PAL

[BigSully1]

Stillwater Added to Preferred Stock List
Monday February 4, 12:08 pm ET 
Stillwater Shares Rise After JPMorgan Adds Miner to Preferred List, Citing Supply Dip


NEW YORK (AP) -- Shares of Stillwater Mining Co. rose Monday after JPMorgan added the platinum and palladium miner to a list of preferred stocks, saying global supply problems should boost Stillwater's share price.
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The stock rose 59 cents, or 4.6 percent, to $13.36 in midday trading.

Analyst John Bridges placed Billings, Mont.-based Stillwater on his "Focus List" with a $16 price target.

Power outages in South Africa, where about 80 percent of the world's platinum and 35 percent of its palladium are mined, should constrict supply, he said.

Further, a glut of Russian metals that had flooded that market for years dipped in 2007 to 24 metric tons from 70 metric tons and still is falling, he said.

With the amount of available palladium and platinum dropping, Bridges said he "the potential for a perfect storm," especially for palladium prices.

Palladium, which is sometimes used as a lower-cost substitute for platinum, is a key component of auto parts, such as catalytic convertors.

Palladium prices jumped 5 percent last Friday, helping to boost Stillwater shares. Bridges said the stock should continue to rise to at least his $16 target.

"We are confident of this upside due to the way palladium has lagged the commodity sector during the recent bull-market," Bridges said in a note to clients.

And demand for palladium should only grow further, as advancements in technology and willingness to control carbon emissions means more of the precious metal is needed, he said.

[berloga]

David,  I am loaded up with stocks at this moment, but would like to get into PAL, since it looks like it has a great potential now. Which stock would you recommend to sell in the portfolio? I have all of them, and think some are a lot more sluggish than PAL, but can't decide which one. Thanks!

[David Randolph]

David,  I am loaded up with stocks at this moment, but would like to get into PAL, since it looks like it has a great potential now. Which stock would you recommend to sell in the portfolio? I have all of them, and think some are a lot more sluggish than PAL, but can't decide which one. Thanks!

This is always a tough question berloga, because if I wanted to sell one of the Main's holdings, I would do so. But I guess ASTI, for example, and taking on IMMR's story as well, could be a good candidate for a switch, mainly because it will take another year or so for the company to start generating meaningful revenues and I'm not sure investors will be patient enough.

But you really need to get into PAL, since, as it happens with $GOLD, $PALL seems indifferent to the current state of the general market:



Palladium is one of the few things moving up, and it has just started a bull run. The all time high is over $1,000. This is exactly what we need to look for in this environment, because bear market or not, there are stocks outthere which will move up 10 fold and one of those can bring a nice performance to a portfolio, much better than selling stocks short.

The current weakness in PAL due to profit taking seems like a nice buying opportunity.

I'll keep holding PAL.

[David Randolph]

Palladium futures continue to march higher:



And that is helping PAL, which is the World's largest palladium producer, at least according to the company.

There's another publicly traded company in the palladium mining field, which is SWC:



Up about 100% in three weeks. But let's compare SWC and PAL's medium term charts:





The charts are similar, but PAL is still much more depressed than SWC. I think this has to do with the private placement PAL made recently ... that was a cause for concern for me too, but as I looked deeper and saw who was buying and how strong were his hands, I felt much more confident about PAL. The investor clearly isn't looking for a short term gain.

So, is it possible for PAL to be back up to $12 plus? I believe so, because fundamentals are better now than what they were in mid 2006 and mid 2007. I wonder if we'll have a gigantic rally until May 2008, like it happened in the previous two years.

I'll continue holding PAL.

[la-onda]

again applauds for this pick David !
cheers from SGP
O.

[soxguy]

More Than Momentum: Stocks Rising for a Reason
By Dave Mock February 13, 2008

Recommendations
Even on the market's worst days, buyout news or other short-term forces can send individual stocks up by 10%, 25%, even 50%. For example, when Allis-Chalmers Energy (NYSE: ALY) agreed to pay $438 million for oil services firm Bronco Drilling (Nasdaq: BRNC), the latter's stock jumped more than 16% in a single day.

But beyond one-time blips like this are stocks with compelling reasons for recent momentum -- provided you can find them. That's where Motley Fool CAPS comes in.

The story behind the story
CAPS is no crowd of lemmings; its best-performing investors' opinions do more to shape each company's rating than the picks of their poorer-performing peers. Let's use the collective wisdom of more than 83,000 CAPS investors to filter out the noise and find companies showing strong momentum.

We'll screen for companies with a stock-price increase of at least 30% in the past month, a market cap of greater than $100 million, and a beta of less than 3. That'll keep us clear of the wild, pump-and-dump land of penny stocks.

Here's a sample of stocks our screen returned.

Company
CAPS Rating
(Out of 5)
1-Month
Price Change

North American Palladium (AMEX: PAL)
*****
51.9%

Cree (Nasdaq: CREE)
****
29.7%

TBS International (Nasdaq: TBSI)
****                                                  Here we are too.
32.4%

JetBlue Airways (Nasdaq: JBLU)
**
41.8%

Lennar (NYSE: LEN)
*
37.6%

Return data is calculated as the difference between the closing price on Jan. 11 and the closing price on Feb. 12, as per MSN Money's screen. Star ranking from CAPS. Data as of Feb. 12.
Let's burrow down through this list of stocks that have thumped the market over the past month, and find out why they've performed so well.

Metal madness
Topping this week's list of momentum stocks is Canada's largest palladium miner, North American Palladium. In addition to soaring more than 50% in the past month, the company made the grade as a stock star with a highly favored five-star rating from the CAPS community.

Shares of the company have been driven higher on two main developments -- a warm reception to a secondary share offering, and the announcement of a strong fourth quarter and full year of production. North American Palladium netted $86 million from a unit offering late last year, which successfully sold its over-allotment commitments as well. Facing a dwindling cash balance, investors were heartened by the news, since the proceeds will go a long way toward supporting development of mining projects in Canada and Finland.

The new cash infusion paired nicely with the 21% increase in palladium production the company saw in 2007, thanks to increased output at its Lac des Iles mine. Similarly, the firm also saw increased output in byproduct metals such as nickel, gold, platinum, and copper last year. With shares trading at less than half of last May's price, and the company pursuing an unhedged palladium policy, many CAPS investors think that now is the time to go long on palladium. Of the 350 investors rating the company, 336 believe that North American Palladium will beat the S&P going forward.

Light at the end of the tunnel
Another stock surging this past month, Cree, owes its hot streak to renewed optimism for demand in LED lighting solutions. With government bodies around the world pushing for new levels of lighting efficiency, investors have a bullish opinion of Cree's capability to meet these demands with technology for LED lighting across a diverse set of markets.

Analysts and the mainstream press have also been shining a light on Cree and other companies in the LED supply chain lately, exposing their potential to solve energy demand issues in emerging markets. Tack onto this a blowout quarter recently announced by the company, which included a forecast for revenue to grow to between $120 million and $125 million in the next quarter, and you've got one hot stock. A solid contingent of CAPS investors like the direction of the long-term trends in lighting, collectively giving the stock a four-star rating. Of the 163 All-Stars rating the company, 147 believe that Cree will outpace the S&P going forward.

[la-onda]

the chart says it all 
chapeaux David 

[berloga]

I guess, I've done well by putting my CHME and IMMR money into PAL, after all. If PAL hits 100% profit, I can sell 1/2 and buy another stock, if I want to. Granted, things like this are not always easy to predict (or as David would put it, impossible to predict  ).

Platinum and Rhodium: Two Metals On Fireposted on: February 19, 2008 | about stocks: PAL / SWC     
Platinum has now pushed over $2000 an ounce.  Rhodium has pushed thru $8500 an ounce.  To say these metals have been on fire would be an understatement.  The increase in these two metals has been because of power and labor issues in South Africa.  The biggest beneficiaries of the issues in South Africa have been the producers in North America and Russia.  While North America and Russia deposits "usually" has more palladium than platinum and rhodium in its deposits (note: palladium has also done well) they are still benefiting greatly from this price boom.


Companies such as North American Palladium (PAL) and Stillwater Mining (SWC) have seen resurgence in their stock price over the past couple of months.  While those two companies have had a great run recently, I always like to look at companies who have operations adjacent to these companies and see if the surronding companies also have decent prospects but have not participated in the run-up.  I'll introduce two explorers that surround Stillwater Mining that might be of interest in your portfolio.


Beartooth Platinum (BTP.V) has a land position (5976 hectares ) surrounding Stillwater Mining Company's two operating mines in Montana.  Beartooth also has a joint venture with Premium Exploration Inc. (PEM.V) on additional Stillwater claims.  These properties have reported decent platinum, palladium, and rhodium grades (2006 drill results- Release 1 , Release 2 with Rhodium Results).     On October 17, 2007, Beartooth Platinum announced their completion of their 2007 drill program in Montana.  Assay results from the 2007 drill program should be out in the very near future.  If the grades are similar to that of the 2006 drill program, Beartooth Platinum and Premium Exploration's stock price should appreciate.  Also with good drill results, Stillwater Mining might look into owning a piece in both of those companies.

Beartooth Platinum and Premium Exploration aren't one property companies either.  Beartooth is currently exploring a PGM project in South Africa and Premium Exploration has some decent looking gold and silver projects in Mexico and the United States..

PGM metals are hot right now, and even though prices might come off from these high levels once the South Africa situation is ironed out, companies that can find high-grade PGM projects outside of South Africa will be in high demand.

[David Randolph]

Looking at what Palladium futures have been doing ...



... and $gold and Platinum I easily get to the conclusion that PAL's fundamentals are much better now that what they were in 2006 and 2007 when the stock traded at $12 plus. I think the current bullish move will keep going and pass beyond $12.

People selling today just can't stand to let a profit grow, in my view.

I think of PAL as the potential tenbagger that can push the Main to a 50% gain, even if all other stocks compensate each other and remain flat. Some stocks will rise 10 fold in 2008 and PAL has the ingredients to be one of them.

So I'll just let the profits run.

[David Randolph]

Palladium futures ($PALL at www.stockcharts.com) continue to power ahead:



And Palladium is much higher than what it was in 2006 and 2007:



Yet, PAL is still way below its 2006 and 2007 highs:



And the company's production increased:

• North American Palladium Increases Annual Production by 21%
Marketwire (Thu, Jan 17)

I'm not an expert at anything, much less so in valuing mining stocks, but it appears to me that PAL will be worth more than $12 a share in some time to come. At least fundamentals are much better now than what they were when the stock traded at those levels.

The late 2007 sell off was mostly due to a private placement, which we've already seen was subscribed by the very strong hands of the largest shareholder of the company with a 45% plus stake.

I know there will be corrections along the way, so I don't expect every day to be strongly positive like the recent past, but I see PAL at $12 plus in a few months time and I'll keep holding for that outcome.

[berloga]

David, you have several blanks in the "target" price section of the front page table. I find the target exit values useful to assert a stock's potential, especially when trying to figure out which one to buy. Why don't you update that anymore for the new holdings? Even using your near term (1 year) expectation would come in handy. Thanks!

[David Randolph]

David, you have several blanks in the "target" price section of the front page table.

Yes. Some of those blanks are due to the impossibility of projecting financial estimates (like in ASTI and IMMR cases) and others are due to my current belief that investing from a fundamental perspective is much more than just extrapolating current financial trends into the future.

I find the target exit values useful to assert a stock's potential, especially when trying to figure out which one to buy.

Yes, I understand that it would be great to always have a target for a sale, but I find my efforts in that camp perhaps misleading. Companies and stocks are much more complex and change due to many more variables than the ones I was considering.

Why don't you update that anymore for the new holdings? Even using your near term (1 year) expectation would come in handy. Thanks!

Because I feel that could be misleading and it would tie myself too much to an expectation of the future. And the perceived future keeps changing.

When I developed the valuation model I was considering that the market would correct its inefficiencies and basically price businesses which have similar financial metrics and trends in basically the same way. But now I see that the way investors value companies has a lot more to it ... it is possible that two businesses with basically the same financial metrics and trends are valued completely differently, say, one is worth 5 times more than the other, and that has to do with the intrinsic and unique nature of each business.

We'll come back to these issues soon.

As for PAL, the Main Portfolio has reached the 100% return on this holding, which was bought less than one month ago. I know everything I said about investing for the long term and that PAL is certainly now worth more than $12. However, I also hear the voice of my experience in 2007, where I held several stocks which at one point returned about 100% and I let a good chunk of profits slip (or in some cases, all of it).

This happened in GSB, ASTI, SDTH, SILC, GIGM, ICOC, NVTL and CPNE.OB.

PAL never was one of those really long term investments for me and I know the company will report a loss in Q4 2007, because production fell from the year ago level, prices were about the same and the company lost $6 M, or 12 cents a share, in Q4 2006. How do you think people having a 100% profit will react to these news?

I think it is possible that due to this short term disappointment my profit may be cut in half, from 100% to 50%. If the stock goes down to close the gap at $6.76, my profit would diminish to 46%, and this is entirely possible.

I prefer to take profits now and if this short term scenario plays out I get back in around $6.76. I'm not as confident in PAL's fundamentals as I am in other stocks.

The Trading Plan is:

SELL.

[berloga]

Thanks for the answers, David. I agree, the game is more complex than simply setting a target and wait until we hit it. The best thing I like about this service is its flexibility, i.e. constant progression in searching for a better solution. It is alright to abandon old views and assume new ones. As one philosopher said, "I live, which means I change". Good job!

Sold PAL at $9. Back in IMMR at $9.7. 

[poli]

David,   Great pick and call on PAL.  Nothing wrong with taking these kind of profits in such a short time frame.  Probably going against my better judgement since I usually follow you I am holding off on selling for now.  Right now and the next couple of months I am very bullish on precious metals.  The GRS I bought a few weeks ago is also up over 50%.  We will know in the fullness of time.  Thanks again,  To good health and trading.
Poli

[David Randolph]

Thanks for the answers, David. I agree, the game is more complex than simply setting a target and wait until we hit it. The best thing I like about this service is its flexibility, i.e. constant progression in searching for a better solution. It is alright to abandon old views and assume new ones. As one philosopher said, "I live, which means I change". Good job!

Sold PAL at $9. Back in IMMR at $9.7. 

Thanks berloga The only constant thing in the market is change.

Right now and the next couple of months I am very bullish on precious metals.

Hi poli, not talking specifically on PAL or GRS (which I don't know) and not because I sold PAL, but I think precious metals have been very hot for some time now and the market is changing.

With the market changing from bearish to bullish it is probable that some sector rotation occurs. You see that inflation is yesterday's story by the market's reaction to today's PPI report.

I might be wrong on this sector call, but the way I see things evolving, investors will take profits in precious metals and commodities and will buy beaten down sectors like the financials and consumer related.

Just my 2 cents, as they may help you to also consider the other side, good luck