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Metals and miners- I see right now that Copper is up about 1% and zinc is up 4% this morning. No such luck for the mining stocks as investors/traders seem to be running out the exits yelling Boo-Bad not Boo-ya.
Also interesting that while CU and ZN inventories at the LME and NYMEX were down again last week, Shanghai is reporting that inventories are suddenly up a bunch. Maybe so, or maybe the Chinese are trying to scare the price down so that they can buy more cheaply.
I'm tempted to buy more myself but I think I'll wait a bit to keep from getting trampled by the freight train coming down the mountain.
G H L T..I live just 15 miles from Bremerton, Wa, which is the town that GHLT shows for their press release. I've never heard it mentioned before. GHLT is also not in the local phone book under business listings. I see their address is at 5869 Werner Rd. I'll swing by there and take a look the next time I go into Bremerton. I do see a big yellow caution flag waving over this one.
Copper prices...researcher, I hear you, but the futures prices for copper are also still much higher today than they were in early April. Today a producer could lock in a March 07 copper price of 3.25/lb vs 2.50/lb for that same contract in early April.
Supposedly, the futures markets are fairly efficient. The prices project the collective judgement of thousands of producers, users and traders. The copper that is in the ground today is worth more than it was in early April. Yet the stock price does not reflect that. I think there is more herd instinct and emotion that plays in the stock market than in the commodity markets themselves. Metals prices can always turn around the next day.
Bottomline, I think one is crazy to sell EZM at sub $2, and EZM will probably be one of my pick6.
EZM-Brutal market the last week or so. The last time EZM was under $2 was April 5. Back then copper was at 2.60lb. Today copper is 80c higher and thats after todays big fall. EZM sure looks oversold to me.
BWRLF- Looks like I jumped in too early. Also picked up some 95c shares today. Amazed it is down so much while zinc prices are actually up for the day...
http://www.kitcometals.com/charts/zinc.html
Nat gas prices- Interesting that while today's prices are below $6,a look at the futures prices indicates much higher prices lie ahead. NG futures prices for this winter are at $10.70+, and Jan 08 prices are at $11.60. It should get real interesting once we are in hurricane season.
Jun 06 6.070 6.090 5.880 5.960 May 18, 10:43 - -0.169 24538
Jul 06 6.320 6.345 6.150 6.200 May 18, 10:41 - -0.184 10970
Aug 06 6.690 6.700 6.500 6.550 May 18, 10:43 - -0.199 4639
Sep 06 7.100 7.100 6.900 6.950 May 18, 10:39 - -0.184 3005
Oct 06 7.530 7.530 7.350 7.350 May 18, 10:41 - -0.259 4602
Nov 06 8.800 8.800 8.670 8.690 May 18, 10:43 - -0.219 5085
Dec 06 10.000 10.070 9.900 9.920 May 18, 10:43 - -0.279 4767
Jan 07 10.750 10.800 10.670 10.720 May 18, 10:41 - -0.219
Feb 07 10.850 10.880 10.740 10.740 May 18, 10:42 - -0.239
Mar 07 10.750 10.750 10.600 10.600 May 18, 10:42 - -0.209
Apr 07 9.050 9.050 9.050 9.050 May 18, 10:41 - -0.119 2612
May 07 8.950 8.950 8.920 8.920 May 18, 10:41 - -0.089 2070
Jun 07 9.030 9.030 9.030 9.030 May 18, 10:42 - -0.094 -
Jul 07 9.170 9.170 9.170 9.170 May 18, 10:42 - -0.089 -
Aug 07 - - - 9.374 * May 17, 15:17 - - - 9.374 - Call Put
Sep 07 - - - 9.499 * May 18, 10:11 - - - 9.499 - Call Put
Oct 07 - - - 9.689 * May 17, 15:17 - - - 9.689 - Call Put
Nov 07 - - - 10.429 * May 17, 15:17 - - - 10.429 - Call Put
Dec 07 - - - 11.129 * May 17, 15:17 - - - 11.129 - Call Put
Jan 08 11.600 11.600 11.600 11.600 May 18, 10:12 - -0.064 -
Feb 08 11.580 11.580 11.580 11.580 May 18, 10:08 - -0.094 -
Mar 08 11.330 11.350 11.250 11.250 May 18, 10:37 - -0.179 - 11
Zinc prices....This kitco site shows zinc prices for the last 5 years.
http://www.kitcometals.com/charts/zinc_historical.html
BWLRF- Nothing was mentioned in the conf call about why their old CFO left. Could be since EZM is a larger company, he was offered more money and maybe he liked working with his old buddy. Maybe he was also attracted to the nicer climate in Vancouver over Toronto??? At 30 minutes, it was short, but BWLRF execs did conduct themselves well in the conf call (unlike some of the old TGB conf calls that I remember).
BWLRF- The auditor that they switched to, Price Waterhouse-Coopers is well respected. I never thought of the change as a problem.
bbotc, metal and mining stock prices....Street.com is Cramer's biz, and isn't he the one who was saying to buy NXG and EZM near the beginning of the recent sharp sharp-selloff?
You're right, we don't know for sure what China is doing behind their communist doors but since they are big users of copper and zinc, why would they want to artificially the price of a metal that they need so much of?? I believe that China is now the largest user of those metals in the world. Their self-interest lies in trying to keep prices down, not watching them run up.
I also see inventories of copper and zinc continue to drop on the exchanges. At current rates of usage the inventory of zinc will drop to zero by year's end. The price run-up likely got ahead of itself but no, I don't believe it is over.
As for the mining stocks, their recent drops have been much larger than the drop in metal prices. Copper prices are down only 5% from their highs, while EZM and NXG are both down 20%. Zinc prices are down about 10% from their highs while BWR is down 30%. Those stocks now look oversold to me and that is why I bought your 2000 shares of BWR and many more as well. I also expect BWLRF to earn as much or more as EZM does next quarter and yet it is selling for less than half the price. I do like EZM but at current prices, I now like BWLRF better.
BWLRF- Breakwater recently reported diluted earnings of 9c for Q1 but that included an income tax recovery credit. Without that credit, they had earnings of 3.5c (Canadian). Annualized and converting to USD, that is a PE of 9. Company also sells at about 4x annualized Q1 cash flow. At 1.08, BWR has sold off 30% from highs of only a week ago. While all metal stocks have taken a big dive in the last couple of days, the market may also be disappointed that breakwater did not do better. After reading the 10Q and listening to the recent conference call, I have been loading up at today’s prices. Here’s why:
1. Last quarter, the company’s provisional liabilities increased from 14Mil to 42Mil. This represents ore/ concentrate that has been shipped and paid for but not yet recorded as a sale since the title has not transferred. Earnings in Q1 would have been much higher had more of this been recorded as sales. BWR actually recorded no sales of copper in Q1, although 3 shipments were made and paid for. In the conf call, mgmt indicated that those 3 copper shipments alone would have increased profits by $10 mil. Those sales will be recorded in Q2.
2. Company mined a lower quality of ore at Myrna Falls in Q1. That will improve in the coming quarters.
3. BWR currently has no hedges on Zinc or Copper, whose prices has exploded in the current quarter. In Q1, BWR received an avg. price of $1.01/ lb for zinc. So far, in Q2, zinc has ranged from 1.20 to 1.60. Today it is up a bit at $1.56. That alone should double earnings from Q1. Most of its current hedges on silver and gold expire after the current quarter.
This company could earn 10c in the current quarter and that annualizes out to a PE of less than 3. Looks cheap to me here
TCHC...49% public rate increase is not guaranteed due to public pressure on regulators. Maybe that is why the majors have been pulling out of FL. The CEO and his wife did manage to sell nearly $2million worth of shares at higher prices using their old guidance. Grrrr.
PHPG- Not that great. Diluted eps were 1.6c with new bookings down to 2.3Mil vs. 3.1Mil a year ago and 3.4Mil last Q. Maybe they will have a PR that will put a positive spin on it but so far I'm glad I sold last week.
PHPG- Unwound my long position in this one over the last week with the recent run-up. I'm nervous about holding into earnings which should be out anytime now. Last quarter was a good one on the bottom line but backlog was down both sequentially and from a year ago. Also the CEO sold 72,000 shares last month. He has a ton of options but that was most of the shares he actually owns.
bwr.to- Most of that 9c for the Q was due to an income tax credit. They actually earned about 3c from operations.
KSW, Gilead, As you mentioned, you are making some assumptions on predicting the pace of new orders in Q1. Keep in mind though that there is likely a larger time lag between writing orders and converting those to revenues for large projects than smaller ones. It would not surprise me at all if a large project might take 6 months or so before backlog is converted to revs. My reasoning is that larger project developers are more likely to put everything out to bid before they start anything and large projects simply take longer to construct. I don't see the old PRs now with the ticker change but as I recall, they announced some very large projects recently.
KSW- Gilead, How do you know then what their orders were in Q1? Here's the only comment I saw about backlog in the PR and it doesn't say anything about what those numbers were:
>>The increase in revenues and profits is a result of the Company's performance on its backlog of work under contract as of December 31, 2005, as well as projects the Company obtained during the first quarter of 2006.<<
KSW- I don't see their 10Q is out for Q1 yet. Or maybe I am missing it with the change to the amex?
GV..amazing runup of late. I do expect Q1 earnings to be 5c, if not more, but this is quite the run-up for a FL construction company. I may close out my remaining position tomorrow and then watch from the sidelines as it zooms to 4 or wherever the momo crowd decides to take it.
VPHM- Stock down on a disappointing sales and earnings report. Apparently the wholesalers do not want to be stuck with inventory if a generic becomes available soon. VPHM may have more problems down the road. As I recall, they are amortizing the purchase price of their Vancocin over a 25 year period. They said that was warranted because Vancocin is so difficult to replicate even with the expired patents. It seems to me that 25 years is too long a period to expense their purchase, especially in medicine and now with a generic version that apparently is coming as well. "caveat emptor"
Fully invested...pros and cons
I agree with R59 that trying to time the market is generally a waste of time. I first started seriously investing in the market back in 2000 which was the peak of the speculative fervor. Many of the favs for that period are selling at small fractions of where they were then. I avoided the favs and only bought the value stocks, particularly small and microcaps which were not followed by analysts.
Since then my portfolio has generated over 40% average annual returns.I prefer to be fully invested but I have noticed over the last few months that my cash account has swelled as I have been unable to find nearly as many good value stocks as I have sold recently. It could be that the market for microcap value stocks is becoming more efficient as boards such as this great one have larger and larger followings. It could also be that the market is simply becoming overvalued and is due for a correction.
I'm not smart to figure that one out but I'll look forward to see where we go from here.
DWSN- This seismic OG services Co. reported an excellent quarter (finally) with revs up 51% and profits up 87% vs a year ago. I nearly gave up on this one as they seemed to always find a way to report a disappointing qrtr. Glad I held on now.
Copper sell rating from prudential analyst who stated:
>>We believe the adverse substitution [or economization in the form of thinner wall tubing and, lighter gauge wires] occurring today involves reactions to the $1.50 per pound price run-up one year ago. Other factors are specific changes in China to higher refined output and higher copper exports.<<
Someone should explain to the anal-yst that thinner wall tubing has a higher risk of rupture and a lighter gauge of wire will not carry as much electrical current. Copper could go to $100/ pound and it would not be worth the dangers of burst pipes or electrical fires from overheated wires. Also plastic pipe which is a substitute for copper tubing is a petroleum based product. I guess he hasn't noticed that oil is also at a record high price as well.
Motto of this story: When Prudential says sell, it must be time to buy.
GV....Sold half of my position at 1.78. I think it may have gotten ahead of itself in the last week, but we shall see. I do expect it to report strong Q1 #s in 3 weeks, so I'd be happy to buy those shares back if it drops back before then.
IECE- bottom line is a disappointment (-2c vs 1c), but sales were up substantially (5.6M vs 4.7Mil). Company also noted the following:
The decrease in gross profit percentage was primarily due to start-up costs associated with new customers, and a higher operational structure required to support long term growth. We expect our gross profit percentage to improve as our sales increase, and new customers move beyond the start-up phase.
It appears to me that bottom line #s will soon improve. Also note that the raw material portion of inventories took a huge jump suggesting that they are probably gearing up for a another substantial increase in sales. I'll hold and buy more if it drops.
GV- Now up 18c! What lit the fire under this one today?? Maybe Cramer is baaack.
EZM- Now it is ranked #1 on IBD's list of stocks under $10.
http://www.investors.com/tr10/TRSUPrint.aspx?tabView=1&columnsort=comprating&columnsorttype=...
Copper, yes indeed, it is a great day for those long copper stocks. Makes it a "little" easier to write that check to the IRS today. : ) Interesting that April Comex copper futures actually hit a high of $3 earlier today. Dec. futures are almost at 2.80 so the market does not expect a pullback anytime soon.
http://futures.tradingcharts.com/marketquotes/HG.html
GV..Pappy, Last year's bonuses which were announced last month were all expensed last year. I confirmed that with the company a couple of weeks ago. Most people seem to be looking for around 2-3c and consider that 4c would be excellent. I think they will beat that.
GV- Looks to me like an excellent quarter is coming. I was looking at the numbers of this psl2 fav over the last few quarters:
GV has 2 components, electrical service lines which has run at about 2/3rd of revs and condominium construction and sales. Lets look at the numbers:
Electrical: Revs over the last 3 quarters have been
Q4 8.6Mil
Q3 7.8Mil
Q2 5.3Mil
Definitely showing a nice rate of growth. Backlog #s are even more impressive:
Q4 24.0 Mil
Q3 13.8 Mil
Q2 11.6 Mil
I think it is probably safe to say that Q1 2006 should show another very nice increase in revs and (hopefully) profits as well.
Now look at real estate (condo) revs. They tend to spike up and down for various reasons. Here are the last 4 quarters of revs from that division:
Q4 1.7 Mil
Q3 3.5 Mil
Q2 4.2 Mil
Q1 1.1 Mil
Again, lets look at backlog #s:
Q4: 16.9 Mil
Q3 3.2 Mil
Q2 6.3 Mil
Q1 10.5 Mil
Real estate revs in 2005 came mainly from “Oak Park”, a condo project that was started in Feb 05. In Q1, they had many orders based on the backlog reported there but they do not report those as sales until they get beyond the dirt moving and foundation stages and into framing. Notice the nice bulge in sales in Q2 which reflected the progress not only in Q2 but their start up in Q1 as the backlog was converted to sales based on % completion method. Q2 earnings were however held down by lower revs from the electrical division.
And here are EPS #s for 2005:
Q4 3c
Q3 3c
Q2 2c
Q1 1c
Now lets look ahead to activity for Q1 06 that GV will be reporting less than one month from now:
Electrical backlog going into the quarter is at 24 Mil vs. 5.8 mil a year ago. Business is booming there so revs should be outstanding and profits should make for a very nice picture as well.
The company has already announced that they will be reporting revs from their new project “Pineapple House” in the quarter. That project is bigger than last years “Oak Park” project so that alone should bring healthy revs and profits there. Plus Oak Park still has some revs that the company has indicated will be reported in Q1. That should also add another $1.5 mil to real estate sales.
Someone please correct me if I am wrong but the way I see it is that GV will likely report an excellent quarter for Q1 06. I see 5c minimum and it could well be higher than that. At 5c, that is an annualized PE of 6 with strong growth. The only negative that I see is the slowdown in the FL RE market. But GV requires a 10% down payment on presales so buyers are not going to just walk away either. Some areas of FL are hurting but from what I have seen, the area that GV is operating in (Melbourne) has simply slowed down to a sustainable rate.
Bottom line: Despite its recent run-up the stock remains very cheap, IMO. Do your own DD as well and good luck to all of us GV stockholders!
EZM...c1001, EZM acquired the Neves Corvo mine by closed bidding in early 2004 for over $100 million and the company then had to scramble to raise the money to pay for it. That was also the last time that copper prices were down in the range that their hedges are at.
Times are different now, of course. High copper prices allowed them to pay off much of their debt last year from profits but those stinking hedges remain.
EZM...copper hedge
>>It makes the EZM management look like a fools to hedge copper at such a low price and even bought puts on copper. TGB management seems doing the right thing. The only other company I own that is not hedged is NTO.<<
It certainly does look foolish now but to be fair, I recall EZM managment saying in a cc that their lender required them to do the hedges in order to get the loans they needed for operations.
Reminds me of an old adage that my former banker would remind me of if I complained about terms of a loan:
"He who has the gold makes the rules".
No Rogue, I got my info about what Cramer said from posts on NXG's yahoo boards. I did not hear what Cramer said on the show myself ( I have to be in a rare mood to even watch it).
Seems to be confusion about what he did actually say too. Some who have seen it now quote him as only saying that NXG is a speculative company. That's a long ways from a fraud!
NXG- Apparently Cramer bashed this one today, even worse he accused their mines of being frauds according to posters on Yahoo's board. Could be why it sold off after huge gains earlier in the day.
Last week he referred to GV by mistake and now this crap.
EZM...Good point c1001, about the delay on the mine approval. Probably it's yet another case of government approvals that take always seem to take longer than expected. Sure would be nice to see news by the time I have to write that check to the IRS.
Copper stocks...Needless to say, I'm very happy that I own NXG. TGB is also up again. I'm surprised that EZM has been dragging behind the last couple of days and it is even down a little today. I wonder why? Simple rotation maybe? Some blame their hedging of 1/3 of production at lower prices as a reason since it will obviously dampen earnings compared to what they would be without hedges. I think that will actually become a positive in the next few months as the market starts looking forward to '07 without those hedges in place. Does someone recall if they hedged '07 production as well? They may have talked about that in the CC, I don't remember.
UVIH.. Continues to make a comeback. I really didn't understand the reason for the recent huge sell-off. Yes, rates were adjusted up the reinsurer which cut into profits we had hoped to see in the short term, but homeowner rates will then be adusted up to compensate for it as the annual renewals come up.
GV accounting...I wasn't clear, but as others have commented, revs, construction costs, and profits are all reported on the income statement based on the % completed. The interim losses that I referred to would not be from ongoing construction costs which are only charged as revs are recognized, but due to overhead and SGA expenses which I believe would still be expensed over the course of construction.
GV followup
..So, the % of completion method must mean they can recognize revenue upon the completion of certain milestones.....even if the apartments won't be completed and delivered until 2007...
Exactly. If there is a firm earnest money (10% down would do that) and they have a good handle on what construction costs will be, the company can elect to either recognize revenue only when the sale is closed (as CTON does for examply) or recognize revenue based on what % is completed. The second method makes more sense for larger projects like GV is doing. Otherwise, they would show losses all year to be followed by huge revenues and profits in the period it is completed and closed. For example, when the building is framed and roofed, they could probably recognize about 1/3 of the revenue for the units that are pending sales (about 2/3 of the units in Pineapple House are pending sale per the company). Another 1/3 might be recognized once the exterior is done and the interior is sheetrocked and painted and ready for interior trim. And so on...
abh3vt, re GV...Yes I did ask GV about that as well. In fact, that was my first question. Here is their response:
Sorry for the confusion.
Obviously much more than 8% of our real estate backlog will be recognized as revenue this year on the percentage of completion method. However, the 8% number represents the amount of backlog expected to be both completed and delivered this year. Since Pineapple House will not be completed until 2007, it is not included in the 8%. The 8% is comprised only of the unrecognized revenue associated with Oak Park.
Best regards,
Goldfield Corp