Sniffing out some Emerging Market Strategist teaser picks

Some overseas teaser picks and gold thoughts for the Friday File

By Travis Johnson, Stock Gumshoe, August 19, 2011

Today there are lots of things I could be talking about on a macro level — certainly everyone’s looking at gold, so I can give you a couple thoughts to take home with you on that:

If you think that gold prices will stay well above $1,700 then Sandstorm Gold (SSL in Canada, SNDXF on the pink sheets), an old fave personal holding that I talk about often, is going to make a lot of money in a couple years and I’d be delighted to buy more. They’re in an odd position, because they would probably prefer to have built up their portfolio of royalties more before this gold price spike, since spiking prices have made emerging miners more confident and made it easier for them to raise money otherwise or to demand easier terms from Sandstorm … but they do have several big (for them) streams lined up already and the analysts are now getting on board — I don’t know what analysts are using as their gold price, but they believe Sandstorm Gold is now trading at a forward PE of about 20 (that’s a discount to Royal Gold, RGLD, the leader in the similar gold royalty business that trades at a forward PE of 32, and a small premium to Silver Wheaton, the model for Sandstorm in steaming silver that trades at a forward PE of 16 — both are far larger and more diversified and both are also still growing quickly), and the earnings should climb at least 50% from 2012 to 2013 or 2014 (again, assuming steady gold). The risk is that they can’t get new streaming deals done at these higher prices, or that they overpay for streaming deals and gold prices subsequently fall far enough that the deals aren’t profitable enough. The price is still elevated thanks to the big wave of newsletter attention this stock got a few months ago, but it has at least come down a bit and if I didn’t own shares I’d be tempted to look for dips for new shares, particularly on days when the market is taking a beating.

And if you think the gold collectible coin market is going to take off, as Steve Sjugerrud keeps predicting in his various touts for collectible gold coins that are trading at an unusually low premium to melt prices (not because they’ve gone down, but because melt ...

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