Get Ready for Some Major Drilling
Fix your gaze upon any segment of the global mining industry, and you're bound to find a long-term growth story that is expected to play out even if economic projections drift downward. I have devoted much effort to bringing an array of quality mining stocks to the attention of my readers, and I continue to perceive significant investment opportunities in the space; but today I wish to draw your attention to an entirely different way to approach the mining industry.
Miners can't mine a thing before they locate and quantify economic reserves, and that's where drilling services provider Major Drilling (OTC: MJDLF) comes into play. Operating worldwide with 547 drill teams in 22 different countries, Major Drilling is ideally positioned to grow alongside global demand for exploration drilling.
We have a powerful global supercycle for coal in the works, as major miner Peabody Energy (NYS: BTU) has repeatedly stated. Epic trailing performances by precious standouts like Eldorado Gold (NYS: EGO) and Silver Wheaton (NYS: SLW) underscore an incredible secular bull market for gold and silver that shows no signs of losing strength. Gold exploration alone currently accounts for some 48% of Major Drilling's revenue. And a copper market that's struggling to identify sufficient sources of future supply continues to bode well for small-cap marvelTaseko Mines (ASE: TGB) . With all of those bullish factors in place, exploration budgets have been ramping up dramatically across multiple segments of the mining industry, and I view Major Drilling as a clear, long-term beneficiary.
Every great and sustained investment trend reveals enticing ancillary opportunities as it unfolds, and the ongoing commodity boom is no exception. Caterpillar (NYS: CAT) understood that well when the company dug deeper into the mining space with its acquisition of Bucyrus, while remaining competitor Joy Global's (NAS: JOYG) stock has already grown about 1,000% over the past decade! Meanwhile, over a similar time frame, Major Drilling's shares have appreciated more than 3,000%, but even after that remarkable rise I perceive some strong upside potential in the stock.
Major Drilling unearthed some seriously high-grade earnings in its recent quarterly report for its fiscal first quarter of 2012. The company enjoyed a 50% revenue surge, which combined with a monster gross profit margin of 31.4% to yield a 250% increase in net earnings. The company increased its dividend, and now yields about 1.25%. Following a noteworthy retreat since April 2011 alongside many resource-related stocks, I view Major Drilling shares as an attractive opportunity that warrants Foolish consideration. I initiated a small position within my own portfolio last month, and I look forward to tracking this enticing ancillary story to the strong trends in global demand for metals and energy.
- Add Eldorado Gold to My Watchlist.
- Add Silver Wheaton to My Watchlist.
- Add Taseko Mines to My Watchlist.
- Add Joy Global to My Watchlist.
- Add Caterpillar to My Watchlist.
At the time this article was published Fool contributorChristopher Barkercan be foundblogging activelyand acting Foolishly within the CAPS community under the usernameTMFSinchiruna. Hetweets. He owns shares of Caterpillar, Eldorado Gold, Joy Global, Major Drilling, Peabody Energy, Silver Wheaton, and Taseko Mines. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has adisclosure policy.
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