So far this year, we have profiled two new companies that we felt represented exceptional value and were set to post impressive gains. Despite the failure of gold to break resistance at $700, we wanted to take a minute to review the performance of our stock picks.
On January 25th, we profiled Fronteer Development Group (FRG), calling it a “Gold & Uranium Winner.” Despite a strong rally prior to our posting, we indicated that the stock still had plenty of room to run and set a target price of $16 for 2007. Fronteer’s stock climbed from $10.18 at the time we profiled the company, all the way up to $15, before settling around $14.30 on Monday.
FRG Return: 40% is 103 days
Annualized Return: 143%
On February 14th, we profiled Northern Orion Resources (NTO), calling out a bullish technical chart pattern and predicting support around $3.75. The stock proceeded to bounce nicely off support around the $3.75 level and climb all the way to $5.14, where it settled on Monday.
NTO Return: 32% in 83 days
Annualized Return: 143%
No, that is not a error in calculation. Both of our stock picks for 2007 have generated the exact same annualized return… 143%. It must be a magic number. Anyway, let’s see how it stacks up to some of our other benchmarks.
At Gold Stock Bull, we actively seek to identify takeover targets, sleeping giants, and leveraged plays that have significant chance for upside explosion in the short term. The bottom line is that we work hard to uncover and report on the best mining and energy companies available and then apply technical analysis to determine optimal entry and exit points.
It certainly helps to be picking stocks within secular bull markets and it is no coincidence that precious metals and energy are our sectors of choice. However, anyone can identify a bull market and simply buy an index to capitalize on the trend. You could have, for instance, bought the Market Vectors Gold Miners ETF (NYSEARCA:GDX), which has a stated objective of replicating as closely as possible, before fees and expenses, the price and yield performance of the AMEX Gold Miners index. Let’s take a look at the GDX's performance over a similar time period.
From Feb 1 to May 7, the GDX returned approximately 3%. When this is annualized, we are looking at a return of 11%. Not bad I suppose, but that return is considerably lower than you could have realized by actively selecting quality miners and putting in the time necessary to determine when and how to purchase these stocks. To be exact, that would have been at 132 percentage points lower.
But if you don’t have a spare 8 hours a day to actively engage in selecting and timing this bull market, you can always follow this space and let us do all of the hard work for you. Oh yeah, and it is completely free! 143% for free. I don’t know of many newsletters, even those charging $100+ per month, that can boast these types of returns. And it is not just this small sample from our 2007 stock picks. We profiled 12 different stocks during 2006 that produced an average annual return of 93%.
We have built an expertise in the gold, silver and energy sectors and spend several hours every day analyzing the best ways to profit from these bull markets. Hopefully this saves you a great deal of time and helps you to increase your investment returns.