New York, New York (PressExposure) April 20, 2012 -- Sasha Cekerevac, co-editor for Penny Stock Detectives, believes that, of the commodities junior mining stocks are involved with, copper is quite interesting lately. In his recent Penny Stock Detectives article, Cekerevac points out that copper looks to be making a bullish formation, if it can hold this lower level of support. Considering the big sell-offs in some of the other commodities, copper is perhaps developing a base from which it can break out to the upside.
"Could this move in copper come from another round of quantitative easing, or perhaps more buying from the Chinese," asks Cekerevac? "It's impossible to know for sure that what we can see is what is occurring to copper prices. The chart is showing us that we have not had massive liquidation in the copper market. Every time copper sells off, buyers step in to accumulate. This is a very bullish sign for copper, as long as this support level holds."
When it comes to picking junior mining stocks, Cekerevac insists that an investor needs to be aware of what is happening to the underlying commodity. The supply and demand dynamics of that commodity will drive prices and ultimately the profitability of the junior mining stocks.
With this in mind, Cekerevac highlights Amerigo Resources. This copper producer also extracts molybdenum, is traded in Canada, and has properties in Chile, according to his article. In the beginning of March, says Cekerevac, this copper miner and explorer came out with earnings that were hurt due to a strike at one of its mines.
Junior mining stocks are occasionally hurt due to one-off events, such as a mine strike. Cekerevac believes that, if this is a short-term occurrence, then it could be seen as a buying opportunity for the long-term investor. According to the editor's Penny Stock Detectives article, Amerigo reported its guidance for 2012: it expects to produce and possibly exceed 50 million pounds of copper and close to one million pounds of molybdenum.
Following the big move up since the fall, some consolidation was in order. According to Cekerevac, the company trades at a trailing price-earnings ratio of 6.19, price-to-sales ratio of 0.78, and price-to-book ratio of 0.93. Cash on hand for the company is over $20.0 million, or $0.12 per share, with debts totaling only $4.6 million, reports Penny Stock Detectives. Compared with some other junior mining stocks that trade up to three times book value, Cekerevac believes that Amerigo is a relative bargain. With the strike over, if Amerigo can exceed its targets and copper breaks its range to the upside, this stock certainly has the potential to move up sharply, according to the editor.
Cekerevac says that, if junior mining stocks miss revenue estimates because of less copper in the ground than they thought, this is a serious and potentially long-term warning sign. But if the event is only short-term, he feels this could be a potentially good entry point.
Published every business day, Penny Stock Detectives researches and analyzes low-priced opportunities in the stock market and individual stock market sectors. Penny Stock Detectives reports on penny stocks, small-cap stocks, micro-cap stocks, high-profit potential plays mostly under $10, and the stock market in general.
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