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written by reader SandStorm Gold Valuation

By valentinoamoro, October 4, 2012

Hi Travis,
Looking at Price to cash flows and PE, do you think Sand storm is overvalued?

While they did sign the big deal recently, they’ve had an incredible run up prior to the NYSE listing and an almost parabolic growth after that. Earnings come in Nov. Seems like the stock has already priced in growth.
Was wondering whether waiting till earnings or an adjustment before adding to my position make sense.

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Travis Johnson, Stock Gumshoe
October 5, 2012 10:48 am

It has certainly gotten more expensive than it was a few months ago. The valuation gap to big comparables Royal Gold and Franco-Nevada has narrowed but is still there, and I still think SAND has better growth potential and a dialed in hefty growth for the next 2 years, at least. All assuming that gold doesn’t collapse, of course.

There could easily be dips and I wouldn’t want to go “all in” at this price, but rising attention could easily drive the shares up still more — Nolan Watson is on Mad Money with Cramer tonight so the boom in attention continues and Watson is a great spokesman for the company.

SAND is still my largest holding if you count my warrants, I haven’t bought at these prices but I did sell some puts recently so I am willing to buy more if it dips.

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Albert
Albert
October 5, 2012 1:06 pm

I have some Sand. Can you explain the term “WARRANTS” and how does it work. Thanks.

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Travis Johnson, Stock Gumshoe
October 5, 2012 3:28 pm
Reply to  Albert

Warrants convey the right to buy stock at a set price before a set expiration date — they’re usually issued during financings as an extra inducement to buyers, and sometimes they get listed and trade publicly, more often in Canada than the U.S.

Sandstorm has three warrant series that trade publicly, the details are different for each and they’re all described on Sandstorm Gold’s website.

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drlinks
Member
October 7, 2012 8:20 pm

Warrants are essentially MULTI-YEAR OPTIONS, whereby the same option trading rules apply, only you’re talking a MUCH LONGER TIMEFRAME (5+YRS @ MINIMUM I BELIEVE)… That’s the simplest def. I can offer, as WARRANTS confused me for some time until I got the skinny on them myself… HAPPY HUNTING……….Stephen Lindquist

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xcernfsi
Irregular
xcernfsi
October 5, 2012 4:03 pm
Reply to  valentinoamoro

Doing that right away, free income with the upside of owning the stock at a cheaper price.
On the unlikely event it goes bankrupt I can cover the downside.

You might want to read up on options and run a few scenarios through Excel before putting real money into option trading, there’s much more downside risk than you seem to think.

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glen1927
Member
glen1927
October 6, 2012 12:03 pm
Reply to  xcernfsi

if you sell puts are you liable if the stock pays out a dividend?

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Travis Johnson, Stock Gumshoe
October 6, 2012 12:26 pm
Reply to  glen1927

No, though if there is a large or special dividend the options contracts are generally adjusted for that.

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drlinks
Member
October 7, 2012 8:36 pm
Reply to  xcernfsi

That’s SO TRUE… Writing Puts SEEMS like a genius IDEA, and most exchanges won’t let you NAKED SHORT SELL, so you have to OWN @ least 100 shares per 1 PUT OPTION WRITTEN… Then, there is the VERY REAL possibility of the stock NOT CLIMBING HIGHER, and you’re 100 shares go BYE-BYE… I wrote Puts against DDD all summer and made VERY GOOD MONEY, but to be honest, I NEVER FELT AT EASE ALL SUMMER b/c I was horrified in the possibility that EUROZONE would go to hell and send our equity markets plunging with it, and it would have cost me 400+ shares of a FABULOUS COMPANY in 3d SYSTEMS SOLUTIONS… THANK GOD, I backed off in EARLY AUGUST and made it through AUG EXPIRY, and just in the nick of time, as DDD PLUNGED, along with StrataSYS-the only 3D printers OUT THERE- and BOTH inexplicably took a POUNDING the Whole MONTH of SEPTEMBER!!! I’d have most certainly lost my shirt-or about $15000 in written puts had I wrote any for SEPTEMBER. Now that DDD got back to $32.50 at it’s nadir in SEPT, however, I was ALL OVER BUYING $40 calls for FEB EXPIRY, as I have been riding the 3D PRINTING WAVE ALLL YEAR, both in STRAT (SSYS) and (DDD) and when DDD was at $33.80 and SSYS plummeted down from $73.60 all the way to $53.99, I jumped on SSYS options for FEB expiry as well. Now I no longer sell puts, as its just not worth losing 100 shares of a company b/c of some shitty numbers coming out of Germany’s ISM Index, for example… But there are always FANTASTIC opportunities to make a killing w/ buying calls, so long as you know what a price aberration looks like. Case and Point-about 3 weeks ago, I noticed CAT trading for $82 and Deere (DE) trading for under $75. Both stood out as anomalies, and CAT immediately made me over $1,000 on each of the 3 calls I bought for NOV expiry as it ROARED up to $93+ and DEERE options are now $720 ITM, and I’m hangin on to them until I smell a hiccup coming. I probably should have cashed those three calls out on FRIDAY, as DE will most likely lose VALUE on MONDAY after such a stalwart week in the markets, but b/c I have so much time value left, I couldn’t resist hangin on to the (DE) calls. The CAT calls were an easy sell, b/c I have a rule; ANYTIME you’re up over 600% on ANY OPTION, you SELL and take the $$$ off the table!!! Of course, I learned this lesson the hard way with SLW last MARCH when I was $3500 ITM for SLW calls that don’t expire until JAN of next year, and as ya’ll know, SILVER DOVE for GOD KNOWS WHAT REASON to RIDICULOUS LOWS this last summer, mainly on the artificial STRENGTH of the US GREENBACK, which had it @ 83.4 on the US DOLLAR INDEX at one point!!!! Now, SLW is OVER $40, and there was a small window last summer when SLW fell through the floor and traded below $23/share. I keep kicking myself for not buying 50 contracts for JAN on top of the 10 I have, as I could have got a strike of $30 instead of $35 for just $65/contract back then!!! Live and LEARN I guess.

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xcernfsi
Irregular
xcernfsi
October 5, 2012 3:59 pm

Doing that right away, free income with the upside of owning the stock at a cheaper price.
On the unlikely event it goes bankrupt I can cover the downside

No, it doesn’t work that way at all. I’d suggest putting pen to paper and calculating the effect of drastic price moves before committing real money to options.

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Buddy
Guest
October 7, 2012 3:44 pm

No. A put is an option to one’s stock holding. An option is not directly connected with the actual stock.

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Cathy
Member
October 7, 2012 4:32 pm

Nolan and crew are way smarter than giving credit just look at who runs Luna Gold and who pulls the strings in politically safe Mexico where you pay to play Mr Luna I wonder if he ever had any Govt jobs and political connections as an tax account, and town hall meetings do not fool your self they pay but they still make money. Seems like everyone who had some SLW pull and they did not burn any bridges when they left they made them stronger. South America is politically safe to,and then go all the way to Canada where you do not pay as much. I Am Gold and (nyse) PPP are all good plays. Look where there management and board of directors come from, wonder if they Golf together. But if you really want a hobby take the Sandstorm Metal and Energy on there website from .27 cents to .48cents and in there last Webinar a reporter asked why Nolan was already taking money out of the company but the reporter forgot to look where Nolan was putting the money which was there Energy and Metals side as the reporter became quite as he sat down. When Romney talked about coal miners in the debates it is a good play to start to look for some coal plays even if he does not win which would be bad Obama has learned a lesson that there will be coal coming out of the ground in the Virginia’s they get to vote to and for US companies and not all exported because of the smart EPA who helped so much with the Keystone Pipeline only to let TYSONS FOOD Bio fuel company Dynamic Fuels force the USA NAVY buy there chicken fuel at a hefty price , remember Obama 90 billion Green Energy and Obama failed to mention that on his Oklahoma trip where Syntroleum is that goes with Mansfield and Tyson Foods forming DYNAMIC FUELS shoving that fuel price down the tax payers throat and the Navy has to use there product and we are not even in pay off Mexico Country WE ARE IN THE VOTE GETTING BUSINESS of the honest USA . OBAMA lets watch other countries burn our flag at least Obama COULD GET THEM TO MAKE FLAGS THAT DO NOT BURN WITH THAT 90 BILLION GREEN MONEY that would be cleaner air the world which is always watching. Just like Mr LUNA and China says.

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bluesharpbob
October 7, 2012 5:25 pm
Reply to  Cathy

Great money making idea-print & sell “Burn Coal Not Flags” bumper stickers. You’ll be rich.

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malandro
malandro
October 7, 2012 6:40 pm

Wow! I’m exhausted now!

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Cathy
Member
October 8, 2012 1:48 am

Tell Obama’s mother in law on the third floor at the White House that it is okay for your grandkids live with you we all do but I get the tax payer to help and so do you but my house is better and you pay for my travel and protection I can not think of one thing I pay for what a country it is what your country can do for you that is how we do it in this house just ask my son in law he loves the printing press and China Panda Bear Gold.

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aoibhneas
October 9, 2012 10:56 am

Heavy volume so far today on SAND with no news that I can find. Yahoo doesn’t even have message boards working yet for Sandstorm, either SAND or the Canadian SSL. Maybe it just got ahead of itself? I don’t see much talk about this gold streaming company but do see constant drum beating for SLW, the premiere silver streaming company.

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Nancy
Member
Nancy
October 10, 2012 8:58 am

does anyone know about the new penny stock in the same category as Sandstorm, that Stanberry newsletter is touting right now, (Canadian, I believe). They believe it has great potential, but want you to buy their newsletter for $3000 ????

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Nancy
Member
Nancy
October 10, 2012 9:05 am
Reply to  Nancy

Stansberry is trying to sell the Phase 1 Investor newsletter in order for you to get the information on this Canadian penny stock.

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Travis Johnson, Stock Gumshoe
October 10, 2012 9:20 am
Reply to  Nancy

Yes, that’s Sandstorm’s sister company — I wrote about it yesterday here: http://stockgumshoe.com/reviews/phase-1-investor/solving-frank-curzios-the-next-royal-gold-teaser

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