This Miner Deserves to Be on Your Radar
Seeking stocks that others ignore, shun, or simply forget gives individual investors like you an edge over the professionals. Getting in before Wall Street discovers them -- or rediscovers them -- means you can stake a claim before they start to take off.
Here we check out companies with minimal analyst coverage at best, and then pair our list with the opinions of the Motley Fool CAPS community. A stock that garners CAPS' top ratings but hasn't yet caught analysts' attention could be your next home-run investment.
For instance, precious-metals miner Paramount Gold & Silver (NYS: PZG) could be the one. None of the analysts that CAPS tracks are following this stock, but it's enjoying a growing following on the investor community site, as 93% of the All-Star CAPS members rating it see it beating the Street. That may be enough to give you a head start.
But remember: Without much analyst support, you'll have to do more digging on your own to see whether it deserves a spot in your portfolio, so don't just buy or sell it based solely on its appearance here.
Hiding in plain sight
Gold prices haven't really gone anywhere since the start of the year. After a brief rally early on, the price of gold has been fairly range-bound between $1,550 and $1,650 per ounce. While India and China -- the biggest consumers of gold, accounting for half of the world's total consumption -- have eased up on their purchases, they still have a voracious appetite for the yellow metal, with China alone importing 383 tons over the first six months of 2012.
And it's not done yet. China continues to gather assets into its hand, particularly in Africa. The China National Gold Group is buying Barrick Gold's (NYS: ABX) African operations, and China's sovereign-wealth fund is turning away from Europe and looking to make strategic investments in Africa.
China's not alone in its golden pursuit. Hedge funds run by John Paulson and George Soros have also been gobbling up gold in anticipation of a rally.
East versus West
Paramount Gold's assets lie in Mexico and Nevada, not Africa, but it is still poised to capitalize on the new gold rush when it comes. Its portfolio is chock-full of potential, including its high-grade gold and silver veins at San Miguel, which has a nexus with the world-class Palmarejo mine owned by Coeur d'Alene Mines (NYS: CDE) and the Sleeper project that connects to Newmont Mining's Sandman development. Since Paramount is more of an explorer than a miner, it will be looking for someone to come in and do the dirty work of actually getting the gold and silver out of the ground while it can focus on exploring.
That sets it apart from the likes of Great Panther Silver (AMEX: GPL), Primero Mining (NYS: PPP) , or Brigus Gold, all three of which have plenty of their own assets left to exploit, but they also generate revenue from production. The lack of current production causes the market to misprice the value of the assets Paramount holds.
Secure as Fort Knox
Shares of Paramount are down 27% from their 52-week high (though up 25% from their low) and have gained almost 3% so far this year, as opposed to shares of Great Panther and Brigus, which are both down by double-digit percentages. Primero is on a tear of its own since reporting record earnings last month and increasing production estimates for the year: Its stock is up 24% year to date and has nearly doubled off its lows.
That ought to give a sense of what Paramount can achieve as it entices miners to come in and develop its projects. The CAPS community is anticipating that run, with 96% of the 437 members rating the gold and silver explorer to outperform the broad market indexes.
I also like its prospects and rated it to outperform on CAPS, and I own shares of it as well, but let me know in the comments box below if you agree that there will be a new gold rush in China (and India) and that Paramount Gold & Silver stands to gain handsomely from the surge.
Swing for the fences
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The article This Miner Deserves to Be on Your Radar originally appeared on Fool.com.Fool contributor Rich Duprey owns shares of Great Panther Silver, Primero Mining, and Paramount Gold and Silver, but he holds no other position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Primero Mining. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.