Good evening, this is my first buy recommendation for the 3 Stocks on Fire Portfolio in about 8 months. I'm very pleased to be back at co-managing the portfolio with my dear friend Ramsburg.
We'll buy PCU tomorrow at the open, 6.66% of the portfolio as always. The analysis that justifies this recommendation is below and was made on Sunday, November the 5th. This thread will be updated every day with new information. You may ask any questions you please, or make comments along the way, that I'll try to address them the best way I can.
It's good to be back :)
1. Introduction
I'm looking for something really positive on PCU, since I'm a long term bull in metal prices like copper and zinc. Copper prices are up 374% since the start of 2003 and Zinc prices are up 500% in the same period. Although these are incredible price advances, you don't see any excitement or big increase in expected production. In oil you see many new people coming into the exploration business, but not many are getting interested in opening new copper or zinc mines. Demand will probably continue to grow as the world is growing like it's the 1960's.
Another thing that I find appealing on copper/zinc/molybdenum mining stocks is that the price of their product rose much more than, for example, gold and silver, and yet, they trade at much lower multiples. Michael, which is an incredibly smart analyst at 3 Stocks on Fire, says this happens because gold and silver are rare materials, and copper and zinc aren't. He has a point, but still, I see more junior companies looking for gold than for copper, despite the price advance in copper and current margins are higher than in gold.
Let's see if PCU really has attractive technicals and fundamentals.
2. Profile
Southern Copper Corporation (PCU) engages in mining, processing, and producing copper, molybdenum, zinc, silver, gold, and lead. The company's operations include open-pit and underground mining, concentrating, copper smelting, copper refining, copper rod production, solvent extraction/electrowinning, zinc refining, sulfuric acid production, molybdenum concentrate production, and silver and gold refining. It operates the Toquepala and Cuajone open pit copper mines in the Andes, Peru; and Cananea mine and La Caridad copper mine in northern Mexico. The company also operates copper smelter and refinery facilities in Ilo, Peru. As of December 31, 2005, it produced 1,521 million pounds of copper; 317 million pounds of Zinc contained in concentrate; 33 million pounds of molybdenum contained in concentrate; 18 million ounces of silver contained in concentrate; and 32 thousands ounces of gold contained in concentrate. The company, formerly known as Southern Peru Copper Corporation, was incorporated in 1952 and is based in Phoenix, Arizona. Southern Copper Corporation is a subsidiary of Americas Mining Corporation.
3. Technical Analysis
3.1. All History Chart
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=27672;image)
The all history chart shows the big price advance that started in late 2003. The stock is near its all time highs. Is it still attractive?
3.2. Medium Term Chart
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=27673;image)
This is what a really long term ascending trend looks like: We have bounces from the 200 day moving average that push the stock to new highs. The 2006 low was $35. After this period of consolidation, if the stock breaks $55 on the upside the technical target of that breakout will be $55 - $35 = $20 + $55 = $75 !
3.3. Short Term Chart
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=27674;image)
The short term trend is up. PCU is poised to breakout to new highs. As support we have the $49.67 level, the 200 day SMA and an ascending trendline.
Let's make some fundamental tests ...
4. Fundamental Analysis
4.1. Number of Shares Outstanding
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=27675;image)
There was a big share sale in 2005, but the number of outstanding shares is stable since then. I don't expect any dilution from PCU, the company is even distributing strong dividends, so clearly it doesn't need shareholder's money. The current market cap is 294,460,850*$53.28 = $15.69 B.
4.2. Liquidity
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=27676;image)
The balance sheet is growing stronger and stronger. PCU now has $1.4 B in working capital.
4.3. Revenues
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=27677;image)
There's huge revenue growth in 2003, 2004, 2005 and expected for 2006 and beyond.
4.4. Profits
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=27678;image)
Again, spectacular earnings growth for the past 3 years. The estimate for 2006 is $7.15, so the earnings multiple is $53.28 / $7.15 = 7.45. This is less than half the market average. Clearly the market thinks these very high metal prices won't sustain for long. But what if they do? What if they rise even more? For example, Zinc prices rose 30% just in the last month, with the introduction of the Zinc ETF on the London Metals Exchange.
Also, you need to consider the big dividend this company is paying shareholders. This year they already paid $3.75 a share, so I suspect they'll pay about $5 in full 2006. This is a 9.4% dividend yield :o
5. General Overview
Despite the incredible revenue and earnings growth, the strong balance sheet and a 9.4% dividend yield, PCU is trading at a very cheap valuation. This probably happens because people expect a fall in metal prices. They don't believe the trend is for real, as they know that when a commodity price rises a lot, new supply comes to the market as new producers get into the party near the top, attracted by the high margins.
But I just don't see this yet, as I said, every one is aware of the rise in oil but there isn't much people paying attention to metal prices. The BRIC countries, Brazil, Russia, India and China will continue demanding more and more of these products and there's not enough supply at this point.
As three billion people from the BRIC reach a certain level of development, perhaps we'll never see much lower prices for copper and zinc again. Remember, 3 billion "new" people are coming to the world economy now, that's ten times the population of the US.
This feels like 'deja vou'. DR is back in town!!!
Uno para todos y todos para uno.....
I have a friend that works for a division of CMC (steel) and he says they've been having record sales over and over...fwiw, the chart looks to have the same pattern.
David... You have been missed, we are SOoooooo glad you're back!
Never heard the complete story on what happen with you , but assume everything worked out for you and we couldn't be happier....BEST WISHES... Now lets make some $$$$...td
Thanks for your kind words bocasva, 422fwhp and TD :)
PCU will be added to the 3 Stocks on Fire Portfolio @ $53.80 (I forgot the password to put trades on the website, will have to wait for Ramsburg to remind me).
Going forward I'll update this thread daily after the close.
PCU did close at an all time high today with volume above average. The technical target of this breakout, as I said on the initial analysis, is $75. PCU will continue as a holding of the 3 Stocks on Fire Portfolio.
Don't be surprisedabout the volume increase !!! its the 3SOF efffect on the market >:D >:D
Your TA was mentioned among others, in the Yahoo boards :D
Great pick!!
If this stock goes above $56 on Tuesday, I'm gonna buy some December 55 call options. I have a contingency order set up! Hope this turns into another LVS like I missed a few weeks ago! ;D
Leaira
This may even be a good LEAPS candidate since it has a low float, and has the potential to do more stock splits.
Leaira
Hey, wellcome back Leaira ;D ;D
Nice to see another fellow "3SOFter" again ! !
Well, I'm in with 20 contracts of the Dec. 55 call option. I was up $800 earlier today, but now I'm back to break-even. ??? I hope this goes back up tomorrow. I don't like the big gap at open today. I would have gotten a better fill if it executed at 56 instead of 57.
Leaira
Quote from: Leaira on November 07, 2006, 05:48:32 PM
Well, I'm in with 20 contracts of the Dec. 55 call option. I was up $800 earlier today, but now I'm back to break-even. ??? I hope this goes back up tomorrow. I don't like the big gap at open today. I would have gotten a better fill if it executed at 56 instead of 57.
Leaira
Leaira, you're all stressed up because of that options game. I know I will never, ever, buy or sell an option, but you wouldn't understand why (I say this because I had the same type of advice and I did it anyway - not options, but futures). I think you need to experience it yourself. Some people are risk takers, it's in their nature. I was one of those people, but I'm cured now.
Coming back to PCU, you're right, that gap up at the open led the way to some profit taking. Nothing serious, as the stock still closed up 1.4% (the market was up just 0.38%).
Because of my technical and fundamental analysis I believe this stock will be up at least to $75 over the next couple of months. But it won't go up in a straight line. There will be negative days. I hope those negative days won't wipe you out of your position, which seems to be too big in size (the size of your position is much more important than the direction of the trade for long term successfull trading).
I will implement a policy on my 3 Stocks on Fire Portfolio managed trades: Never let a profit turn into a loss. If PCU prints $54 I'll sell it. If not I'll continue holding expecting the bullish trend to continue.
Welcome back David! We all missed you...:)
Quote from: Leaira on November 07, 2006, 05:48:32 PMWell, I'm in with 20 contracts of the Dec. 55 call option.
Leaira, I was interested in your call option strategy. Now that you've got the DEC/55 contracts, what's your exit plan? Is it similar to your entry plan, i.e are you setting triggers to sell the options if the underlying stock price drops or increases to a certain level?
Maestro
I have a contingency stop order to sell the contracts if the stock drops below the 5EMA, which is about 54.80. The low of the day is 55.20, so I'm still in the trade. Down $1000, but still in the trade. I don't use contingencies to sell contracts at a target price. I just keep moving the stop to follow a certain moving average.
Leaira
Quote from: Leaira on November 08, 2006, 11:45:15 AM
I have a contingency stop order to sell the contracts if the stock drops below the 5EMA, which is about 54.80.
Thank you, Leaira. Since I also bought some of the same call yesterday you now have me to help you pray that the price moves up nicely by the time the call expires in December.
Maestro
PCU successfully tested the $54.96 (or in round terms, $55) support, prior resistance, and recovered some ground. Everything is set now for the stock to resume its bullish trend.
Due to money management tactics I keep the plan of not letting a profit turn into a loss, so I'll sell PCU if it touches $54.
I'm very glad that everything is turning out fine for our fellow members that play options :) But I continue to warn that the risk is extremely high there and most ventures will have a dramatic end in financial terms. The stocks game is hard enough if you ask me.
PCU did what it should do, given its sound fundamentals, which is to close at a new all time high. No doubt I'll continue letting profits run.
I took a $1600 profit on my call options today. I'm looking for some bearish trades now. I think the market is about to make a move down.
Leaira
Quote from: Leaira on November 09, 2006, 09:13:31 PM
I took a $1600 profit on my call options today. I'm looking for some bearish trades now. I think the market is about to make a move down.
Leaira
Congrats and applaud on that options profit Leaira, Niiiiice! ;D
I agree that there was a bit of a "climax top" feel to the market today, but I had that feeling a few times recently and was always surprised that the market kept going higher. If we see a few more dips that dont get met with buying, and a few more high volume distribution days, then I think the market starts to go down.
David, could we at some point get your opinion of the overall market, maybe in the market indices section?
Leaira did well on selling those calls near PCU's high yesterday. Unfortunately the announcement of a strike in Peru (http://today.reuters.com/news/articlebusiness.aspx?type=tnBusinessNews&storyID=nN10182794&imageid=top-news-view-2006-11-10-075124-RTR1IBJI_Comp%5B1%5D.jpg&cap=The%20logo%20of%20electricity%20company%20Electricite%20de%20France%20(EDF)%20in%20Paris%20October%2014,%202006.%20The%20French%20power%20giant%20reported%20a%2020.6-percent%20rise%20in%20nine-month%20sales,%20slightly%20ahead%20of%20forecasts.%20REUTERS/Charles%20Platiau&from=business) took my profits away from the stock. I was stopped out at $54, taking just a 0.37% gain that barely pays commissions.
I don't think this is a valid motive to dump such an attractive stock, though. I'll be looking to buy it back over the coming days/weeks. Perhaps I should have given more room for it to fluctuate, we'll find out next week.
Hey David,
I bought PCU today at $52.5 ;)
I felt like I bought it a little high but we'll see. Right now it looks pretty good ;D
Will be holding out like you said for $70...........at what value are you looking to getting back in PCU? Thanks!
Thai
Can someone explain the price action with PCU? Does it concern something with dividends?
I mean, yesterday it closed at 53.xx and today it shows a netgain of 1.xx yet the price only 52.xx.
How does this stuff all work???? ??? ???
Quote from: thai626 on November 14, 2006, 10:13:33 AM
Can someone explain the price action with PCU? Does it concern something with dividends?
Thai,
Yes, PCU went ex-dividend today. The "ex" means that they "take away from" today's price the amount of the dividend, which is $1.375 per share. You will be paid that amount. It will be on your statement, and also on your year-end statement. You need to report it next spring when you pay taxes.
Quote from: thai626 on November 13, 2006, 10:08:25 PM
Hey David,
I bought PCU today at $52.5 ;)
I felt like I bought it a little high but we'll see. Right now it looks pretty good ;D
Will be holding out like you said for $70...........at what value are you looking to getting back in PCU? Thanks!
Thai
I'm thinking of jumping back in soon, still don't know at what price (will try to get it around support like the 50 day SMA). Yes, the stock is ex-dividend today, that explains the fall.
Good luck !
Inflation numbers might have something to do with the sell off?
I got this quote from my initial analysis of PCU:
QuoteThe short term trend is up. PCU is poised to breakout to new highs. As support we have the $49.67 level, the 200 day SMA and an ascending trendline.
Yesterday's low was $49.64, so we hit support. As I think the long term trend will continue to be up for PCU, I should buy at support. I wasn't able to recommend buying back PCU yesterday, but I'll do it today.
6.66% of capital, as always. At or near the open, say, between $50.50 and $51.25.
PCU has 3 supports working on this area:
1) $49.67 was a previous resistance level, now it's support;
2) This is the 50% fibonacci retracement level of the last advance phase that took the stock from a low of $41.63 to a high of $58.38;
3) A short term ascending trendline, as you can see on the chart below.
I love to buy stocks at short term support areas, especially when they have rock solid fundamentals and a long term ascending trend on the share price. I'll continue holding PCU without any stop, at least for now, because I don't want to be shaken out of the position by a possible minor and secondary move.
David,
I've been watching CUP since you selected PCU for the 3SOF portfolio, thinking that it might be a real nice percentage gainer if it could follow PCU's lead, and break out of this Falling Wedge to the upside.
Instead, CUP rallied to the top of the pattern right after you selected PCU, and was unsuccessful in its breakout attermpt at TRIPLE validated resistance (the three red arrows). It has rolled over to the downside, the 50/200DMAs made a Bearish Cross yesterday, and CUP is threatening to break the pattern to the downside.
I'll be interested to see if CUP can find support at the bottom of the pattern, then breakout above its recent high of 4.05, and rally with PCU.
The technicals look very weak, though. MACD rolled over and crossed its signal line, from below zero, along with the 50/200DMA Bearish Cross.
Hi Melf :)
Although their names are very similar, PCU (Southern Peru Copper) and CUP (Peru Copper) are completely different companies. PCU will have revenues of about $5.47 B in 2006. PUC will have $0 in revenues ::) PUC isn't mining anything yet, but it is a $389 M market cap.
So it's not surprising to see PUC's recent price action:
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=28560;image)
Coming back to PCU, the stock is still consolidating on its support area. After an intraday sell off, copper prices rebounded late in the day finishing higher on the session. PCU is way undervalued at this point and will push higher to new all time highs above $60. No stops here, holding for the long term.
Quote from: David Randolph on November 18, 2006, 05:31:50 PM
Hi Melf :)
Although their names are very similar, PCU (Southern Peru Copper) and CUP (Peru Copper) are completely different companies. PCU will have revenues of about $5.47 B in 2006. PUC will have $0 in revenues ::) PUC isn't mining anything yet, but it is a $389 M market cap.
So it's not surprising to see PUC's recent price action:
David,
Right.
Several sessions ago, when CUP was at the top of the Falling Wedge, it had a chance of an upside breakout, and a chance to catch a rally, "in sympathy" with the sector.
Quote from: Melf Elf on November 17, 2006, 05:40:43 AM
I'll be interested to see if CUP can find support at the bottom of the pattern, then breakout above its recent high of 4.05, and rally with PCU.
If CUP had banged off the bottom of the pattern and did something like ralliy on a Bullish Engulfing pattern on Friday, that would have looked decent. Instead, it closed below the pattern, by two cents, and the tail on the candle isn't nearly long enough for a Bullish Hammer, so CUP isn't looking so good at the moment. :P
Quote
The technicals look very weak, though. MACD rolled over and crossed its signal line, from below zero, along with the 50/200DMA Bearish Cross.
The weak technicals, particularly the rollover and Bearish Cross of the 50/200DMA, which are at the top of the Falling Wedge, make it tough going for CUP. It would need to breakout and take out the recent high of 4.05 to show any upside potential.
Bottom line: Sorry that I wasted your time, David, looking at CUP. :D
CUP
closed below pattern support on Friday.
PCU
found support again at the July high of 49.675 on Friday.
So, at the moment, the only thing similar about these two stocks is the sector and the anagram. :D
The news out today on the copper mining industry was spectacular: Freeport-McMoRan Copper & Gold to Acquire Phelps Dodge, Creating the World's Largest Publicly Traded Copper Company (http://www.marketwatch.com/tools/quotes/newsarticle.asp?siteid=mktw&sid=3749&guid=%7B3C9C02EB%2D3781%2D4ED5%2D88D3%2D3E78824E55F7%7D&symb=)
$26 B takeover to create the largest copper mining company in the world. This will certainly put everyone's eyes on the copper mining industry, and they will surely like what they see, since this is probably the most undervalued sector currently trading on the market.
Anyway, probably PCU will come down a bit to close the gap opened at $50.70 - $51.28. But I don't mind these short term girations as I will hold the stock for longer term purposes.
Quote"This will certainly put everyone's eyes on the copper mining industry, and they will surely like what they see, since this is probably the most undervalued sector currently trading on the market."
David,
Would the same apply for GOLD??
It seems to be getting ready for another run..
http://wallstreetwindow.com/buffett.htm?gclid=CL7qmfydpYgCFR7TJAodIFTk5w
thanks,
mexirafa
QuoteDavid,
Would the same apply for GOLD??
Although I'm a long term bull on gold since August 2001, I think gold mining companies are overvalued. The play on gold stocks would be much different from a copper stocks play. What I mean is, copper can just stay here and you will probably see copper mining stocks rise 100%. For gold mining companies to rise 100% (as a group) probably gold futures would need to go to $1,000 an ounce, because their valuations are already pricing in a much higher gold price.
The Copper industry is trading at 8 times earnings and 1.22 revenues. The Gold industry is trading at 32 times earnings and 12 times revenues. Yet, Copper prices rose more than Gold prices in the past 3 years and probably this Copper outperformance will continue. I think you get the point.
You really need to be a big bull on gold prices to buy gold mining companies at this point. The risk is higher than the potential reward.
Quote from: David Randolph on November 21, 2006, 02:52:49 PM
QuoteDavid,
Would the same apply for GOLD??
Although I'm a long term bull on gold since August 2001, I think gold mining companies are overvalued. The play on gold stocks would be much different from a copper stocks play. What I mean is, copper can just stay here and you will probably see copper mining stocks rise 100%. For gold mining companies to rise 100% (as a group) probably gold futures would need to go to $1,000 an ounce, because their valuations are already pricing in a much higher gold price.
The Copper industry is trading at 8 times earnings and 1.22 revenues. The Gold industry is trading at 32 times earnings and 12 times revenues. Yet, Copper prices rose more than Gold prices in the past 3 years and probably this Copper outperformance will continue. I think you get the point.
You really need to be a big bull on gold prices to buy gold mining companies at this point. The risk is higher than the potential reward.
You sure had some great mining picks before David, I know you know your metals! EZM, DEZ were a few I recall did really well. I missed entry to PCU, but will try to get in if the gap fills.
Speaking of EZM, do you have any thoughts on LMC? It is apparently EZM merged with a nickel mining company, Cramer was quite bullish on it recently.
QuoteYou sure had some great mining picks before David, I know you know your metals! EZM, DEZ were a few I recall did really well. I missed entry to PCU, but will try to get in if the gap fills.
Curiously EZM and DEZ were both bought or merged, as they're not trading anymore 8)
The good thing about a $50 stock like PCU is that you have time to get in and out ... you don't have to be a day trader or johnny on the stop to trade this stock successfully, I believe.
QuoteSpeaking of EZM, do you have any thoughts on LMC? It is apparently EZM merged with a nickel mining company, Cramer was quite bullish on it recently.
No, I currently don't have any thoughts on LMC, but I will, no doubt about that. You gave me the third stock to analyze tomorrow, those are ASPV, IMOS and LMC (I also need an airline, I think I'll pass IMOS as the chart looks dead for now).
Coming back to PCU, I was a bit surprised to see it up 2.18% today, after yesterday's black candlestick. I don't know what's going to happen, but I think this stock will be a $100 stock in a year, and not every gap gets closed.
Copper future is building a base just after breaking down a support area. Usually when a medium term support is broken on the downside but the price holds just below support, many times it means it was a false breakdown and a powerfull short covering rally will push it back up above support:
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=28826;image)
If $Copper closes back above $320 as I think it will, surely PCU will make a move above its all time high of $58.38.
Anyway, this stock shows a 10% dividend yield, 8 times trailing earnings, strong demand and price increases for its product, what more can an investor hope for?
Nothing, I think. PCU will be a $100 stock in no more than a year.
Since copper futures are traded in US dollars, as gold futures, they tend to benefit when the dollar falls, because they become cheaper for foreign investors. The metal gets more attractive solely due to a currency issue and global investors bid it up.
Copper futures went as high as $324.5 on Friday's session but closed the day unchanged at $313.6. Technically it is important for the bull case to make it close above $320, previous support, now resistance. Well, this was just the first try from the bulls, I think they will try some more times until they ultimately breakout above $320.
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=28966;image)
PCU is probably one of the stocks with the highest dividend yield, lowest PER and highest growth rate in the entire US stock market. I'll continue holding it.
QuoteWell, this was just the first try from the bulls, I think they will try some more times until they ultimately breakout above $320.
Well, yesterday $copper closed at $321.55, up 2.54%. This will probably force shorts to cover all the way up to the $390 high. PCU will benefit from this and break above the $58.38 high.
I'll continue holding PCU.
Nothing new on PCU, not in technical or fundamental terms. I'll patiently continue holding the stock.
Decent day today for PCU up over 2%.
Quote from: nullzero on November 29, 2006, 07:03:48 PM
Decent day today for PCU up over 2%.
Yes, decent. Opened a little gap at the open, between $53.45 and $53.55 and volume was below average, but, closing above the $54 resistance level is what really matters, I guess.
This is a 10% dividend yield, 8 times earnings stock. It could double and would still be cheap, given its growth rate.
Just watch this $16 B mammoth go up 100%, not in one day or one week, but almost for sure !
PCU opened with a gap up, came down to close the gap and test the new $54 support (prior short term resistance) and closed at $54.36. $Copper rose 1.28% yesterday to $319.55. I would like it to close above $330 to get a clear bullish signal - I'm sure this would put PCU on fire !
I'll continue holding PCU.
A bit of an intraday sell off on PCU, but still managed to close above $54, which I welcome. $copper went down 0.74% to $317.2.
Nothing new on the technicals or fundamentals, I'll keep on holding PCU.
Look at this giant, slowly but surely, moving towards a new all time high. No press releases for almost a month now. I don't have a problem with that.
PCU is showing a profit of 9% to the 3 Stocks on Fire Portfolio, I will keep on holding it.
PCU continues to approach its all time high of $58.38. But the real move will come when $copper makes its climb from the current $317 to $400 plus. I see strong demand for $copper worldwide and not much capacity entering the system. We're even getting concentration in the industry, with Phelps Dodge being bought for $26 B.
As I wrote this I immediately thought about TGB, opened the chart, and oh my, what a bullish breakout ! I need to look closer at TGB, because $copper is in play right now and for months to come.
PCU is one of the most attractive stocks in the market now, with a 10% dividend yield and trading at just 8 times earnings. Nobody would say its main merchandise is in an intense bull market, about to make another leg up. I know PCU closed at $55.85, but I already see $100 :o
Quiet day on PCU, nothing changed. Just leaving the updated chart.
Just like the Jeffersons................MOVIN ON UP!!! ;D
Slowly but surely.....just like David said. Can't wait till we see a new all time high which may come next week.
Why do I feel so lonely??? ............. Anybody in here???? haha
Thai
Yes thai626, slowly but surely :)
Found a funny thing today on PCU (well, funny for me, totally boring for most people), my chart shows the stock still about $2 away from the all time high of $58.38 (see on the bottom of the message), but www.stockcharts.com shows the stock is just at all time highs, take a look:
(http://www.3stocksonfire.org/trading/index.php?action=dlattach;attach=29797;image)
Do you know why?
Well, because StockCharts has the price corrected by the dividends ! The quarterly dividend distributed to shareholders on record at November 16th, 2006, was $1.375 a share, that is, $5.5 a year or a 9.75% dividend yield.
Just imagine a quarterly dividend that messes up with the charts :o
Moreover, PCU released this at 3:10, PM, ET:
UPDATE 2-So. Copper raises reserves estimates on two mines (http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20061207:MTFH39170_2006-12-07_18-57-41_N07255083&type=comktNews&rpc=44)
I think this may help push PCU to a new all time high (by my chart) in a short period of time.
Quote from: thai626 on December 07, 2006, 04:35:05 PM
Why do I feel so lonely??? ............. Anybody in here???? haha
Thai
Just quiet like PCU...but here.
Hello,
PCU was featured in the Smartmoney Magazine for December '06. Some of you might have already read it but I'll share it for those who haven't
============================
"Southern Copper" PCU,$51
YIELD 9.0%
If a young Dustin Hoffman character needed a career advice in a single word today, it might just be "copper". The metal has quintupled in price over the past five years. And while price may very well come down a bit, it's unlikely the bottom will drop out of the copper market. It's a crucial componet in our cars, cell phones, plumbing and buildings, so economic expansion around the globe is fueling demand. Even criminals are getting in the act - thefts of air conditioning systems and wiring from construction sitesare on the rise. Southern Copper is one of the largest copper producers, with mines both in Peru, where it is headquartered, and Mexico.
While a 400 percent price hike would normally be a red flag, many strategists argue that the bull market for copper isn't over yet.
The worldwide inventory for the commodity is just a 3-day suppply, so an unexpected blip at just one mine can have a great impact. Moreover, a replacement isn't likely to surface soon.
"Copper is the horse that carries everything from power to communications, and it appears it's going to be around for a while," says John Hammerschmidt, manager of the Quaker Mid Cap Value Fund. "This is a stock my mom should own". And mom would like the 9% yield.
There is wide speculation that Southern Copper could combine with Phelps Dodge, the largest copper producer in the U.S. Analystssay such a combination would benefit shareholders over the long term.
====================================
Rafael ;)
curruent holdings,
ASPV
PMU
PCU
Thanks for the article mexirafa :)
PCU expects $copper's average price in 2007 to be $3.00/lb: DJ Southern Copper Sees Copper At Average $3.00/lb In 2007 (http://www.marketwatch.com/News/Story/Story.aspx?guid=%7BF639C8A5%2D99EB%2D4EF6%2DB4E4%2DFBC3D80BC286%7D&siteid=mktw&sid=2140022&symb=)
In the article there's an agreement for an extra-tax on Peru's mining companies, but nothing too serious. These political constraints are possibly one of the reasons why PCU is so undervalued. But the risk isn't that high, as I figure it.
It's good to know PCU expects $copper to trade 3% to 10% lower in 2007, and still analysts estimate $7.88 EPS for 2007. To have a cheap earnings multiple of 10 the stock would need to trade at $78.80. If we consider an average market multiple of 16, it would then trade at $126.
There's nothing else to do but to continue holding PCU.
Check the article on Yahoo's Finance homepage: 10 Top-Rated Dividend-Paying Stocks (http://biz.yahoo.com/y/se/38541/:/special/ibd121106.html)
Which stock is the #1 on their top 10 list, with an IBD rating of 98 (the maximum is 100)?
You guessed right, our dear PCU !
Quote from: David Randolph on December 11, 2006, 05:48:02 AM
Check the article on Yahoo's Finance homepage: 10 Top-Rated Dividend-Paying Stocks (http://biz.yahoo.com/y/se/38541/:/special/ibd121106.html)
Which stock is the #1 on their top 10 list, with an IBD rating of 98 (the maximum is 100)?
You guessed right, our dear PCU !
Yes, the publicity yesterday gave us a gain of 3.26% on PCU, with volume above average of more than 2 million shares. She's moving, she's moving ... to a new all time high above $58.38.
Even near a new all time high, PCU still shows a 9% dividend yield and a 9 times earnings multiple. This is very attractive.
Up 3.26% yesterday, down 1.42% today. Two steps forward, one step behind is the way PCU seems to be moving, and that's fine by me.
$copper rose 0.53% today to $315. I'll continue holding PCU.
David and others,
I just sold my shares of PCU. I'm looking to buy another stock very soon...........i.e. one of the T3ML plays. I just wanted to wish you guys the best of luck.
I'll be back in PCU in the near future. ;D
Quote from: thai626 on December 13, 2006, 11:36:35 AM
David and others,
I just sold my shares of PCU. I'm looking to buy another stock very soon...........i.e. one of the T3ML plays. I just wanted to wish you guys the best of luck.
I'll be back in PCU in the near future. ;D
Thanks for the information thai626, and good luck on those momentum plays :) (although I still don't understand how you can use three moving averages, which are slow in nature, to identify momentum, I need to study more of Terliso's thread).
Coming back to PCU, nothing changed, I'll continue holding it.
Slowly, but surely, PCU continues to push higher and is near a new all time high. Making 13.5% on this one, not willing to let it go, since this is probably the most attractive stock outthere in terms of dividend yield and earnings multiple.
Could be $100 and would still look cheap.
It would be nice to see PCU really breaking out to new all time highs above $58.38, but we need patience here, remember this is a $17 B market cap company.
I'll keep on holding PCU.
Even with $copper trading around $3 (300 on www.stockcharts.com), PCU is still near the $58.38 all time high. Slowly, but surely, this 9% dividend yield, 8 times earnings stock will continue to push higher.
I won't let go of it, this is my number 1 copper play.
TGB was up 12% today, and that's only my number 2 copper play, imagine PCU, which is my number 1 !
Of course, it doesn't have the same potential, since PCU is already a $16.8 B market cap company and TGB is just $217 M. But the market reaction on TGB goes to show how attractive and unknown fundamentals are at copper mining companies. People don't believe or notice them until the numbers are splashed on their screens. And then stocks do what they have to do to reflect the improving fundamentals.
PCU is a 9% dividend yield, 8 times earnings stock. And the price of their product is up 400% over the last four years. Yet, almost nobody believes copper mining is an attractive sector, perhaps because the industry is so old ... so old that we don't see much people interested in entering the sector, adding to production capacity, hence the long term appreciation of $copper prices.
I know $copper is down from it's highs and I guess this is exactly the right time to buy it, on a medium term correction within a long term bull market for the commodity.
Anyway, I've been a bull in $copper since 2001, and reaffirmed by bullishness about a month ago, and in the meantime (this last month) $copper went down some, so ... perhaps I'm wrong ! I always keep my mind opened to all possibilities.
For now I'll continue holding PCU, expecting it to breakout to new all time highs above $58.38.
PCU was down ugly today, more than 4%. The stock just touched its ascending support as you can see on the chart below. Just below the ascending trendline there's the 50 days SMA also providing support.
The long/medium and short term trends are still bullish, despite today's sell off. I need to be coherent and continue holding the stock, at least for now.
But it did cross my mind today that I should sell it based on the following theory:
"The fundamental status isn't all that important. What matters most is the change in fundamentals, or the potential change".
But now I look at the chart and think: the market still didn't say my fundamental assessment of PCU is wrong. But if PCU is set to close below $54, then I think it is clear there was at least a short term top and the stock may go down about 10 or 15% more.
You can see I have doubts. I'll let the market decide on my course of action. So, the trading plan for tomorrow is: SELL PCU if it is set to close below $54. Otherwise HOLD.
QuoteYou can see I have doubts. I'll let the market decide on my course of action. So, the trading plan for tomorrow is: SELL PCU if it is set to close below $54. Otherwise HOLD.
Sold PCU at $52.4, according to plan.
Its a pitty this one turned out to be such a bomb. I should of went with my gut feeling on this one and stayed out. I had a feeling the nationwide construction slowdown would come back to hit copper prices down.
My eyeballs about popped out when I looked at PCU this morning. :o :o :o
Quote from: David Randolph on December 21, 2006, 04:01:20 PM
Sold PCU at $52.4, according to plan.
David sold PCU on December 21, when a short-term trendline broke after the stock had put in a short-term "Double Top."
Certainly a very reasonable choice on David's part.
In addition to that short-term picture, all day long on December 21 on CNBC, it was non-stop about the drop in the price of copper. Then, at about 2:30PM, PCU got "Cramerized!" (cumulina ought to patent that term :D).
Cramer called for a COLLAPSE in copper, said that he wanted nothing to do with copper stocks, and specifically said, "Sell PCU."
No, he SCREAMED it.
I think he hit the cash register a few times, and then screamed some more. :D
Mercy! ;D
It always interests me to see what a stock does after a "Cramerization" (I have to ask cumulina if that's a word ???):
1. Seven sessions after it got "Cramerized," PCU put in a Bullish Doji Star Hammer just above technical support at the July-October Rectangle.
2. PCU then formed a Bullish Inverse H&S, and broke out of it on January 19.
3. It closed at a new high on Wednesday, and is nearing the 61.64 target IN PLAY.
Very, very difficult to buy that Bullish Doji Star Hammer
at support on January 4 if we had been watching it, after PCU got Cramerized with a COLLAPSE call, but what an OUTSTANDING play, if anyone bought it there, huh?!
I still have PCU in my fathers portfolio. Its a mostly high dividend porfolio.
Bought PCU on Jan 8th @ 51.50
As you can see on the following charts PCU is following the mostly the same pattern as FCX and Copper futures.
Nevertheless going back and comparing PCU with $copper there is
at this moment a remarkable divergency which from time to time comes
back to zero. The question is which one will lose some ground to close
the difference.
PCU - FCX
Quote from: jorgegr on January 27, 2007, 07:53:49 PM
Bought PCU on Jan 8th @ 51.50
As you can see on the following charts PCU is following the mostly the same pattern as FCX and Copper futures.
jorge,
That's a fine play you made there. Applause.
Even though I always defer to the techicals over the fundamentals when I have to choose between the two, if I had seen PCU put in that Bullish Doji Star Hammer
at technical support on January 4, I would have passed on that trade.
Given how bad the copper chart looked, I would have respected that, and I wouldn't have given PCU much chance of rallying against it, let alone rallying to a new high! Wow. :o
That's why I said that I thought it was a very difficult play to make, and it's another good market lesson for me. I have difficulty with it, because I always want the market to "make sense," and I keep having to remember that, very often,
it doesn't make sense. Quote from: nullzero on December 22, 2006, 12:16:14 PM
Its a pitty this one turned out to be such a bomb. I should of went with my gut feeling on this one and stayed out. I had a feeling the nationwide construction slowdown would come back to hit copper prices down.
nullz,
And, that was right. Copper prices did come down, but PCU
didn't. ???
Quote from: nullzero on January 27, 2007, 04:34:15 PM
I still have PCU in my fathers portfolio. Its a mostly high dividend porfolio.
Nice. I think PCU is one of the highest paying dividend stocks. Last quarter was something like 1.37 a share, if I remember correctly. Tell your dad that he has to share next quarter with you for making him such a nice pick. 8)
Quote
Nevertheless going back and comparing PCU with $copper there is
at this moment a remarkable divergency which from time to time comes
back to zero. The question is which one will lose some ground to close
the difference.
Right, jorge.
There's a big "disconnect" between the two, isn't there? Even CUP is doing well against copper. It just took out the 4.09 - 4.10 highs of TWO ugly, ugly black candles!
I'm lousy at predicting, but I'd say watch to see if the 61.64 target gets MADE, and watch to see if PCU can hold above the highs of the current Rectangle breakout.
See the last Rectangle that broke out on October 13, around the time that copper started doing a header to the
downside? That breakout put 57.43 IN PLAY, which MADE with no problem.
This breakout on January 24 put a target of 66.82 IN PLAY.
Math:
58.23 - High (the more conservative of the 58.38 and 58.23 highs)
49.64 - Low (the more conservative of the 49.64 and 49.16 lows)
58.23 - 49.64 = 8.59 Points + 58.23 = Target: 66.82
Good luck with this one, guys!
Thanks Melf for your detailed TA, very usefull comments.
I see RSI, Dist/Accum., and FULL STO too high, may pullback :'(
before achieving the target. Will keep an eye on $copper
hoping it breaks 280 ;)
Sold today @ 64.55
Quote from: jorgegr on February 05, 2007, 03:08:29 PM
Sold today @ 64.55
jorgegr,
Great trade! Congratulations. Applause.
PCU has had a stunning, straight-up rally off the 49.16 low. It goes ex-dividend on Friday, and the dividend has been raised to 1.70, so that probably has helped to propel the stock higher. The shorts don't want to pay that kind of dividend because it isn't likely that they have received dividends to offset it.
Looks like the shorts are bailing out big time. No point in selling PCU for my fathers porfolio he doesnt have more then 2k in it, its better to get the divy and reinvest with a drip over time.
THX Melf for your guidance. Got out because believe it reached the top of the trend line & dont want to wait until friday.
On the other hand $copper falling & believe this rally is exhausted considering
Full STO, RSI, MACD and CCI.
Maybe I'm wrong, in any case GLTA holders.
PCU trading at 65.56 still making new 52wk highs :)
Quote from: nullzero on February 07, 2007, 12:55:53 PM
PCU trading at 65.56 still making new 52wk highs :)
nullz,
I've been wondering if the Rectangle target of 66.82 would get MADE before PCU goes ex-dividend (I believe it's Friday morning; the open should be down 1.70 from today's closing price for the dividend pay out).
Yesterday's high was 66.02. We'll see if the shorts step in after the dividend is out of the way.
By the way, remember Cramer's call for a collapse in copper, and his call to sell PCU on the afternoon of December 21 (PCU closed at 52.29)?
I just read an article called "Unstoppable Energy" at The Street.com from Wednesday afternoon. At the end of the article was this interesting comment from Cramer, on PCU:
TheStreet.com TV Recap: Unstoppable Energy
By TheStreet.com Staff
2/6/2007 1:45 PM EST
"As for individual investors, when Task asked how one would invest in asset types such as copper when all of the hedge funds are targeting them,
Cramer advised buying Southern Copper (PCU - Cramer's Take - Stockpickr - Rating), "which has a good yield." He believes copper will be in short supply in the long run because hybrid batteries in cars use a "gigantic amount" of the mineral."
PCU still making new 52wk highs, man this stock is on fire. Im not in it anymore wish I was :o. What can you do though to many good stocks and to little time and money to catch them all.
Quote from: Melf Elf on January 27, 2007, 06:08:44 AM
Very, very difficult to buy that Bullish Doji Star Hammer at support on January 4 if we had been watching it, after PCU got Cramerized with a COLLAPSE call, but what an OUTSTANDING play, if anyone bought it there, huh?!
Talk about outstanding!!! PCU has been on such a run this uear it is just ridiculous. Up over 50% since the beginning of January!! Whew!! :o :o
ANd I have to say tht it looks like it may have more legs to make a break to new all time highs. Today's candle made a clear breakout above previous reisitance and consolidation of the last couple weeks, and puts those all-time highs of 76.50 within reach. I think that, market blessing provided, we could be seeing that new high over the next few sessions. I for one am betting on it ;)
Great chart.
What an appropriate name for the thread - PCU is once again breaking to all-tim highs, having gotten above 76.50. I think that we could see this continuing from here...