The Hunt for the Next 10 Bagger

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PAL..The turnaround story


is that palladium prices have risen from about $200/oz at the depths of the Great Recession to as much as about $900/oz earlier in 2014; and they are expected to go higher and/or remain high for many years into the future. Nymex palladium futures closed at $794.90/oz. on November 21, 2014. It is hard to say exactly where palladium prices are going in the near term; but for Q4 2014 PAL says it is fully hedged at $855/oz.

Revenues increased 39% year over year to $46.4 million; and PAL realized a palladium selling price of US$860/oz. With the Q3 2014 cash cost per ounce to produce the palladium, that left it with an operating margin of US$271 per ounce. This was healthy.

PAL should produce close to 20,000 ounces of palladium per month for all of the months of Q4 2014. This would allow PAL to surpass the bottom level of its FY2014 guidance of 170,000 - 175,000 ounces of palladium

Non-palladium metals account for approximately 30% of PAL's revenues. If one added 30% * $23.5 million = $7 million to the approximate figure of $20.5 million in greater palladium revenues above (for 60,000 oz. of palladium production versus Q3's 32,560 oz. level), you would get additional revenues of approximately $27.5 million in Q4 2014. PAL had a net loss of $18.8 million in Q4 2014. The $27.5 million number should do away with the net losses; and PAL might be truly profitable in Q4 2014 for the first time in a long time. This would probably cause the stock to rocket higher. Even if PAL doesn't achieve profitability in Q4 2014, it is seemingly very close to it; and it should achieve it quickly. Irrespective of the achievement of profitability in Q4 2014, investors should at least be able to see the "light at the end of the tunnel" with the Q4 2014 earnings report. This makes PAL a buy.


http://seekingalpha.com/article/2707655-the-turnaround-story-at-north-american-palladium-is-growing-legs?uprof=45&dr=1







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