|By PR Newswire||
|February 11, 2014 09:30 AM EST||
CHICAGO, Feb. 11, 2014 /PRNewswire/ -- Today, Zacks Investment Ideas feature highlights Features: SPDR Gold Shares (AMEX:GLD-Free Report), iShares Silver Trust (AMEX:SLV-Free Report), Rio Tinto PLC (NYSE:RIO-Free Report), Stillwater Mining Co (NYSE:SWC-Free Report) and Franco Nevada Corp (NYSE:FNV-Free Report).
Pay Mind to the Miners
Sorry King Midas, but nobody cares about what you touch anymore. That shimmery stuff you melt down to make rings and things has lost its luster. Gold was the talk of the town around $1,900 an ounce but since the collapse in prices now it's an afterthought. Which to me is baffling. I think that the real reason gold prices are not that high is the same reason people think that gold should be high. It's all the "worthless" fiat currencies of the world. Globally we are printing money and devaluing currency. So the only thing on Earth that should be worth any money is a hard asset like gold, right? Sounds good in theory. But who are the major players in the gold market? Who buys the most gold? Central banks do. So now if your currency has depreciated then guess what you can't do? Buy as much gold as you used to. And the cycle continues...
I am not bold nor crazy enough to come out and say that the tough times are behind us for the precious metals. I do, however, offer up a couple of charts that may change a few minds. First take a look at the gold chart using the exchange traded fund SPDR Gold Shares (AMEX:GLD-Free Report). From the October 2012 relative high near $175 we can draw a trend line channel across the first few tops. This trend was broken to the downside in April 2013, rendering these trend lines obsolete for the time being. Just for giggles though, let's extend these through today. More on this later.
Now let's fast forward to price action since September 2013. We can draw another channel coming down across the tops through January 2014 only to be violated at the beginning of February by continued bullish price action. This technical picture looks a lot different given this new set of circumstances. The chart changes from a downward death spiral to dead cat bounce with a side of optimism. Price sits above the 25x5 SMA and, more importantly, above the most recent downward price channel. To quote the great Jim Carey, "So you're saying there's a chance!" The next resistance sits at the extension of the downward trend line from the October 2012 high.
You can't talk gold without mentioning its hard-working, industrious, albeit less glamorous and attractive brother silver. On the charts silver and gold have a very high correlation. Economically this never really made sense to me as they have to very different sets of supply and demand determinants. Silver has industrial uses far above and beyond what gold has. Gold pretty much gets mined, shined, and showed off or buried. Silver is used to make all sorts parts from light switches to soldering applications to water purification. Regardless of what theory suggests, the chart moves pretty much in step with gold. As such, the silver chart has nearly the same pattern as gold but has not had the breakout yet from the major trend line resistance. Here we use the iShares Silver Trust (AMEX:SLV-Free Report) and can see it trading in the $19 handle down from an October 2012 high in the low $30s and a far cry from the all-time highs seen in April of 2011 in the $48 range.
Gold has a relatively high correlation with many metals, not just silver. My thinking is that if we see a recovery in gold prices it will spill over to silver, platinum, copper, aluminum and a host of other metals to a certain degree.
Entertain my wild ideas for a minute here. What if the pundits screaming "Gold is dead" are wrong? What if gold has seen the worst of its decline? What if the recent price action is the beginning of a gradual recovery in prices and not a dead cat bounce? What if there was a way to profit from this crazy notion other than buying GLD or SLV?
If you have never paid any mind to the miners then you might like what you're about to hear. By investing in a diversified mining operation we stand to make profits on a recovery in gold and silver prices but will still be insulated by exposure to other metals so it is not a "make or break" proposition. Further, we can use the Zacks Rank to uncover mining companies that have had the most positive earnings estimate revisions. Given the fact that miners have been relatively beat up during last year's market rally we have the chance to find a few real bargains.
Rio Tinto PLC (NYSE:RIO-Free Report) is an international mining company with interests in mining for gold, silver, copper, coal, iron ore, uranium, zinc and a host of other metals. Fundamentally it's a Zacks #2 Rank. A quick look at the price and consensus chart gives me hope for the future. You can see the price tracked the consensus estimates and revisions relatively closely for the past four years. Estimates have slid along with prices for gold and silver since Q2 2011 and the stock sold off as a result. The recent consensus estimates have seen a bounce off the bottom as prices appear to be stabilizing. Should this trend continue it is very bullish for shares of RIO.
The technical chart on RIO reads bullish as well. The recent range from $51 to $57 looks to me like a consolidation after a big move from the low $40s. A break above $57 with volume would be a very bullish breakout. Failure to breakout would not be a sell signal but rather a chance to get in near the bottom of the recent consolidation range from $51-$53. A breakdown below $51 means you look for another stock to buy.
There is something about the name of this stock that soothes my nerves. Stillwater Mining Co (NYSE:SWC-Free Report) is engaged in mining operations in the Stillwater Complex in southern Montana. The area contains gold, copper, nickel, chromium, platinum and palladium. SWC is a Zacks #1 Rank and its last earning surprise was a whopping 425%. I want to show the price and consensus chart because it shares an important characteristic with RIO. Recent earnings revisions have seen upwards momentum for the first time since gold and silver began their decline. I think that a pattern is beginning to develop amongst analysts which only further supports the idea that gold may have already bottomed.
The price chart is temporarily bearish but that could change in a few days. I like the fact that the stochastics are oversold and awaiting a buy signal. I like the pull back and support at $12. What I don't like is the speed of the fall from mid-January to today and I don't like seeing the stock below the 25x5. This trade set up could take a couple weeks. I would need to see the stock get above the 25x5, pull back to it, then see a stochastic buy before I got on board. This is a perfect case of great fundamentals but I'll pass on the technicals right now. In mid-December the stock set up perfectly for a buy around $11 which took the stock near $14. But it is not mid-December, it's February so I would be patient for better technical timing.
If the first two examples were dipping your toes in the water on a possible gold rebound then this next stock is a cannonball from the high board. Franco Nevada Corp (NYSE:FNV-Free Report) is a gold focused royalty and stream company with some interests in platinum group metals. While this does not make it a 100% pure gold play, it does give it added risk to price movements in the base metal. The price and consensus chart looks the way you think it would given the other two examples. However, FNV has only been around since late 2011 so the chart is not as impactful. Being a newer operation, the analysts haven't quite figured things out and the estimates have been all over the place historically. Recently, upwards revisions of some magnitude have helped push FNV into a Zacks #2 Rank.
On my chart I like what I see. The stock pushed above resistance at $48 and had been consolidating. It rested firmly above the 25x5 while the 25x5 had a very positive slope. Stochastics were beginning to come down from overbought levels as the stock consolidated between $48 and $50. I would buy today's break out above $50. If you missed it, that's alright too, a better opportunity will come with a pull back to the 25x5 coupled by confirmation from the stochastics.
The bottom line is if you believe in a possible recovery in gold prices these three stocks are all good ideas. With a little bit of patience you can find favorable entry points that will offer up the best risk versus reward scenarios. If gold continues to unwind, hopefully the diversification in the first two stocks will cushion any downside and a wisely set stop loss will protect you on FNV. With the chart set up on gold and the earnings revisions by analysts I think there is a relatively strong case for at least a consolidation in gold prices if not a reversal of the long term down trend.
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros.
Follow us on Twitter: http://twitter.com/ZacksResearch
Join us on Facebook: http://www.facebook.com/ZacksInvestmentResearch
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit http://www.zacks.com/performance for information about the performance numbers displayed in this press release.
SOURCE Zacks Investment Research, Inc.
SYS-CON Events announced today that Isomorphic Software will exhibit at DevOps Summit at 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Isomorphic Software provides the SmartClient HTML5/AJAX platform, the most advanced technology for building rich, cutting-edge enterprise web applications for desktop and mobile. SmartClient combines the productivity and performance of traditional desktop software with the simp...
Aug. 28, 2016 03:30 AM EDT Reads: 2,343
With so much going on in this space you could be forgiven for thinking you were always working with yesterday’s technologies. So much change, so quickly. What do you do if you have to build a solution from the ground up that is expected to live in the field for at least 5-10 years? This is the challenge we faced when we looked to refresh our existing 10-year-old custom hardware stack to measure the fullness of trash cans and compactors.
Aug. 28, 2016 02:00 AM EDT Reads: 1,767
Extreme Computing is the ability to leverage highly performant infrastructure and software to accelerate Big Data, machine learning, HPC, and Enterprise applications. High IOPS Storage, low-latency networks, in-memory databases, GPUs and other parallel accelerators are being used to achieve faster results and help businesses make better decisions. In his session at 18th Cloud Expo, Michael O'Neill, Strategic Business Development at NVIDIA, focused on some of the unique ways extreme computing is...
Aug. 28, 2016 01:45 AM EDT Reads: 2,151
The emerging Internet of Everything creates tremendous new opportunities for customer engagement and business model innovation. However, enterprises must overcome a number of critical challenges to bring these new solutions to market. In his session at @ThingsExpo, Michael Martin, CTO/CIO at nfrastructure, outlined these key challenges and recommended approaches for overcoming them to achieve speed and agility in the design, development and implementation of Internet of Everything solutions wi...
Aug. 28, 2016 01:30 AM EDT Reads: 2,085
Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is expected in the amount of information being processed, managed, analyzed, and acted upon by enterprise IT. This amazing is not part of some distant future - it is happening today. One report shows a 650% increase in enterprise data by 2020. Other estimates are even higher....
Aug. 28, 2016 01:00 AM EDT Reads: 2,965
Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more business becomes digital the more stakeholders are interested in this data including how it relates to business. Some of these people have never used a monitoring tool before. They have a question on their mind like “How is my application doing” but no id...
Aug. 28, 2016 12:15 AM EDT Reads: 1,829
The 19th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Digital Transformation, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportuni...
Aug. 27, 2016 11:00 PM EDT Reads: 4,000
Identity is in everything and customers are looking to their providers to ensure the security of their identities, transactions and data. With the increased reliance on cloud-based services, service providers must build security and trust into their offerings, adding value to customers and improving the user experience. Making identity, security and privacy easy for customers provides a unique advantage over the competition.
Aug. 27, 2016 08:45 PM EDT Reads: 2,354
Qosmos has announced new milestones in the detection of encrypted traffic and in protocol signature coverage. Qosmos latest software can accurately classify traffic encrypted with SSL/TLS (e.g., Google, Facebook, WhatsApp), P2P traffic (e.g., BitTorrent, MuTorrent, Vuze), and Skype, while preserving the privacy of communication content. These new classification techniques mean that traffic optimization, policy enforcement, and user experience are largely unaffected by encryption. In respect wit...
Aug. 27, 2016 08:45 PM EDT Reads: 1,779
Fact: storage performance problems have only gotten more complicated, as applications not only have become largely virtualized, but also have moved to cloud-based infrastructures. Storage performance in virtualized environments isn’t just about IOPS anymore. Instead, you need to guarantee performance for individual VMs, helping applications maintain performance as the number of VMs continues to go up in real time. In his session at Cloud Expo, Dhiraj Sehgal, Product and Marketing at Tintri, wil...
Aug. 27, 2016 06:15 PM EDT Reads: 751
19th Cloud Expo, taking place November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy. Meanwhile, 94% of enterpri...
Aug. 27, 2016 06:00 PM EDT Reads: 3,102
Enterprises have forever faced challenges surrounding the sharing of their intellectual property. Emerging cloud adoption has made it more compelling for enterprises to digitize their content, making them available over a wide variety of devices across the Internet. In his session at 19th Cloud Expo, Santosh Ahuja, Director of Architecture at Impiger Technologies, will introduce various mechanisms provided by cloud service providers today to manage and share digital content in a secure manner....
Aug. 27, 2016 06:00 PM EDT Reads: 738
Smart Cities are here to stay, but for their promise to be delivered, the data they produce must not be put in new siloes. In his session at @ThingsExpo, Mathias Herberts, Co-founder and CTO of Cityzen Data, will deep dive into best practices that will ensure a successful smart city journey.
Aug. 27, 2016 05:15 PM EDT Reads: 1,584
SYS-CON Events announced today that 910Telecom will exhibit at the 19th International Cloud Expo, which will take place on November 1–3, 2016, at the Santa Clara Convention Center in Santa Clara, CA. Housed in the classic Denver Gas & Electric Building, 910 15th St., 910Telecom is a carrier-neutral telecom hotel located in the heart of Denver. Adjacent to CenturyLink, AT&T, and Denver Main, 910Telecom offers connectivity to all major carriers, Internet service providers, Internet backbones and ...
Aug. 27, 2016 05:00 PM EDT Reads: 1,888
To leverage Continuous Delivery, enterprises must consider impacts that span functional silos, as well as applications that touch older, slower moving components. Managing the many dependencies can cause slowdowns. See how to achieve continuous delivery in the enterprise.
Aug. 27, 2016 04:45 PM EDT Reads: 1,640