This article is part of a 20 article special report on "Metals, miners and money".
"We have added palladium and platinum miner, Stillwater Mining (NYSE: SWC), to the high-risk, high-return Aggressive Growth portfolio," notes Bill Martin. The editor of FindProfit notes that this portfolio is meant to provide "swing for the fences ideas with home-run return potential."
"Stillwater reported disappointing third quarter earnings, as production fell and costs rose due to labor and production challenges. While results should improve materially in Q4, the company is still behind its original plan for the year.
"Despite these near-term bumps, we believe that SWC is on the cusp of a breakout as prices for palladium and platinum continue to strengthen. Platinum, in particular, has been on fire this year, rising more than 25% to nearly $1,500 per ounce.
"This price rise should add $25 million to SWC's bottom line in 2008. Palladium has also been stronger, rising above $350 per ounce, however, that market still has plenty of runway to move higher.
"We believe that the spread between platinum and palladium prices will narrow over time as automakers and jewelers use more palladium in lieu of platinum. We believe the former is a particularly important driver, and recent data points continue to point to greater palladium content in automobile catalytic converters.
"However, auto design cycles take time, and so the 'switching' impact of this arbitrage won't happen overnight. Given that 75%+ of its production is palladium, SWC would benefit more greatly from higher palladium prices.
"Add it all up, and we believe that the good times are nearing closer for SWC even as investors are giving up on the stock. We're going to take advantage of that by purchasing of the stock."
Each day, Steven Halpern's TheStockAdvisors.com website features the latest investment commentary and favorite stock picks of the nation's leading financial newsletter advisors.
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Reader Comments (Page 1 of 1)
12-02-2007 @ 3:13AM
ii2000426 said...
You are absolutely correct regarding PGM investment in SWC and PAL. But there are even better reasons than you know. Please read:
http://www.seekingalpha.com/article/55173-palladium-an-investable-metal-that-defies-physics