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I recently came across a mining stock that seems to have all the ingredients for long term growth (Growing reserves, a strong balance sheet and compelling valuations).

HudBay Minerals (NYSE:HBM) - "HudBay Minerals Inc., an integrated mining company, engages in the exploration and development of copper, zinc, and precious metals mines in North and South America". (Business Description from Yahoo Finance)

7 reasons HBM offers solid long term value at just over $10 a share:
 

  • If the stock's PE looks somewhat elevated, it is only because the company has over $900mm in net cash (50% of its market capitalization). It also is growing reserves.
  • The company increased its operating cash flow by over 150% from FY2010 to FY2011.
  • The stock sells at book value and around 7 times operating cash flow.
  • The three analysts that cover the stock have price target significantly above HBM's current price. The low target is $15 and the current high target is $21.50.
  • The stock yields 1.9%. It starting paying dividends last year and I would look for the company to start raising its dividend payout given its huge cash hoard and rapidly increasing cash flow.
  • The company got significant assets in Peru through the 2011 acquisition of Norsemont. It is building the infrastructure to ramp up production in the country and Peru should be a key growth driver for the company going forward.
  • The stock is selling just over its long term technical support levels (See Chart)

(click to enlarge)

Source: This Cash Rich $10 Mining Stock Worth A Serious Look