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Robert Taylor
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I hold a Masters in Business Administration and have been a professional writer and stock analyst for the last 3 years. I am a contributor to several other sites including InvestmentUnderground.com and write primarily on tech stocks.
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  • Is Gold A 'Golden Opportunity'?

    So what's the truth about gold? Where is the market heading and what's the move for investors?

    The simple answer is: gold is like any other investment - it has its pros and cons, and there are moves into and away from gold recently made by the 'big names'.

    In the short run, gold can be a safe haven in a time of uncertainty. With several events in recent months and years relating to political and economic volatility, our markets (and the world in general) seem increasingly hard-wired to experience these periodic waves of crisis and calm. While the Fed is desperately trying to stimulate the economy, and housing prices remain slow on the rebound, one sees the continued issues with the Middle East being far from stable in recent weeks. Stability in the political/economic climate appears to be more and more fleeting. In this sense, gold can be seen as a short-term hedge, or a short-term speculative play on volatility.

    That being said, investors also have some downside with gold. One may pay a markup for buying gold, and the cost of buying a security should be factored into any investment decision. Another grumble is that some ways of buying gold come with extra risks such as those with gold-mining shares, which are definitely more volatile and can be correlated with the stock market especially in sharp declines. With these thoughts, let's look at a few possible choices for investors that will achieve the return they seek.

    GLD and GDXJ

    I sometimes like to take the strategy of cheating off the smartest guys in the room. George Soros is a big name at the investment strategist table. The billionaire hedge fund manager reported last month that he had almost $240 million in gold-related positions. Moreover, on May 16 he had purchased $25M in call options on the Market Vectors Junior Gold Miners ETF (NYSEARCA:GDXJ).

    The historical relationship between gold and gold shares shows the logic behind the move, but why would Soros buy gold-related instruments and not equities, even the large caps? In the case of GDXJ, he (or any other investor) would actually be buying a "basket" of equities related to gold/silver mining and exploration. By doing this, one could spread the risk over several companies in the same space. This diversification could protect from a one-off event such as politics or natural disasters that could undermine a correct call on the sector as a whole.

    In addition, as previously stated, exposure to gold carries some cost with it. Popular vehicles such as GLD charge reasonable prices for exposure to gold.

    Pilot Gold (OTCPK:PLGTF)

    Pilot Gold has been called a 'must-own' stock due to its conservative yet progressive strategy. After selling Fronteer Gold to Newmont Mining (NYSE:NEM) for $2.3 billion, Pilot launched a spin-off, joint venture with Teck Resources (NYSE:TCK) in a pair of important gold-bearing properties in Turkey. This smacks of a 'that's-good-that's-bad' scenario due to what is currently happening politically in Turkey.

    Even so, the Haligaga project boasts an encouraging assessment, with a net present value of over $470 million and an internal rate of return of 20%. Accordingly, Pilot's current market capitalization of $175 million stands at a discount to the estimated value of the company's 40% share of Haligaga alone.

    During the second half of 2013, Pilot intends to conduct a 25,000-meter exploration campaign at the company's 100%-owned, past-producing Kinsley asset in Nevada. Initial drill results show promise there as well, placing another 'golden nugget' in the investment prospect. Currently, the stock is $.89 and, in my opinion, a $3 share price can be reasonably expected.

    Pershing Gold & Silver (OTCQB:PGLC)

    Pershing Gold is another promising opportunity, though it should be said, not without risk of course. According to Forbes, if Pershing Gold can continue drilling as they have in the past 12 months for the next 12 months, it is reasonably expected that they could be pushing close to 1,250,000 oz, getting ready to commence production in 2014. As they get closer to production, the value of the resources on the balance sheet should increase as well.

    The current $100mm market cap implies $200/oz for an anticipated 500,000 oz. If the new resource report shows a number closer to the firm's expectations of 650-750,000 oz, the stock price should rise a bit. Currently at only $.37 per share, some anticipate a bump to around $.50+.

    It should be noted here, that this is a younger and smaller company compared to others mentioned here. They simply don't have the time in the industry, nor the established streams of production. Much of the growth estimation is based on the prospective land results.

    Sabina Gold & Silver (OTCPK:SGSVF)

    Sabina seems to be the secret success in the gold market. With a current market cap of just $390 million, these shares presently value the entirety of Sabina's non-cash assets at an impressive $261 million.

    According to reports, Sabina is due 22.5% of the first 190 million ounces of silver produced from XSTRATA's Hackett River polymetallic property, and 12.5% of any silver output thereafter. Using a conservative silver price of $22 per ounce, Sabina makes a convincing case for a $650 million net present value for that silver royalty alone.

    Now, let's talk gold. Sabina's Back River property boasts an uncommonly high average gold grade of 5.6 grams per ton across an indicated resource of 4.2 million gold ounces, plus another 1.7 million ounces in the inferred category. The company is also eyeing a prospective land package in addition to year over year extending mineralization 'to depth and along strike' (gold speak for capitalizing on what is already producing), all the while adding ounces and finding new targets that warrant follow-up. The current stock price is $.92 with next major catalyst for a bump being the Back River study results due in late Q3. Based on findings, this could easily achieve up to a dollar increase.

    Summary

    In the long term, gold is a good way to invest in expectation of higher inflation growing possibility. As governments battle debt problems and central banks intervene on their behalf, we could very well see deliberate weakening of currencies in many developed countries. If central banks start buying gold in earnest, it will create extra demand. Even if central banks simply hold onto their stockpiles of the metal, they will limit supply. Either scenario gives some support to the gold price.

    Investors should incorporate it into their portfolios only with an understanding of the risks. I see these companies listed along with other well managed ETF's as true 'golden' opportunities.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Tags: GDXJ, NEM, TCK, long-ideas
    Jun 24 2:19 PM | Link | Comment!
  • 4 Biotech Stocks For Growth

    Biotech investments have been vastly popular in the last few years. It is one of the few market sectors where investors can still make large profits in a fairly short time. Last year, the five top biotech movers gained between 99% and 300% in one year.

    That being said, caution is king. Many emerging biotech firms struggle to find sufficient funding for their research, some are unable to prove the validity of their cancer treatments, and still others bomb in Phase II and III clinical trials. Just recently, a promising company named Keryx crashed and burned after its Phase III trials for its drug perifosine failed. Within days, the stock dropped more than 60% from its previous high.

    Investors can navigate this perilous ground and achieve big gains by looking at a few companies poised for growth in this key area. Here are two small caps and two large caps I see potential based on advencement in specific products.

    1) Dendreon Corporation (NASDAQ:DNDN) is a biotechnology corporation focused on the development of cancer therapeutics. The company's current flagship product is Provenge, used in the treatment of prostate cancer.

    This company has solid financials and began being noticed after its impressive last 2012 statement. Dendreon generated $325.3 million in product revenue, an increase of $122 million from the prior year, and a staggering 3x growth from 2010 of just under $48 million. Analysts are currently projecting revenue for 2014 to be $429.7 million. If that indeed happens, the company will have a strong likelihood of being cash flow positive. Currently the stock is $3.85, just under its 3 month high of $3.97.

    2)Viratech Corp. (OTC: VIRA) is the first social network platform focused on biotech research and experience-based searching. The goal of the company is to accelerate the research and development of new cancer therapies and diagnostics. In a relatively short period of time, this company has not only become a solid performer for investors, but a worldwide force against limitations in cancer research and a powerhouse behind therapy collaboration.

    The company works to consolidate this highly fragmented world of biotech research and development and make that knowledge public. Its sole aim is to benefit people. By leveraging the utility of social collaboration and networking, it meets a need that individuals cannot meet for themselves.

    From a financial standpoint, the stock has not seen much love. The stock is under a dime and under 25,000 volume. However, some analysts believe that with its new marketing and education campaign, trading could boost the stock at least over $.25. The key to future sustainability will be to earn revenue from its open source social networking products and partnerships.

    3)Genomic Health, Inc. (NASDAQ:GHDX) is a molecular diagnostics company focused on the global development and commercialization of genomic-based clinical laboratory services that analyze the underlying biology of cancer allowing physicians and patients to make individualized treatment decisions.

    Genomic Health has had an unbelievable 3 months, and a nod from analysts after its recent financial report filed this month. The balance sheet showed that the company had $17.1 million, down only $1 million from the 3 months before. However, even though the cash went down, the total current assets went up by about $2.5 million. Additionally, the company has no long-term debt on the balance sheet. On the income side, the company was able to generate $63.1 million in revenues, an increase of $4.6 million from the same period a year ago.

    4)This one may shock a few people, but I'd also throw Johnson & Johnson (NYSE:JNJ) in this group. The company has its own approved treatment for prostate cancer called Zytiga. Zytiga actually generated more than $960 million in sales in its first year on the market. With marketing and spending power of a titan such as J&J, even a moderately successful product can mean huge gains for the company.

    That being said, this company does not offer one product, but a wide range of pharmaceutical and medical devices as well as its mainstay of packaged household goods and cleaners. It also has the leverage over the aforementioned companies as it has an established pipeline for distribution, using big-box retailers to sell its products.

    Additionally, the company stated that by 2017 it plans to seek regulatory approval for a dozen new medicines and two dozen variations of existing ones. This kind of expansion, particularly in this sector, will no doubt boost the value of its currently $87 stock.

    Investors need to look at both sector and business structure. In the market, both biotech and social networking are fields have seen impressive stock growth, thus, Viratech is a good choice. In addition, the business model for Dendreon has already shown it is capable and poised for sustainable growth. Finally, as biotech companies continue to set new record stock prices on a daily basis, this is a perfect time to invest in a multi-billion industry.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    May 26 5:15 AM | Link | Comment!
  • Invest In CEO's

    Typically, change in leadership in a business results in a dip (and sometimes a plummet) in the stock. The adjustment period can be lengthy, but rarely does a large impact change result in a bump in price per share - unless the new leadership wins the support of investors. There have been a few examples to the exception of this rule.

    Since Yahoo's (NASDAQ:YHOO) newest CEO, Marissa Meyer, took office its stock price jumped from below $ 15 up to a maximum price of $ 23.09 in 35 days, the cumulative increase of over 50%. This has been attributed to Meyer's experience and vision for the company's future.

    Meyer initiated a series of changes to simplify company processes and eliminate bureaucracy to allow for quick movement on consumer trends. For the current support team, she provided free lunch for the employees, but also required those employees of the Home Office report to the corporate office.

    Change leadership concerns the driving forces, visions and processes that fuel large-scale transformation. It requires a great deal of planning and foresight to ensure control over the situation and that the number of problems associated with bigger changes, such as dissension, hemorrhaging of cash/capital, or a mass exodus of investors, doesn't happen. Change leadership as it applies to Yahoo, essentially dealt with putting an engine on the whole process, and making the company move faster, smarter, and more efficiently.

    Another notable example is the Sears Holding Company (NASDAQ:SHLD). After announcing that Eddie Lampert would take the position of Chief Executive Officer, shares of the retailer rose 2.6 percent in pre-market trading. The company's new appointment followed on the heels of an update to its fourth quarter and full year earnings guidance for 2012. Despite a fall in same-store sales of 0.2 percent for the recent nine-week period, online sales increased by 20 percent and Sears now expects fourth-quarter earnings per share of $1.25 - $2.00, beating consensus estimates of $0.86.

    Both these companies leveraged the previous experience of these new leaders in establishing momentum. Another company doing this is Soupman Inc (OTC:SOUP). SoupMan saw some success through partnerships. Its soups are sold in the main soup aisle of several large supermarket chains across the country alongside famous age-old soup brands, Campbell's and Progresso. Now, as it changes leadership, it could see even more.

    The company recently announced the appointment of Lloyd Sugarman to the position of Chief Executive Officer. Sugarman, who brings a wealth of retail merchandising, restaurant operations and franchising experience, will continue the focus on expansion. In addition to the grocery store retail line, Sugarman intends to also leverage his 20 years of restaurant industry experience to expand the Company's franchise model.

    Sugarman has led the move into partnership with Al's Famous New York Delicatessen & Restaurant. This equates into a multi-unit franchise deal in casinos throughout the United States and Canada. The next two locations are slated to open in the Mohegan Resorts Casino in Atlantic City and the Mohegan Sun at Pocono Downs in P.A.

    Leaders must possess a combination of business acumen, creative thinking and incredible energy in order to lead an established management team and make direction changes. For Soupman, the casino entertainment venue is a smart move for the well-known soups. Robert Azinian operates over 50 restaurants, including 20 Johnny Rockets Hamburgers across the country in casinos and at City Walk at Universal Studios in California. He has been a franchisee in the Johnny Rockets system since 1990. This partnership is stands to profit both parties.

    In today's business environment, it is often the case that companies cannot settle for incremental improvement. To stay competitive, they must periodically undergo entire transformations, sometimes within, sometimes at the top. Ideas and strategies about how to go about implementing a transformation are varied. What is certain, is that it takes the right person at the top to lead a company efficiently.

    Another example of is Tesla Motor's (NASDAQ:TSLA) famed leader, Elon Musk. As far as visionary leadership goes, Musk is at the top of his game. In fact, the former PayPal founder made history last year when his company SpaceX launched the first commercial spacecraft in history to reach the International Space Station. Musk is now attempting to transform the auto industry with the electric-car.

    As an investment, Tesla reported exceptional first-quarter earnings recently, and the stock has been on an incredible run since earnings, as well as the start of the year, having gained 51% and 148%. But more importantly, this is this is an opportunity to invest in a CEO, particularly one with Musk's track record.

    The company's growing brand recognition, innovative technology, and disruptive retail strategy aren't reflected in its financial statements. Moreover, many investors continue to make the mistake of valuing Tesla by the same near-term benchmarks used for established automakers. However, investors willing to take a long-term approach and make a bet on Musk will likely see outsize gains if Musk is able to deliver on his promise of making Tesla the greatest automaker of the 21st century.

    Clearly, all companies are different, even more so, as these companies are of different sizes and in different sectors. Sugarman and Musk are value creators and disruptive innovators within their respective industries. For investors, the trick is in recognizing the visionary CEOs ahead of the market. It's by keeping an eye to the future that these CEOs are able to create lasting shareholder value.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Tags: SHLD, TSLA, YHOO
    May 14 11:25 AM | Link | Comment!
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