Jun 01 2009
Two Metal Companies
Metals are once again on the move. People who have owned gold and silver are enjoying the climbing price of metals in the past few months. This blog encouraged all people to buy, buy, buy last February. Now it’s time for those who listened to enjoy their investments.
Mining stocks have been bouncing back the same as most other stocks. However, mining stocks may be next to truly sparkle. Here are two stocks to watch in the mining sector.
Cameco (CCI)- Ever since Cigar lake mine filled with water, Cameco has struggled with getting the mine up to speed. Water is still an issue there. The result: a stock price that is slightly overinflated, with a P/E ratio of 24. Cameco is also the world’s largest uranium producer in the world. Uranium is lower in price right now than several years ago, and the charts indicate that the prices are on a downward trend. This is surprising; China is putting over 120 nuclear plants into production in the next three years. With the world’s most populated country using more uranium, it would be logical that the price would rise.
It’s not bad enough that Cameco is over the comfortable P/E level of 20. Insiders are not buying either, and that’s never a good sign when considering jumping into a stock. For now, it might be best to leave Cameco by the wayside.
Rio Tinto, (RTP) is blitzing upward at a frenetic pace. It’s up to over $181 since it’s ridiculous drop to $59 earlier this year. That deep discount was the perfect time to buy into Rio, but now is not a bad time, either. The stock fell late last year from a high of $495, and with a current P/E at 15, there is obviously room for the stock to grow. High metal prices will juice up the stock prices even further.
Rio seems to mine everything that can make money. Diamonds, uranium, gold and silver are all part of its production. In addition to that, Rio’s name is not often associated with some of the less ethical shenanigans that have sometimes dogged Freeport-McMoran. Rio is huge and a “Steady Eddy.”
No insiders are buying Rio Tinto, so nothing in the way of mergers are on the horizon. However, as gold continues to climb in price, so shall Rio enjoy the benefits of its luster. When comparing Cameco over Rio, RTP is probably the better buy at this time.
