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JimVanMeerten (61.47)

Ride the GOLD train

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June 21, 2010 – Comments (0) | RELATED TICKERS: NEM

Newmont Mining Corp. (NEM ) is engaged in the production of gold and copper, the exploration for gold and the acquisition and development of gold and copper properties worldwide. The company produces gold from mines in Nevada and California, and, outside of the United States, from operations in Peru, Indonesia, Mexico and Uzbekistan. New mines coming online in the next few years in Peru and Ghana should add to sales in the coming years.

Presently production levels this year are expected to be 5.5 million ounces of gold and 380 million pounds of copper.

The stock had a recent price appreciation of 9.45% last month and hit 5 new highs in the last 5 trading sessions. Barchart is giving buy signals on all 13 of its technical indicators. The stock trades around 59.68 with a 50 day moving average of 54.67.

Investor sentiment is high on Motley Fool with the CAPS members voting that the stock will beat the market by a vote of 899 to 84 and the more experienced All Stars are in agreement 311 to 22. Of the columnists Fool follows, articles have been positive 13 to 2.

Wall Street analysts are also high on this stock with 10 buy and 10 hold recommendations published. They feel sales will increase 20.50% this year and 3.50% next year with earnings increases forcasted to be an increase of 25.80% this year, 10.80% next year and continue at a 5 year compounded EPS growth rate of 20.15%.

Normally mining stocks are triple plays where you can have 3 ways to make money: 1- price appreciation of the underlying commodity, 2 - earnings from the mining operations and 3 - nice dividends.

In the case of NEM this years earnings are expected to be about $4.85 per share & cash flow expected to be $3.50 per share. That means the cash dividend of $.40 looks pretty secure now and for several years in the future but at today's share price of 59.68 the dividend gives you only a .67% yield so income investors should look elsewhere for income.

Why should you buy?
1 - Price appreciation of the underlying gold and copper reserves

2 -  Profits from the mining operations

3 -  100% Barchart technical buy signa

4 - l Very high investor sentiment

5 -  Wall Street buy recommendations based on increases of sales and earnings.

Before you buy this stock please look at an article I've written previously entitled "Should You Own Gold or the Gold Producer?"

Jim Van Meerten is an investor who writes on financial matters on Financial Tides,Barchart Portfolio Blogs, Seeking Alpha, Marketocracy and MSN Top Stocks. Please leave a comment below or email JimVanMeerten@gmail.com

Disclosure: No positions in the stocks mentioned at the time of publication

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