Anglo American plc (ADR) (NASDAQ: AAUK) is really a United Kingdom based company with no American history, although a long history it has. We are continuing our search for value stocks as we very methodically place new money in the market. Our first purchase was an old favorite: Washington Mutual, Inc. (NYSE:WM). We recently acquired it at $40 per share after following it down from $47. Yesterday, Georges Yared posted Washington Mutual: A ridiculously cheap pick in sub-prime panic and we agree with him totally....take a look at the depressed price, the 5.3% yield and more.
We like the Anglo American company and the stock for numerous reasons. It came to our attention initially because it has a 1.17 price-to-sales ratio (P/S), a price-to-book ratio of 1.29 (P/B), and a yield over 2%. To go along with those metrics it has been growing at 15% to 20% over the last few years as the world demand for gold and platinum has increased. You can check out the fundamentals at AOL Money & Finance as a starting point for your own research if you are interested.
AAUK also owns 45% of De Beers Investments (DBI) -- which means diamonds, and has interests in paper and packaging goods, ferrous and base metals, and industrial minerals. According to AOL it is one of the world's largest independent coal miners. The following 5-year chart indicates that AAUK has been on a solid run for several years.
While it is usually not advisable to buy at or near a stock's all-time high, it is certainly worth putting this one on your watch list. There are some added benefits to owning some of this company. It allows you some international diversification while being accounted for on a US exchange.
Since it is so heavily involved in precious metals and stones you have some hedge against government treasuries gone wild floating too much currency which is highly inflationary. This has been a subject of major concern to some of my frequent readers so I'm sure they will like this pick. Anglo also is entrenched in enough basic commodities and energy that it will continue to prosper with the growing economies of China, India and Brazil.
It is very hard to find value and growth, along with a solid dividend in the same stock. From our review so far we think Anglo American provides that rare opportunity. Since it closed yesterday at $24.65 near its high and it is up this morning as I write this post we feel we may have to take a very measured position. Perhaps we will dollar cost average into it over six months or just take a larger position now and acquire more if it goes down without a change in fundamentals.
Over the past few months Chasing Value has looked at Wells Fargo & Company (NYSE:WFC), Anadarko Petroleum Corporation, (NYSE:APC), and the Aluminum Corp. of China Limited (ADR) (NYSE:ACH). I still believe these stocks are worth your attention. If you want to read the original stories you can find them by scrolling through the link below.
Disclosure: I own WM, APC, and ACH as of today's date.
Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm. Check out his other posts for BloggingStocks here.
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Reader Comments (Page 1 of 1)
3-20-2007 @ 9:18PM
Mr. noitall said...
Ok Sheldon,
I do like this stock, I think I'll take your advice & buy some shares. It seems to be a well diversified company. I also think people should consider buying some actual gold or silver to hold. Not just the E.T.F.'s but coins or jewelry.