# Value in Resource Stocks



## YOUNG_TRADER (20 May 2006)

Hi Peeps, well Gold got mashed last night down to $650, Silver is @ $12, Copper is @ $7,600t and Zinc is @ $3,200t

Now heres whats interesting, when I did my little valuation sheets for stocks like CBH and JML I was using a Zinc Price of $3,000t - $3,400t, a silver price of $12 an oz and a Copper Price of $6,000t, I forgot that we were at these levels about 1 month ago and these stocks were screaming buys )IMO and to most brokers who were using far more conservative metals prices Patersons, Hartleys, Bell Potter, Fat Prophets)

Have a look at CBH and JML see if you can find the valuation sheets I put up, point is using these metal prices the stocks were screaming buys, didn't really bother to adjust prices upwards as I thought they were running to hard, 

People must take everything into consideration, most analysts are saying
U.S. copper futures have corrected more than 10 percent since record highs on May 11. *But analysts say the fall is not too big, given the extent and the size of this year's rally. * 
Analysts said *fundamentally * the market remained supported by bullish supply/demand imbalances and the potential for further labor disruptions due to several labor contract renewals this year.  


Take BMO, it is being sold down crazily, as gold drops its the high margin producers who are insulated the most, BMO will be a 70k oz p.a. producer with intial cash costs of $300 AUD an oz dropping to $250 AUD an oz for life of mine, so when gold is @ $750 AUD an oz there margins are still huge, unfortunately players such as RSG and other high cost producers margins begin to disappear,


Now CVRD and Rio have just secured a 19% price increase for Iron Ore, which Japanese and European Steel Mills were happy to pay, now if JMS (see thread) can pull of its JV with Sino steel, then regardless of how 'worrying' inflation is blah blah blah, its mkt cap has to rise from under $10m,

Uranium spots have kept increasing, again regardless of all this other mkt sentiment crap undervalued Uranium deposit developers should be insulated to this sell off,

Point is although this downturn was a correction e needed and does effect all stocks due to its effect on mkt sentiment etc, don't overeact and throw away your value stocks, I'm sure the people who were 'dumping' OXR @ close to $1 in Oct correction and PEM @ under $1 know what I'm saying, 

Most anaylsts and economists I'm speaking to don't really care where the mkt heads in the next 2-3weeks, as they also believe in the 'stronger for longer' theory, XSTRATA is doing a $19BILLION US T/O I'm pretty sure they too believe in the stronger for longer theory.

One last thought, if inflation worries are causing this sell off why has gold continued to get smashed? I'LL LET YOU ANSWER THAT ONE


Anyway just my two bob, no doubt monday will be another shocker as most people *over-react * to the falls


----------



## powerkoala (20 May 2006)

Good thinking YT.
I have been doing the same thing on October last year.
Afraid of losing more, selling all my good stocks.
Result => afraid to enter when it crawls up
Now, all the stocks is twice my values.... 

So, just close my eyes for what happen this week. Don't even bother touching my shares. Coz, it will be back and i am sure it will be higher


----------



## IGO4IT (20 May 2006)

I agree with youngtrader that the Current market bad attitude towards resources is not coming from the actual decrease in metal prices because fund value of reserves & price estimations of prospect reserves were generally conservative when it was done & current dip shouldn't really make resources lose their weight much but more or less give resources stocks a hair cut!

The problem imo is the current fear from the DOW to keep declining (which I don't think anyone can really predict where it will stop its current dive!) & the more it declines the more time it will take to get up again to reach previous highs, therefore, more will tend step out & watch rather than get involved in a fight they have no connection to!

I'm not doubting that this is a temporary correction & it was due sooner or later but I'm scared of how long it should take before bulls trust putting their money back into resources without being worried of minerals pricing dropping again.

DOW is up already on close on Friday 0.14% after a very volatile trading & a lot are assuming that the buys at the close were to garnish the close & I think it was very possible.

I think ASX200 should act positively or at least stay stable on Monday as a response to the positive close of the DOW.

cheers,


----------



## nizar (20 May 2006)

IGO4IT said:
			
		

> the problem imo is the current fear from the DOW to keep declining (which I don't think anyone can really predict where it will stop its current dive!) & the more it declines the more time it will take to get up again to reach previous highs, therefore, more will tend step out & watch rather than get involved in a fight they have no connection to!




IGO4IT

IMO.. asx200 will get SMASHED on monday... resources especially..

No one cares about DOW when it comes to resources... its metals and Gold, BHP are not going to earn less money if DOW goes down, but they will if metals (keep) going down..

IMO this is only temporary, i would expect copper to hold above $2.80 (still a bit of down to go) and zinc im hoping stay above $1.20, as for gold maybe reach 600-620 before bouncing... everything got a bit 2 speculative and carried away... copper after getting dumped is still around $7,700tonne, last month it was $6,300tonne...

Agree with YT about over-reaction, everyday OXR are selling a few hundred tonnes of zinc and copper at SPOT prices, even copper at 2.80 and zinc 1.20 still VERY profitable...

More downside to come, but at the end of the year resources IMO will be much higher than they are today


----------



## Kipp (20 May 2006)

Is the emotional solution (for those who still hold resource stocks) to just not check the SP's for the next week if the carnage continues?  Or is that akin to sticking your head in the sand?

But really whether the choices are no news or bad news... I'll take no news thanks.

Am I correct in saying that while the LME stocks are disappearing (Zinc and Nickel) that current supply can't match demand?  Or is that a simplified view?


----------



## Smurf1976 (20 May 2006)

IMO the underlying "problem" is that the markets are starting to wake up to the reality that recent interest rate rises haven't been anywhere near enough to halt inflation. 

And so we come to a decision point:

1. The Fed keeps hiking rates to ward off inflation and protect the US Dollar's value. Not good for stocks or the economy in the short term though.

2. The Fed goes soft and the inflation rot is allowed to spread beneath the surface. Then at some point in the future we get far larger interest rate rises than option one. Good news economically short term leading to a trainwreck when the high rates finally arrive. 

So basically a guessing game as to _when_ the Fed addresses the inflation problem. Do it now or let it grow and fix it tomorrow? Either way, the required interest rate hikes ought to suppress economic activity and hence commodity demand globally.   

All in my opinion etc. Do your own research before investing.


----------



## specman (21 May 2006)

I'm sure there are plenty of investors who believe in the China story sitting on the sideline smacking their lips just waiting to take advantage of this correction.

As for inflation and interest rates,they are still considered to be within acceptable levels at this stage.


----------



## coyotte (21 May 2006)

Since the Yanks have been hiking Rates --- the SP500 has been steadly climbing with them ---- So what happened now ? ---- is the real concern is that they will stop --- hence a drop in the $us --- leading to overseas investors pulling the plug on their US Equities ?


Just a thought
Coyotte


----------



## nizar (21 May 2006)

coyotte said:
			
		

> Since the Yanks have been hiking Rates --- the SP500 has been steadly climbing with them ---- So what happened now ? ---- is the real concern is that they will stop --- hence a drop in the $us --- leading to overseas investors pulling the plug on their US Equities ?




Agree
drop in us$.... U know what that means for gold 
Hmmm... but what about gold stocks?
if DOW tanks and asx200 follow (?)... but gold is up will gold stocks suffer?


----------



## michael_selway (21 May 2006)

YOUNG_TRADER said:
			
		

> One last thought, if inflation worries are causing this sell off why has gold continued to get smashed? I'LL LET YOU ANSWER THAT ONE
> 
> Anyway just my two bob, no doubt monday will be another shocker as most people *over-react * to the falls




yeah i wonder why, but maybe they are thinking tha to fight inflation, they will raise interest rates, which shoudl lower inflation, tus gold falls in advance, like the DOW?

KZL - Earnings and Dividends Forecast (cents per share) 
2005 2006 2007 2008 
EPS 7.2 17.6 64.0 41.7 
DPS -- 0.0 0.0 0.0 

PEM - Earnings and Dividends Forecast (cents per share) 
2005 2006 2007 2008 
EPS -2.8 34.1 57.9 47.4 
DPS -- 2.0 2.0 2.0 

thx

MS


----------



## specman (21 May 2006)

I thought the drop in metal prices have been the hedge funds selling.Now they are shorting base metals and probably gold as well as declining prices has the been the trend of late.The hedge funds has really distorted the price of metals and it's anyones guess what the real supply and demand prices are.One report I read said 50% of what they were at their peaks but I don't know how they got that figure.


----------



## YOUNG_TRADER (21 May 2006)

Another thing that makes me laugh is how modern players or analysts view gold as an alternative investment to the US $ and protection against inflation only, they fail to recognise a new very powerful force,

About 2.5 Billion people from China and India combined with a few thousand years of belief that gold represents a family's wealth and status,

ie If you are Asian (Chinese/Indian etc) I'm sure you'll know what I'm talking about, but for those who are in the dark, most families from these countries view gold as a good place to store family wealth, don't ask me why but one of the first things a person does from India when their income levels begin to rise is buy gold jewellery, watches, bangles (type of bracelet), chains etc etc, 

As the incomes of thse 2.5 Billion people rise slowly yet stedily we are going to see massive organic jewellery oriantated demand for the metal, so just like oil, analysts better re-write their books on prediciting gold prices,

$750 - $800 us/oz will be a good gold price to have going into the new year, anything higher is too high short term, 

LT we will definately see $1000 us/oz probably in mid 2007



But for example, BMO is valued @ 60c (Hartleys) using a gold price of under $600 an oz and AUD/USD of 0.75, so once sentitment of stupid selling leaves, bargain hunters should be picking up the undervalued stocks.


----------



## nizar (21 May 2006)

Smurf1976 said:
			
		

> IMO the underlying "problem" is that the markets are starting to wake up to the reality that recent interest rate rises haven't been anywhere near enough to halt inflation.
> 
> And so we come to a decision point:
> 
> ...




Smurf, some US economist in weekends AFR said that the FED has a habit of lifting interest rates until something " breaks" (so a great call by you) but he reckons the fact that housing has cooled may be that break, so 1 more rate rise in june and then it stops there...

Thoughts?
(sorry for off-topic guys)


----------



## YOUNG_TRADER (23 May 2006)

Well today was another smashing just like I thought it would be (see first post) and another over-reaction,

I am still 100% stronger for longer, this correction should last another week to 2 weeks (ie start june) so guys its gonna be a bit of an drain,

I was never that bullish on Copper, but Gold, Zinc Oil and Uranium yes please!

Zinc is my favourite, week on week we are seeing a decine in Zinc stocks, come Oct Zinc stocks will be @ or close to 0 so we'll see what a tech bubble really looks like then,

Oil, lol even with all this massive selling and slowdown etc etc Oil is @ $67 a bl, so near record highs, I hope it doesn't advance any higher. Some really undervalued Oilies out there

Uranium, the world needs a new power source full stop! ie interest rates, inflation, sentitment blah blah, the worlds demand for uranium has only started and will become insatiable over the next few years, lesson I have learnt, back players outside Aus, with strong technical and financial JV's

Gold, so many goldies have got hammered, can't believe how low BMO is going, one of the highest margin producers,


So for those who believe in the stronger for longer like me, try and ignore these next 2 weeks, look for bargains, top up on oversold stocks,

For those newbies out there, trust me when I say you'll look back on this and wonder why you stressed so much,


----------



## Sean K (23 May 2006)

Agree with your last 2 lines YT. 

This will be a great opportunity to buy once the dust has settled.  

Everyone should be hanging in there and happy that this correction has occurred. A chance to buy in at cheaper prices!


----------



## YOUNG_TRADER (23 May 2006)

To emphasize my point on over-reaction and sentiment devoid of fundamentals, look @ PDN's sell off from $5.60 to $3.60 almost 35-40% and Uranium spots just keep increasing!

p.s. once mkt turns I'm gonna CFD long OXR ZFX and PEM to the max!


----------



## nizar (23 May 2006)

YOUNG_TRADER said:
			
		

> To emphasize my point on over-reaction and sentiment devoid of fundamentals, look @ PDN's sell off from $5.60 to $3.60 almost 35-40% and Uranium spots just keep increasing!
> 
> p.s. once mkt turns I'm gonna CFD long OXR ZFX and PEM to the max!



YT dont forget KZL
The price is going down but those earnings keep on getting upgraded!!


----------



## Warren Buffet II (23 May 2006)

Hi,

This is one of the reasons why Warren Buffett does not invest in commodity stocks, it is simple, they do not follow fundamentals. He is very clear about that and I have always thought that now I can see why.

I am not saying that I do not own commodity stock but it amazing how they can swing from one day to another. They have become a hot topic and as such they will be in the ot seat for a long time.

IMO, I believe there is more downside than upside in commodity stocks now and the future has turned clowdy. 

WBII


----------



## YOUNG_TRADER (23 May 2006)

Sit tight and don't lose your mettle
Robin Bromby 
May 23, 2006
PREPARE for more bad news on the commodities front - possibly a lot more bad news - but don't panic and lose your nerve, say analysts and advisers.
And there was certainly disappointment yesterday after Friday's stomach-churning reverses in the precious and base metals prices in London and New York on Friday. 

Gold, which had fallen 3.4 per cent at the end of the week, dropped another $US11.70/oz in Asian trading yesterday to bring the retreat to $US645.90/oz. 

Copper, which gave up 6.5 per cent in New York to $US3.467 a pound, saw another 4 per cent sell-off in Shanghai yesterday. 

And the mid-tier producers took another hammering as trading began for the week. Zinifex, which 10 days ago hit $13.50, shed a further $1.61 to end the day at $9.20. Consolidated Minerals, above $2.70 earlier this month, was down another 22c to $2.02. Copper producer Straits Resources - $4.63 on May 5 - took a 33c pummelling yesterday to close at $3.70. 

Even Kagara Zinc, largely unhedged and riding both the zinc and copper bulls, is down from a month high of $4.64 to $3.03. 

But this is where, in the view of Southern Cross Equities, investors risk making the biggest mistake of all. 

In a letter to clients, SCE points out that, while copper is above $3.30 at present, the average broker forecast for the metal in fiscal 2007 is $US1.85/lb. 

BHP Billiton produces 1 million tonnes of copper per year. 

Wait for a week or two, let the correction run its course, and then buy BHP and Rio Tinto, advises SCE director Angus Aitken. 

These resources giants have much better long-term earnings growth than industrials such as Coles Myer, Tabcorp or the banks. 

"Who wants to be in a company with only 6 per cent growth?" Mr Aitken said. 

He pointed to recent profit downgrades by industrials such as Housewares International and Repco as typical of the danger of switching away from resources stocks to industrials during a commodities boom. 

And SCE's letter rammed the point home: "The current cycle is only in its infancy due to two decades of under-investment in new capacity and the unprecedented simultaneous industrialisation of two countries that together account for one-third of global population." 

And there are signs local investors are watching and waiting rather than throwing in the towel. 

Rohan Edmondson, client adviser at broker Montagu, said the phones had gone quiet yesterday after a busy time late last week. 

"Investors here seem to be getting more informed about resources," he said. 

Mr Edmondson is telling those clients who do call that he is not concerned with corrections and that the underlying fact is that there is not enough metal to meet demand with China booming and growth picking up in the developed countries.

There were just not enough new mines in the pipeline. 

"Where is the supply coming from which is going to satiate demand?" he added. 

Even though he believes metals have further to fall, Commonwealth Bank commodities strategist David Thurtell sees this correction as a reaction to the phenomenal speculation that has been sending prices skywards. 

But he expects zinc, which closed at $US3280/tonne on Friday, to be back over $US4000 by the end of 2006 as London Metal Exchange stocks of just 247,000 tonnes should be run down before eight months were out.  

And, while no gold bug, Mr Thurtell sees the yellow metal reaching $US800/oz also by year's end. 

Far East Capital's Warwick Grigor's advice to investors is that they shouldn't try to beat the hedge funds that are driving the metals market. 

"These barbarians of the market push prices up to the precipice and over the cliff because this is the way they make their money. And if there's panic they make even greater profits." 

Mr Grigor said the market had peaked for probably as long as six months but that was good: at recent prices, buyers like China would have refused to take metal. 

His best investments were iron ore and uranium, because neither was traded on the spot market and the price-setting through long-term contracts meant the hedge funds could not manipulate their prices. 

Apart from that, investors should sit on their hands and wait for this to all play out, said Mr Grigor. Follow the old market adage - go away in May.


----------



## powerkoala (23 May 2006)

The market now is really overreacting toward this.
How come growth in 4 months, wipe out only in 4 days ???
Most of the companies is still making money, yet they dumped all.
Logically, if I still have more money, I will buy all and wait till my TAHITI arrives


----------



## specman (23 May 2006)

Base metals up a bit overnight.Apparently trade buying halted the slide so at least there there is real fundamental support around current prices.Perhaps that will stop the hedge funds shorting.


----------



## chris1983 (23 May 2006)

Guys read this.  This is an extract taken from sanfords website.  Some "around the traps" thread that is written.  He has grabbed details off the timesonline website.  Is this a worry? 

We don't want to ruin investors' day but there's a report on the 
Timesonline website which will, ah, interest them:
        Conditions in the financial markets are eerily similar to those 
that precipitated the "Black Monday" stock market crash of October 1987, 
according to leading City analysts.
        A report by Barclays Capital says the run-up to the 1987 crash 
was characterised by a widening US current-account deficit, weak dollar, 
fears of rising inflation, a fading boom in American house prices, and 
the appointment of a new chairman of the Federal Reserve Board.
        All have been happening in recent months, with market nerves on 
edge last week over fears of higher inflation and a tumbling dollar, and 
the perception of mixed messages on interest rates from Ben Bernanke, 
the new Fed chairman.
        "We are very uncomfortable about predicting financial crises, 
but we cannot help but see a certain similarity between the current 
economic and market conditions and the environment that led to the 
stock-market crash of October 1987," said David Woo, head of global 
foreign-exchange strategy at Barclays Capital.
        Apart from the similarities in economic conditions, during the 
run-up to the 1987 crash there was a sharp rise in share prices 
worldwide and weakness in bond markets, Woo pointed out.
        "Market patterns leading to the crash of 1987 resemble the 
markets today," he said.


----------



## professor_frink (23 May 2006)

I posted a link to that article in "the stockmarket is crashing" thread if you want to read the whole thing


----------



## boults_4545 (23 May 2006)

out of interest how often do we get times with conditions close to conditions at stock market crashes but not get stock market crashes?


----------



## coyotte (23 May 2006)

The big difference between 87 and now.

The DOW had been going UP like a skyrocket (pull back around this time of year)


These where the days of buying on the dips --- and it worked for a few years.


----------



## Sean K (23 May 2006)

It's more psychology than fundamental I reckon, so keep talking it up and we'll have one!


----------



## chris1983 (23 May 2006)

I dont think its more psychology.  It will happen if its going to happen.  Personally I havnt sold any of my stocks.  Ive taken a battering but im still in it because I believe the market will come back.  A lot is going to rely on the economic data that is released from the USA.  Lets all have a little prayer.  Hope it isnt too bad   In the end China and India are still going to need metals and oil and uranium.  So hey i reckon this fall will only last a few months and we will be back on track.  I just wanted to see the opinions of others


----------



## noirua (31 December 2007)

It's a bit of a game in these volatile markets that look set to stay that way for a longtime yet. It's a case of doing your homework well. Finding coal, iron ore etc., is great, with a big but, $5 million is peanuts and without joint venture partners it's tough in these markets to raise enough cash. Partners need to be able to take the commodity themselves and be experienced sellers of it.

Is the commodities price fixed to good growth requirements in world markets. Or is it a needed commodity to supply power to cities, such as thermal coal. 

How deep is the commodity, if its good quality hematite at 65% FE or better and at a depth of up to 350 metres that's not bad. Some depths at close to 1,000 metres raise questions. Can it be easily dug out or is there hard rock present.
Watch out for these tenements that are close to big finds, so are lots more tenements. Close to Oxiana etc., is just a case of name dropping. 
We are exploring for Uranium and it's risen 20-fold in the last 3 years, so what, they haven't got any. 
They've surveyed the area and have found an anomaly that looks like a large deposit of coal, iron ore etc., Lots of costly drilling to follow up, if they can get a rig that quickly. 
Then comes the placing of stock and shareholders putting another $5,000 up and so it goes on. 
The Founding Directors are not risking much as they got in cheap long before the IPO. 

There are railing costs and have they got permission to use another companies railway and is there enough capacity. How far away is the port and can it handle all the extra commodity. 

A find may cost up to $100 million to setup a mine. So that $5 million in the bank is a paltry sum. 

...and so it goes on, especially if the company has not got much mining expertise on their board of directors and have to bring in expensive MD's etc.,

Don't let me put you off, there are great winners to come out there, but the sector is high risk to very high risk. So take care with money you either can't afford to lose or if you are likely to get into a forced sellers position.


----------



## noirua (24 January 2008)

noirua said:


> It's a bit of a game in these volatile markets that look set to stay that way for a longtime yet. It's a case of doing your homework well. Finding coal, iron ore etc., is great, with a big but, $5 million is peanuts and without joint venture partners it's tough in these markets to raise enough cash. Partners need to be able to take the commodity themselves and be experienced sellers of it.
> 
> Is the commodities price fixed to good growth requirements in world markets. Or is it a needed commodity to supply power to cities, such as thermal coal.
> 
> ...




Posted this not knowing what would happen a few weeks down the line. Only difference is that most stocks are cheaper now and there has got to be a lot more value out there.


----------



## noirua (19 February 2008)

Time to look, me thinks, at those bombed out uranium explorers. Fair enough, they ain't got any Uranium, but the bombing has been worse than Dresden ( bombed to ground level in WW2).

***Have been known to be wrong, however...


----------



## GREENS (24 March 2008)

Came across this article in the Sydney Morning Herald today, well worth a read.

Some unloved stocks are now a third of the price that they deserve to be and the share market rout presents bargains for retail investors and corporate predators, analysts say.

Cheap share market valuations have led to strong merger and acquisition (M&A) activity, particularly in the resources sector. The the most recent example is the Lihir Gold/Equigold NL combination announced on Friday, and a takeover bid by Indophil Resources NL for Lion Selection Ltd announced on Thursday.

"And we're going to be more of this, there is no doubt," said independent analyst Peter Strachan.

CopperCo Ltd, which is merging with Mineral Securities Ltd, was a prime example of a company now priced at a third of its value, he said.

Mr Strachan said many companies were trading at bargain basement, bottom-of-the-cycle levels.

"They're probably three to five per cent from the bottom in any continued downward movement, which I think we're going to get," Mr Strachan said.

"The stocks that stick out are property developers and property trusts, and also financials: the main banks, Suncorp-Metway and ANZ particularly.

"Those stocks have fallen 50 per cent.

"I know there will be profit downgrades from the banks ... but I still think, if you take a two or three year views, those stocks are looking particularly cheap."

Mr Strachan said oil and gas producers such as Petsec Energy Ltd, Arc Energy Ltd, AWE Ltd and Roc Oil Company Ltd represented extraordinary value.

"Petsec ... would spit out the same amount of cash as you would pay to buy the company in about 14 months."

While not yet producers, oil and gas explorers Otto Energy Ltd and Nexus Energy Ltd were also good value, he said.

"Any company that's got oil and gas assets, as opposed to undertaking pure exploration, looks cheap."

Mr Strachan said the energy sector had lost favour with investors due to a lack of recent exploration success and operational woes at projects including AED's Puffin field and the Anzon Australia Ltd-operated Basker Manta Gummy joint venture.

Mr Strachan said a string of high profile dusters - dry wells - included Adelphi Energy Ltd's Sugarloaf project in the United States and others in Mauritania and China's Beibu Gulf.

He said some companies servicing the resource sector offered better value than others, with GRD Ltd, RCR Tomlinson Ltd and Monadelphous Group Ltd being the top picks.

Among this sector, the most expensive stocks included United Group Ltd, Leighton Holdings Ltd and WorleyParsons Ltd, he added.

He said BHP Billiton Ltd and Rio Tinto Ltd, which comprise 20 per cent of the S&P/ASX 200, were highly priced.

"If Rio goes back to $80 and BHP goes back to $28 to $29, we'll see this market back at 4,800 points, and that's when I'd be looking to pick up some stock."

In a research note on Sunday, brokerage DJ Carmichael said the companies that were merging were acquiring targets with large sums of cash.

"This makes sense in these difficult times of raising debt to build large projects," the brokerage said.

As for future M&A targets, DJ Carmichael singled out Murchison Metals Ltd and Mount Gibson Iron Ore Ltd, as potential targets.

Murchison has cash and liquid investments of about $190 million and Mount Gibson, $120 million.

DJ Carmichael also pointed to Troy Resources NL, a 60,000 ounce-a-year gold producer with $80 million in cash and an enterprise value of about $100 million.

Not only are companies including Moly Mines Ltd facing deferred project development as financing arrangements become increasingly hard to complete, new floats were drying up, DJ Carmichael resources analyst James Wilson said.

While retail investors should be making the most of the current fire sale, they remained averse to risk, Mr Wilson said.

There were "bargains galore" to be had, he said.

http://news.smh.com.au/slump-offers-bargains-for-investors/20080324-216o.html


----------



## noirua (24 March 2008)

Resource explorer stocks don't really have a bottom and can go down to any price. Nothing to base them on and if they have little cash, no JV's, they could be worth nowt. Even with plenty of cash it may not be good as its all earmarked for exploration. Deep discounted rights issues and placings become the order of the day.

Companies with good reserves, plenty of cash, good rail services, and good shipping set ups, are ones that get to become good value in these markets. They won't go under and its possible to work out a price for them.

Coal and oil should hold up well, especially the former. Iron ore may have some downside but producers are ones to watch.

As they say though, "just because a stock is very cheap doesn't mean it's not going to get even cheaper".


----------



## YOUNG_TRADER (8 July 2008)

Well thought I'd dig up this old thread for a bit of reflection, as again the Mkts are really dirty and toxic at the moment, nothing is being given anywhere near fair value, yet some stocks have bucked the trend while others that are already cheap are becoming cheaper

Interestingly on reflecting I realised some of the biggest gains/profits I have made have come from buying what I thought were fundamentally undervalued/dirt cheap stocks during the fear and panic of a correction,

So far its worked really well for me over the past few years, so I'm sticking with it and committing my cash to buying up stocks in certain key commodity sectors



Fundamentally for me a few sectors offer excellent fundamental value

1. Iron Ore - it is a bulk commodity whose price is determined by ling term annual contracts which have just risen another 95% ensuring plenty of profits for those lucky few who can get into production quick enough, but also tasty takeover stories for those who can firm up a big enough resource

2. Manganese - Its price is even hotter that Iron ore and the odd company that can find a deposit and get it into production becomes a star, see CSM and OMH, also the odd spec explorer can command a huge mkt cap regardless of success see AQD, need to find some good exposures

3. Oil Gas, CBM CSG (especailly in the hot takeover area of East Coast Aust ie Qld NSW, this is an excellent long term sector to get into to supply the power hungry States of Qld NSW and Vic, the hard part is finding a decent enough company thats not too expensive

4. Coal - With such massive 200%-300% price rises it is very difficult to ignore the fact that Coal is now one of the most profitable sectors to be in

5. Agri - Again massive price increases have meant that Agri/fertilizers are now a very very profitable business and given the fact that we need them for our food ensures that regardless of price the commodity


----------



## woltage (10 July 2008)

YOUNG_TRADER said:


> Fundamentally for me a few sectors offer excellent fundamental value
> 
> 1. Iron Ore - it is a bulk commodity whose price is determined by ling term annual contracts which have just risen another 95% ensuring plenty of profits for those lucky few who can get into production quick enough, but also tasty takeover stories for those who can firm up a big enough resource
> 
> 2. Manganese - Its price is even hotter that Iron ore and the odd company that can find a deposit and get it into production becomes a star, see CSM and OMH, also the odd spec explorer can command a huge mkt cap regardless of success see AQD, need to find some good exposures




Thought I'd respond to this by mentioning Archer Exploration (AXE)

Carrapee Hill 
- Iron ore grades of up to 57% and Manganese grades of up to 38%
- 55 km from deep water port of Whyalla, SA
- 2000m/18 hole drilling campaign just completed, assay results out in 6 weeks

Disclosure: holding a small parcel


----------



## michael_selway (10 July 2008)

YOUNG_TRADER said:


> Well thought I'd dig up this old thread for a bit of reflection, as again the Mkts are really dirty and toxic at the moment, nothing is being given anywhere near fair value, yet some stocks have bucked the trend while others that are already cheap are becoming cheaper
> 
> Interestingly on reflecting I realised some of the biggest gains/profits I have made have come from buying what I thought were fundamentally undervalued/dirt cheap stocks during the fear and panic of a correction,
> 
> ...




Hi YT, just wondering, what order of preference at current prices do you have those 5 sectors you mentioned above

thx

MS


----------



## YOUNG_TRADER (18 July 2008)

Hi Michael its hard to say

Iron Ore and Coal are excellent as they are YEARLY pricing contracts and thus are not subject to daily fluctuations or swings

But CSG/CSM is red red hot at the moment too,

Then again BHP has just done a takeover/acquistion deal with NHC for like *$5Billion * for some Coal deposit

Also Potash prices have hit record highs as of tonight http://www.canada.com/vancouversun/news/business/story.html?id=957890ea-3a6d-4024-903a-da2f7a34b790


So its hard I like all of the sectors mentioned but am definately much more Iron Ore focused

I really really want to get amongst the CSG/CSM sector though and also add to my Coal exposures


----------



## d_crome (18 July 2008)

YT - and if you look around right at this point in time most of the solid spec stocks in those fields have been truly SMASHED right now.

If I had the capital I'd certainly be enlarging my position.


----------



## YOUNG_TRADER (28 July 2008)

d_crome said:


> YT - and if you look around right at this point in time most of the solid spec stocks in those fields have been truly SMASHED right now.
> 
> If I had the capital I'd certainly be enlarging my position.




Omg so many good resource stocks are getting slammed

Cheap stocks get cheaper

Yet the actual prices for Iron Ore Coal and Oil are soo strong 

Such a divergence


----------



## jersey10 (28 July 2008)

YOUNG_TRADER said:


> Omg so many good resource stocks are getting slammed
> 
> Cheap stocks get cheaper
> 
> ...




which stocks are you referring to?


----------



## tm1234 (28 July 2008)

yes im with ^^^^^

quite new to the share market would also like to know some stock which are cheap at the moment. i understand only just opinions will do my own research

thanks tm


----------



## chrissyoscar (28 July 2008)

Check out BMY, I believe Young Trader is a fan as am I.
Lots of potential but it's in the early stages so somewhat still risky but worth a small punt.


----------



## ans25 (30 July 2008)

Take a look around, type in any 3 letter combo..lol

My tip:

CAG, LMP, CFE, LOD, GBG but please do you research


----------



## LRG (7 August 2008)

My long term tip is SDL.

Heaps of money behind this one with Ken Talbot holding nearly 20%

No fool - v good track record (see MCC).


----------

