Investing in Commodities: The 9 Commodities Investments on the Verge of Breaking Out
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Commodities are experiencing a long-term bull market that will last for years, despite periodic ups and downs. As things stand now, investors are increasingly allocating a larger share of their investment capital to hard assets and we expect this trend to continue.
Several factors will continue to lead investors to seek shelter in commodities: Quantitative easing in developed economies and loose monetary policies in the rest of the world; strong demand for infrastructure upgrades in emerging markets such as India and China; and, of course, tight supply of hard assets.
However, investors should approach commodities with caution. Although we still believe the longer-term case for commodities remains intact, buying at reasonable valuations and being prepared to take profits off the table at opportune times is a good way to play the sector this year.
In this report, we take a look at our favorite commodities in energy, precious metals, industrial metals and agriculture. We also reveal a number of stocks that are poised to do well in a continued bull market for their underlying commodities. Enter your email to uncover all the details.
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Commodities Investment #1
A Glittering Gold Producer from Down Under
Commodities Investment #1 is a unique company that has substantial levels of free-cash flow and exceptionally low cost of capital requirements. The company is one of Australia’s leading producers and operates mostly in Western Australia. It also has very promising projects in New Guinea, New South Wales, Ivory Coast and Indonesia that are expected to add considerable volume to future output.
In a statement announcing first-half results, management described fiscal 2013 as “a significant year for the company.” The company is completing two major projects that should establish “a platform for increased gold and copper production, earnings and cash flow.”
To a large extent, this gold investment's results for the first half of the year reflect what management called the “transitional nature” of fiscal 2013. Management closed by noting that production is expected to be higher in the second half of the fiscal year. The time to get into this investment is now. Uncover this pick when you sign up to our special report.
Commodities Investment #2
A Diversified Copper Giant Paying a Generous Dividend
Commodities Investment #2 has been one of our favorite companies in the commodities sector for a long time. The company has grown to become the world’s leading producer of copper. Recoverable reserves are estimated at 120 billion pounds, using a projected long-term price for copper of USD2 per pound.
That’s a remarkably conservative estimate, because it’s more than a third lower than copper’s current price. Adding in “mineralized material”—which won’t qualify as reserves until feasibility studies are completed—the company has 235 billion pounds in the ground.
Current plans call for ramping up annual copper output from a projected 2.6 billion pounds this year to 3.5 billion pounds in 2016. Meanwhile, production of molybdenum—a key element in making high-pressure steel needed for undersea energy drilling—is on the verge of ramping up to 90 million pounds a year in 2013. Sign up for our free report to uncover the name of this top commodities investment.
Commodities Investment #3
Deepwater Dynamo
Spending on deepwater projects should rise significantly over the next 2 to 3 years. Recent discoveries include the deepwater Kwanza Basin in Angola, gas deposits off the coasts of Mozambique and Tanzania, and new oil and gas finds in the Barents Sea offshore Norway.
There’s a growing shortage of the deepwater and ultra-deepwater rigs needed to drill and produce oil from these finds. Commodities Investment #3 owns a modern fleet of 24 deepwater rigs, including 16 operating vessels and another 8 units slated for delivery. The rig shortage has given Commodities Investment #3 the flexibility to boost the “day-rates” it charges to lease rigs.
In early June, Commodities Investment #3 announced the firm is in advanced discussions regarding a five-year contract for the West Polaris drillship. At a rate of up to $635,000 per day, this contract would generate a reliable stream of cash flow and a solid profit margin for years into the future.
Look for Commodities Investment #3 to continue boosting its dividends, as cash from new contracts begins to flow to the bottom line. Enter your email to uncover all the details on this pick.
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Sincerely,
Phil Ash
Publisher, Personal Finance
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