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(LUIS ENRIQUE ASCUI)
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TheStreet.com

Three precious metals stocks to watch Add to ...

We expect Stillwater Mining , Barrick Gold and Silver Wheaton to outperform their peers during this earnings season on the back of commodity outlook, anticipated better performance than consensus estimates, competitive advantage and price-to-earnings multiples.

Stillwater Mining

We continue to be bullish on Stillwater Mining, the only primary U.S. producer of palladium and platinum. It is yet to schedule a date for announcing its first-quarter results.

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The company is estimated to report earnings of 11 cents per share during the first quarter this year compared to a loss of 12 cents per share and earnings of 7 cents per share in the first and fourth quarters of 2009, respectively.

The miner is set to benefit from stronger platinum and palladium prices during the first quarter of 2010. Auto recovery during the quarter bodes well for the company and specifically, it has a relationship with Ford, which is on the verge of becoming the market leader in the U.S., surpassing General Motors.

The introduction of U.S. metal ETFs for platinum and palladium, ETFs Physical Palladium Shares ETF and ETFS Physical Platinum Shares ETF , boosted platinum group metal stock prices and increased investment demand for these metals.

According to analysts polled by Bloomberg, Stillwater is set to report earnings of 83 cents per share for 2010 and $1.48 per share for 2011, turning around from a loss of 9 cents a share during 2009. The stock has one buy, no hold, and no sell ratings, as per TheStreet's Analyst ratings guide.

The stock appreciated 79.0% year-to-date, in comparison with North American Palladium's 42.6 per cent and Platinum Group Metals' 29.2 per cent.

Barrick Gold

Barrick Gold, the world's largest gold miner, is scheduled to announce its first-quarter results on April 28. Gold and copper, which respectively account for 86 per cent and 14 per cent of the company's revenue during 2009, have seen a significant spurt in prices during the first quarter. This will likely enable the company to post strong profits this season.

Analysts polled by Bloomberg estimate the company to report earnings of 56 cents per share on revenues of $2.4-billion, compared to 42 cents per share on revenues of $1.8-billion during the year-ago period.

Earnings before interest, taxes, depreciation and amortization is expected to zoom 72.5 per cent to $1.280-billion from $742-million for the first quarter of 2009 and 19.0 per cent from $1.076-billion for the fourth quarter of 2009.

The company is expected to report earnings of $2.46 per share for 2010 and $2.82 per share for 2011, a significant turnaround from a loss of $4.84 per share reported for 2009.

The stock is currently trading at an attractive price-to-earnings ratio of 14.3, the lowest amongst the gold majors. In comparison, gold giants Goldcorp , Newmont Mining , Kinross Gold , and Agnico-Eagle Mines are trading at PE multiples of 33.1, 15.1, 27.2, and 30.8, respectively. As per TheStreet's Analyst ratings guide, the stock has 16 buy, seven hold, and one sell ratings.

Silver Wheaton

Silver Wheaton is scheduled to announce its first-quarter results on May 12. Analysts polled by Bloomberg expect the company to report earnings of 16 cents per share compared to earnings of 6 cents per share and 15 cents per share in the first and fourth quarters of 2009, respectively.

Silver Wheaton remains our top silver stock pick for the earnings season. Production at Goldcorp's Penasquito mines that commenced during the first quarter will be a significant contributor to earnings growth.

Management anticipates producing 22.2 million ounces of silver for 2010 and 38 million ounces by 2013 with no ongoing capital expenditures required to generate this growth. The company has a portfolio of world-class assets, including silver streams on Penasquito mine in Mexico and Barrick's Pascua-Lama project in Chile and Argentina.

Importantly, the company currently has 13 silver purchase agreements, in exchange for an upfront payment, to purchase all or a portion of the silver production, at a low fixed cost, from high-quality mines located in politically stable regions. These unique contracts will keep the company's silver production costs below the industry average.

The stock has 11 buy, one hold, and no sell ratings, as per TheStreet's Analyst ratings guide.

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