New York, New York (PressExposure) April 18, 2012 -- Sasha Cekerevac, contributor to Penny Stock Detectives, believes that commodities have sold off on word that there might not be anymore quantitative easing by the Federal Reserve, because growth is picking up. In his recent Penny Stock Detectives article, Cekerevac argues that this logic is a bit odd, because, if growth is picking up, it would be good for commodities.
"Yes, this might be an opportune time to pick up some junior mining stocks in particular while everyone is heading for the exits," believes Cekerevac. "If firms are stable and generating cash and an investor in junior mining stocks has a long-term outlook and can hold through periods of volatility, these events can be great buying opportunities for penny stocks."
Copper has come off the recent high, but Cekerevac puts this in perspective. The low in October was roughly $3.00 and the current price is approximately $3.80, so we're significantly higher in the market than just a few months ago. At current levels, junior mining stocks are making money, and have healthy profit margins, believes Cekerevac.
According to Cekerevac, one name that has a healthy profit margin, but that has sold off recently, is Lundin Mining. With a 52 week range of $3.17 as the low and $9.31 as the high, with the current price at roughly $4.30, reports Cekerevac, we're clearly near the bottom of the range. Junior mining stocks are notoriously volatile, which can be seen as a good thing, the editor says. If you can time your buys and sells accurately, Cekerevac feels that investing in penny stocks can be quite lucrative.
Like many junior mining stocks, Lundin extracts a variety of commodities, including copper, zinc, nickel and lead, notes Cekerevac. With a diversified base of properties and commodities, this is a positive, because it helps cushion any shocks to the firm. One shock last year, reports Cekerevac, was the closure of the Aguablanca mine. Heavy rains caused damage to a pit ramp, but work is underway to fix this problem and to restart mining on this property in the second half of this year.
For long-term investors of penny stocks and those who specifically want exposure to junior mining stocks, Cekerevac feels that Lundin might be worth further investigation. One thing the editor would suggest watching for is when the Aguablanca mine re-opens later this year. He would also look to see if we break above $5.50, which has been the resistance for the past few months.
Penny stocks can trade in a range and, for patient investors, this can be seen as a positive, because it allows you time to enter a position. For junior mining stocks, Cekerevac suggests you look for cash generation. He feels that this will allow the junior mining stocks to self-fund exploration work, which hopefully leads to more reserves and ultimately a higher share price.
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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