July Idea of the Month: Buying Future Coal, Oil, Gas and Copper

By Travis Johnson, Stock Gumshoe, July 15, 2011

It seems like I’m starting to get into a bit of a rut — many of the stocks I’ve profiled for you recently have been somehow involved in the commodities space, whether little oil stocks, or oil services, or what have you. And despite my fondness for a number of other stocks right now, including personal holdings Intel (INTC) and Google (GOOG) that I think will continue to have great years, and I do have a few other ideas percolating for you that I haven’t gotten comfortable with yet, that commodity focus is going to continue today, though it’s a different kind of company.

I’ve been personally invested in both of the Sandstorm streaming companies (Sandstorm Gold and Sandstorm Metals & Energy, which together used to be called Sandstorm Resources before the split last year) for some time, and you probably have noticed that I’ve written a lot about Sandstorm Gold recently … but in part because Sandstorm Metals was very young and Sandstorm Gold is entering a period when growth — with high gold prices — might be expensive, I haven’t been inclined to profile either of them as “Idea of the Month” stocks. But thanks to some new deals and a great strategy, that changes today.

Though Sandstorm Gold is my largest personal holding, I’m going to suggest that you look first at Sandstorm Metals & Energy, which has a couple things going for it right now, is smaller, is poised to see big revenue jumps in a couple years, and hasn’t experienced the same dramatic publicity-led jump that their golden sister has this past month. This Sandstorm is listed at SND in Toronto, and at STTYF on the pink sheets (remember to do your currency conversion and use limit orders if you buy on the pinks — as I write this SND is trading around 54 cents in Canada, which would be almost US$0.57.

Sometimes when investors are so interested in a business that they have to keep raising the amount of equity financing deals, we ought to take notice — and that’s been the case with Sandstorm Metals and Energy. The company barely existed last Winter when they did their first major equity fundraising, and they intended to raise a maximum of C$60 million at the time, to fund their first big deals (in coal). Demand was so strong in December that they ...

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