It appears the six month old rally is starting to falter and 2012 might be a repeat of 2011 where market rose early in the year before taking a significant beat down. In my own portfolio I have raised substantial cash over the past two months from selling winners and having my covered call positions "called" from me. I also increased some of my small short positions in the last six weeks. Finally, I have made a list of stocks I want to buy on any pullback. One mining stock that has already taken a significant hit is on that list.
Thompson Creek Metals (TC)
6 reasons Thompson Creek will reward aggressive long term investors at $6 a share:
- After falling nearly 35% from its highs earlier this year, the stock is about 50% below the median price target of $9 a share the five analysts that cover this stock have on TC.
- Numerous insiders bought new shares in late February at higher prices. There has been net insider buying in the stock over the past six months.
- The company is selling at 60% of book value and under 7 times forward earnings.
- Its Mount Milligan mine is expected to come on line in 2013. This mine is expected to produce 81mm pounds of copper and just under 200,000 ounces of gold a year when it is fully operational.
- The stock has been hit by cost overruns to bring Mt. Milligan on line in Mid-2013. It got Royal Gold (RGLD) to up its ownership of the gold stream from this mine to 40% from 25% for $270mm cash. Given Thompson's low market capitalization (Approximately $1.1B), large cash flow from its other assets (Est. $200mm/year), and attractive holdings; it would not surprise me if company was either acquired in whole or brings in another strategic partner to bring this mine on line.
- The stock looks like it is putting in a long term bottom at these levels (See two year chart)
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in TC over the next 72 hours.