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Global Resource stock picks - from La Mancha (gold) to Exxon Mobil (big)

Barry Sergeant examines 27 global resources stock picks made on 12 January 2009, and finds splendid gains in 70% of the selections.

Author: Barry Sergeant
Posted: Tuesday , 05 May 2009

JOHANNEBURG -

La Mancha Resources, with operating and developing gold mines in Africa and Australia, and with a rise of 1,000% in stock prices from low points seen late in 2008, to currently trade around CAD 0.44 a share, ranks as one of the high points among 27 stock picks made a couple of weeks into January this year.

Some of the other gold selections, however, are out of the running with speed tickets, and have lost in market value since then, viz., heavyweights Kinross and Agnico-Eagle. But smaller name Eldorado Gold continues to perform, along with Great Basin, which recently completed a daring, but dilutive and also necessary equity capital raising. Aurizon and Tanami Gold are likewise still very much in the money, and Queenston Mining, even more so.

Among selected silver stocks, Silver Standard has more than covered its face; First Majestic has strangely lost value since early January, and Bear Creek Mining even more oddly so. Staying with precious metals, platinum group metal (PGM) stocks remain deeply out of fashion; among selected names, Tier II PGM digger Northam has just covered its face from levels seen earlier this year, while Starfield and PGM remain on the drip, as developers.

The most spectacular price gains from earlier this year have been produced by First Uranium, up 174% from prices on 12 January 2009, and African copper-gold miner First Quantum (up 139%). Among other uranium names selected, Deep Yellow has flown, particularly on more recent drilling results; Hathor Exploration has lost ground but global industry leader Cameco has gained a fairly decent 36%.

Among other copper selections, Southern Copper, Antofagasta, and Equinox have all done fairly splendid things in the past while. Looking at the heavyweight selections, BHP Billiton, the world's biggest diversified resources stock, has powered away; its longer term, 12-month price performance is currently ahead of that shown by other big and/or well known names such as Anglo American, Xstrata, Vale, Shenhua, Alcoa, and even a number of the bigger gold stocks, such as global industry leader Barrick.

Among other heavyweight selections, PotashCorp has performed relatively well; CNOOC even more so. Exxon Mobil has disappointed somewhat, but retains, for very good reasons, its position as the world's most valuable listed stock of any kind, with a market value of USD 337bn. Exxon Mobil, by the same token, ranks as the biggest name in the 30-component Dow Jones Industrial Average, where the next biggest stock by value is Wal-Mart, at USD 199bn.

This may well be a good time to consider some changes to the stock picks selection. Over the past month or so, there have been negative net investor portfolio outflows from listed gold and silver stocks; PGMs are neutral. Big positive investor inflows have been shown for listed zinc stocks, led by the likes of Sichuan Hongda (zinc and phosphates), Inmet (zinc, copper, gold), and smaller names such as CBH Resources, Perilya, even smaller names such as Ampella Mining, and yet smaller ones like Zincore.

Following zinc, strong positive inflows have gone the way of listed uranium miners (led by recovery stock Uranium One) and developers (First Uranium and Extract Resources), followed by nickel names (Jien Nickel), and then copper ones (First Quantum, Mercator). Next on the list are non-Asian coal stocks (James River Coal, Western Canadian), followed by iron ore miners (Ferrexpo) and developers (United Minerals), Asian coal stocks (Bumi Resources, Huolinhe) and then tin (Yunnan Tin) and aluminium names (Century Aluminium, Vimetco). As it's said in some classics, watch this space.