Fred Hickey is one of my favorite money managers. We tend to take the same view on politics, fiscal policy, Europe and Bernanke's incompetence. We also tend to gravitate to same sort of value picks in our stock investing. In this week's Barron's roundtable, Hickey highlighted two mining stocks he owns in advance of what he believes will be "QE3". One I already own and I will be looking at the other closely.
"Hecla Mining Company (HL) discovers, acquires, develops, produces, and markets precious and base metals worldwide." (Business description from Yahoo Finance)
4 reasons Hecla is solid long term value at $4.50 a share:
- HL is selling near the bottom of its five year valuation range based on P/E, P/CF, P/S and P/B.
- One of the company's two mines have shut down due to the first fatalities in the mine's history. Investors should bid up its shares as 2013 approaches and the mine is due to reopen. Analysts expect 35% revenue growth in FY2013.
- The stock is cheap at just 12% of book value. It also has almost a $1 a share in net cash and pays a dividend of 2%.
- The stock is selling at just 9.5 forward earnings, a steep discount to its five year average (23.5).
Agnico-Eagle Mines (AEM) engages in the exploration, development, and production of mineral properties in Canada, Finland, and Mexico." (Business description from Yahoo Finance)
4 reasons AEM is a bargain at $40 a share:
- Operating cash flow increased by more than 500% over the last two completed fiscal years.
- HL is selling near the bottom of its five year valuation range based on P/E, P/S and P/B.
- The stock's forward PE of just over 17 is a discount to its five year average (26.7) and the stock yields 2%.
- The stock sold for north of $70 a share when gold went over $1900/ounce last year. If gold hits $2000/ounce because of "QE3" and its mine in Quebec comes back online, the stock could easily hit $80 a share.
Disclosure: I am long HL.
