (all times Eastern):

7:00 a.m. – Mortgage Bankers Association purchase applications
7:30 a.m. – Challenger job cut report
8:15 a.m. – ADP employment report
10:00 a.m. – Factory orders
10:30 a.m. – EIA weekly petroleum status report

Paul Ausick

Filed under: HI/LOW, Market Close Tagged: ABX, ACI, ADM, ANF, AVP, AZN, CHK, COST, CPO, DAL, DPZ, featured, FSLR, JDSU, MERU, MRO, PBY, PFCB, PFE, SPWR, V, VECO, VLO, WPI, YGE

Silver & Gold Both Become The Devil’s Metal… Is Chart Support Near? (GLD, SLV, ABX, GDX, SLW)

Administrator — Wed, 04 Apr 2012 17:02:15 +0000

There is no point in arguing about it. Gold and silver are just the wrong trades in the current state of the markets. Hope may be near for support, but there are risks to having too much conviction behind that hope. Most investors are currently blaming the fears that Bernanke and friends are no longer going to invent ways to add quantitative easing measures any longer beyond operation twist as it expires. Despite a personal rant yesterday calling for an end to all of these easing measures, the current state of the policies will still likely be accommodative for quite some time even if the FOMC does not invent any new easing measures.

The charts have turned ugly for gold and silver and it bleeds right back to what Carter Worth of Oppenheimer said in mid-March about gold going back to $1,500.00. Our take is that gold is currently suffering from identity crisis: it is not an inflationary nor a dollar hedge, nor is it proving to be the risk-on asset that investors, traders and speculators had been hoping it was.

Today’s prices on gold and silver matter if you are a pure chartist. If the prices fail to hold here, gold has another $100 or so in downside and silver could see another 10% easily come out of its still-elevated price. The iShares Silver Trust (NYSE: SLV) and the SPDR Gold Shares (NYSE: GLD) are experiencing different forms of chart failures right now.

The Gold Trust failed its 50-day short-term test last month and it has now been proving to fail on its 200-day moving average test for the longer-term outlook. If the GLD does not get a bounce soon, there could be dead air down to $152 or so before technical buyers start sniffing again.

Be sure to see the Stockcharts.com charts below. The Silver Trust failed its 200-day for longer-term investors back at the end of February and the beginning of March, but its short-term chart was failing at the 50-day moving average back to mid-March. If this Silver Trust share closes under $30 and hangs out there for long, there is really a bunch of dead air down to $28 or even $27 before technical buyers will start sniffing.

Before you think that the end will never come, Kitco’s Allen Sykora noted today in a longer presentation, “analysts and traders suspect that the market will find some kind of footing before long.” As we always say, charts matter but they are often corrected by a whole host of excuses as to why they did not work in a particular instance.

The weakness in metals is turning the key gold shares into value traps rather than value stocks. The $41+ billion dollar in value of Barrick Gold Corporation (NYSE: ABX) is even down 4% at $41.21 and that is $1.00 under its prior 52-week low. A 4.3% drop in the Market Vectors Gold Miners ETF (NYSE: GDX) down to $46.65 is down $1.40 under its prior 52-week low of $48.05. And silver is proving to be the devil’s metal for Silver Wheaton Corporation (NYSE: SLW) with a 4.2% drop to $31.30, but its 52-week low does not come into play until $25.84.

This is a difficult time to play a chartist in gold and silver. The underlying theme is that both metals are weak and could get much weaker. We usually prefer more fundamental analysis and the fundamental analysis is not supportive either. If no more easing measures are going to be invented, then the dollar’s rise against the Euro will only help put pressure on gold and other commodities. And more specifically, investors as of today are not able to successfully claim that gold is a hedge asset nor that it is a risk-on asset worth buying.

Stay tuned. Maybe silver is not the only devil’s metal.

JON C. OGG

Chart provided by Stockcharts.com:

Filed under: Charts, Commodities, Currency, Metals Tagged: ABX, GDX, GLD, SLV, SLW

Barrick Gold to Issue $2 Billion in New Debt (ABX)

Paul Ausick — Fri, 30 Mar 2012 11:00:19 +0000

Barrick Gold Corp. (NYSE: ABX) has announced this morning that the company will issue $2 billion in debt securities, the proceeds of which will be used:

primarily to repay existing indebtedness under two revolving credit facilities, each of which was drawn upon in connection with Barrick’s acquisition of Equinox Minerals Limited in 2011, with the balance of the proceeds being used to finance the development of mining projects and for general corporate purposes.

There are two parts to the offering: $1.25 billion of 3.85% notes due 2022; and $750 million of 5.25% notes due 2042. The offering is expected to close around April 3, 2012.

Barrick’s shares closed yesterday at $43.13 in a 52-week range of $42.20-$59.95.

Filed under: Metals Tagged: ABX

Are Gold Stocks a Bargain at 52-Week Lows? (GLD, ABX, NEM, GG, GDX)

Administrator — Thu, 15 Mar 2012 17:55:11 +0000

Gold is trying to recover on Thursday as it moves back and forth between being a risk-trade asset and an end of the world trade. While gold may be on the mend or at least trying to find some footing, it is impossible to not notice that the major gold stocks in many cases are down very close to their 52-week lows. Does this make the gold giants like Barrick Gold Corporation (NYSE: ABX), Goldcorp Incorporated (NYSE: GG), and Newmont Mining Corporation (NYSE: NEM) bargains? And what about the Market Vectors Gold Miners ETF (NYSE: GDX)? Maybe more is up to the charts than to fundamentals right now (see below).

Barrick Gold Corporation (NYSE: ABX) is up 1.2% at $43.84, but its 52-week trading range is $42.50 to $55.95. The market value is still almost $44 billion. Goldcorp Incorporated (NYSE: GG) is up only $0.03 at $44.48 but its 52-week trading range is $41.91 to $56.31. Goldcorp is still worth nearly $36 billion today. Newmont Mining Corporation (NYSE: NEM) is down around $54.15 after a $0.15 drop on Thursday and the 52-week trading range is $50.16 to $72.42. It is still worth more than $26 billion and it has a 2.6% dividend yield.

To show that these large players are not alone, the Market Vectors Gold Miners ETF (NYSE: GDX) is up 0.5% at $50.34 but the 52-week trading range is $49.22 to $66.98.

Gold itself is up almost 1% at $1658.90, but that is down from about $1,780 at the end of February and down from above $1,700.00 just last week. If you just look at gold via the SPDR Gold Trust (NYSE: GLD), it is up 1% at $161.30 and the 52-week range is $136.25 to $185.85. The “GLD” is at an important juncture on its chart if you take a look at the stockcharts.com chart below.

JON C. OGG

Filed under: ADR, Commodities, ETF, Luxury, Metals Tagged: ABX, GDX, GG, GLD, NEM

Upside is Scarce in Metals and Materials Stocks (X, NUE, STLD, NEM, ABX, SLW, FCX, SCCO, AA, MCP)

Paul Ausick — Thu, 23 Feb 2012 16:50:29 +0000

The metals and materials sector, including miners, has been hit hard by the weaker global economy. China’s manufacturing slowdown, the turmoil in Europe, and slow growth in the US have caused prices to fall even as expenses rise. All but three of the companies in this survey have had their target prices lowered in the past three months, a further signal that weaker revenues and profits may be in store for 2012.

The companies we examined were United States Steel Corp. (NYSE: X), Nucor Corp. (NYSE: NUE), Steel Dynamics Inc. (NASDAQ: STLD), Newmont Mining Corp. (NYSE: NEM), Barrick Gold Corp. (NYSE: ABX), Silver Wheaton Corp. (NYSE: SLW), Freeport-McMoran Copper & Gold Inc. (NYSE: FCX), Southern Copper Corp. (NYSE: SCCO), Alcoa Inc. (NYSE: AA), and Molycorp, Inc. (NYSE: MCP).

Since November, gold prices have gained about 3%. Silver prices are essentially flat, and copper prices are up by about 5%. Titanium prices are about 6% lower, steel prices have been falling and are now about 7% lower than in November, and rare earth minerals exports from China were below expected levels in 2011, causing a price drop in the latter part of the year. Chinese production projections for 2012 are roughly equal to the 2011 production quota of 31,000 metric tons.

Newmont’s consensus target price has fallen from $81 in November to $77.92. At a current price this morning of $62.98, Newmont’s implied gain is 23.7%. Since the beginning of the year, the stock has gained more than 5%, with a 12-month share price gain of about 6.8%. The company raised its quarterly dividend to $0.35, a jump of 133%, following a pledge to raise dividends if gold price targets were met. The company’s dividend yield is now 2.3%.

Barrick’s target price has also been cut, from $68 to $64.72. At its current price of $49.62, Barrick’s implied gain is 30.4%. Year-to-date shares are up about 9.6%, but for the preceding 12 months, Barrick’s stock is down 5.6%. Shares are trading at less than 6% away from the 52-week high of $55.95. Over the past month, Barrick’s shares have gained 12%.

Molycorp’s target price fell from $70 to $52.83. At a current price of $28.68, the potential upside is a whopping 84%. Molycorp’s shares have lost about 38% in the past 12 months, though since January shares have risen about 20%. The company is expected to report EPS of $0.41 on revenue of about $135 million after markets close today. The company has begun a phased launch of its new manufacturing facility and expects to produce 19,050 metric tons of oxides by the end of the third quarter. That would be good news if prices weren’t falling.

US Steel’s target price remained nearly flat from November’s $34.50 to today’s $35.21. At the current price of $28.19, the implied gain is 24.9%. Falling steel prices in the fourth quarter hurt all steel makers. Global crude steel production grew 6.8% in 2011, which combined with a slower growing economy depressed prices. Global production was down -7.8% year-over-year in January, which could herald a comeback in pricing.

Nucor’s target price has risen from about $45 to $48 since November. At the current share price of $43.44, the potential upside is 10%. Two recent analyst downgrades have chopped share price gains, but Nucor’s stock is still up nearly 10% since January.

Freeport-McMoran’s target price actually rose from$53 to $55.28 in the last three months. At the current share price of $43.89, the potential upside for the stock is 26%. Freeport had a lousy fourth quarter, due mainly to labor strife in Australia. Slowly rising copper prices should help, but production may have to be reined in to keep prices moving up.

Silver Wheaton’s consensus target price fell from $49.50 to $47.80, while the share price has gained more than 26% in three months. At the current share price of $39.29, the implied gain here is 21.7%. Silver prices are roughly flat since November, and unless they improve, Silver Wheaton’s share price won’t either.

Alcoa’s target price has dropped from $13 to $11.53 since November. At the current price of $10.46, the implied gain in Alcoa stock is about 10%. Alcoa appears to have little attraction at its current share price, which is more likely to suffer than prosper from a glut of aluminum.

The target price for Steel Dynamics has risen from $16 to $18 in the past three months. At the current price of $14.75, the implied gain in the stock is 22%. As with US Steel, whether or not Steel Dynamics has a chance to add value depends on demand for steel and what that will do to prices if production continues to grow.

Southern Copper’s target price hjas fallen from $36.25 to $35.58. At the current price of $33.45, the implied gain for Southern Copper is 6.4%. The only thing that will boost Southern is a rise in copper prices.

The underlying softness in commodity prices makes any play other than gold a risky choice. Newmont and Barrick, the two gold producers in this bunch, offer significant upside potential, and rising gold prices should help, provided the miners can keep costs under control.

Paul Ausick

Filed under: 24/7 Wall St. Wire, Commodities, Metals Tagged: AA, ABX, FCX, MCP, NEM, NUE, SCCO, SLW, STLD, X

24/7 Wall St. Closing Bell (AMZN, DE, NVDA, LO, WFR, AAP, APA, ABX, DTV, DUK, GM, TAP, STRA, PFCB, JNGW, AEA, HDY, PMFG, CAR)

Paul Ausick — Thu, 16 Feb 2012 21:05:06 +0000

Stocks opened higher this morning following upbeat reports on unemployment claims and new housing starts. With a little more than a half hour left in today’s session, all three indexes have made solid gains today and remain near daily highs. Volume has been quite light, with less than 500 million shares traded today. Lack of news from Europe is probably keeping many investors on the sidelines. The dollar has lost all the gains it started today with. The dollar index is down -0.42% at 79.394, after starting the day up over 80. Crude oil is higher today, with WTI crude up 0.51% at $102.32 and Brent up 1.13% at $120.27. We have more coverage of the jump in Brent prices here and the impact of rising gasoline prices here.

The unofficial closing bells put the DJIA up more than 123 points to 12,904.01 (0.96%), the NASDAQ rose more than 44 points (1.51%) to 2,959.85, and the S&P 500 rose 1.1% or nearly 15 points to 1,358.05.

There were several analyst upgrades and downgrades today, including Amazon.com Inc. (NASDAQ: AMZN) cut to ‘equal-weight’ at Morgan Stanley; Deere & Co. (NYSE: DE) cut to ‘market perform’ at Wells Fargo; Nvidia Corp. (NASDAQ: NVDA) cut to ‘neutral’ at BofA/ML; Lorillard Inc. (NYSE: LO) started as ‘buy’ at Jefferies; and MEMC Electronic Materials Inc. (NYSE: WFR) raised to ‘hold’ at Jefferies.

Earnings reports since markets closed last night have led to some price changes as of the last half hour of trading today: Advance Auto Parts Inc. (NYSE: AAP) is up 7.3% at $85.20 after posting a new 52-week high of $86.30; Apache Corp. (NYSE: APA) is up 0.14% at $107.82; Barrick Gold Corp. (NYSE: ABX) is up 1.24% at $48.02; DirecTV (NASDAQ: DTV) is down -1.9% at $45.41; Duke Energy Corp. (NYSE: DUK) is up 1.53% at $21.19; General Motors Co. (NYSE: GM) is up 9% at $27.17; Molson Coors Brewing Co. (NYSE: TAP) is up 3% at $45.18; Strayer Education Inc. (NASDAQ: STRA) is down -8% at $105.81; and PF Chang’s China Bistro Inc. (NASDAQ: PFCB) is up 2% at $35.35.

Other standouts from today include the following stocks:

Jingwei International Ltd. (NASDAQ: JNGW) is up more than 43% at $2.08. The Chinese software company is being taken private.

Advance America, Cash Advance Centers Inc. (NYSE: AEA) is up more than 32% at $10.46 after posting a new 52-week high of $10.55 early this morning. The cash advance provider is being acquired by Mexico’s Grupo Elektra for $10.50/share, for a total price of about $655 million.

HyperDynamics Corp. (NYSE: HDY) is down nearly -30% at $1.42 after posting a new 52-week low of $1.01 earlier this morning. The independent oil & gas exploration and production company reported only non-commercial quantities of hydrocarbons at its offshore West African field.

PMFG Inc. (NASDAQ: PMFG) is down nearly -20% at $16.85. The machinery maker has announced a secondary offering of 2.6 million shares at $16/share.

Avis Budget Group Inc. (NYSE: CAR) is down nearly -16% at $12.28. The car rental company posted an unexpected loss in the fourth quarter.

Stay tuned for Friday. We have noted the following events on the schedule (all times Eastern):

8:30 a.m. – Consumer price index
10:00 a.m. – Leading economic indicators

Paul Ausick

Filed under: 24/7 Wall St. Wire Tagged: AAP, ABX, AEA, AMZN, APA, CAR, DE, DTV, DUK, GM, HDY, JNGW, LO, NVDA, PFCB, PMFG, STRA, TAP, WFR