Given the sentiments I expressed in this blog article, you might be inclined to think its time to look at resource stocks again. I have still to answer this question, but at this point, let me point you towards several stocks you might like to consider, as well as the type of stock.
Type of stocks
If we are about to engage in a period of solid, sustainable growth, then we want to ditch gold, and look at commodities - copper and nickel. We know copper has very good fundamentals, so this is a very good bet. I also like nickel, as I know of scant new capacity. Undoubtedly there are some projects in Russia, Greenland, Africa, but my interest is in one in particular.
Which companies?
Of course we can buy established miners, or we can buy future miners which are trading at a discount. I have several in mind:
1. Metals X Ltd: This Australian stock is capitalised at $300 million; but in 4-5 years it will be worth $3-4 billion, so it represents good buying. It is sitting on one of the largest undeveloped nickel deposits in the world.
2. Voyager Resources Ltd (VOR.ASX) is another good stock which I just discovered today. The company is developing a raft of good projects in Mongolia, which will supply gold and base metals to China. The grades are clearly commercial, so its just a matter of time for the value of these assets to be realised. This company is capitalised at $100 million, but again, though they might not be the largest projects in the world (at least at this point), they have a few of them. They have $5mil in cash, and having spent as much in the last quarter, you can expect a capital raising in the next quarter. We do like to see exploration though for such a large-scale project, you don't need to worry about the cash burn because the % of cash raised is less than 10% of the equity. The long-term upside is far greater. Expect a takeover bid for this company if the share register is open; but perhaps they already have Chinese stake holders. Do your research!
3. Marengo Mining (MGO.ASX) - This is a more advanced copper-gold play in PNG. PNG is not the easiest regimes in the world to work in, but when you have a large project, you can commit to it far more easily. The tax system I doubt is as favourable as Mongolia, but this is a large project, low grade, and mix of copper-gold.
I am comfortable with the sovereign risk of these countries. Its Turkmenistan, Kirghistan, Uzbekistan and affiliates that I worry about. I've seen projects in these areas delayed long-term.
You may know some other good stocks....honestly I am not focused on the market; but based on my 30 years of market watching...yes, I started when I was about 12-13 years old, these are good stocks...probably better than many you will find.