Royal Gold (RGLD)
From Cabot Wealth Advisory 9/24/12 Sign up for free Cabot Wealth Advisory e-newsletter
With gold back near new highs, interest in miners is extremely high. Gold mining companies can get a boost from higher prices or unexpected discoveries.
But the downside of mining stocks is also significant. I remember the flooding that took Cameco's Cigar Lake uranium mine out of production for several years. The fallout (sorry) of this unfortunate occurrence was severe for both Cameco and the price of uranium. And other mines have been hit by labor disputes, cave-ins and cash crunches.
My favorite approach to mining stocks is to find companies that stand to benefit from the rising price of metals without the risks of actually digging in the dirt. I call them clean-fingernail miners.
Royal Gold (RGLD) is a Colorado-based company that buys royalty positions in precious metal mines around the world. The company's 39 producing interests produced an 85% jump in revenue in 2010 and 59% in 2011, when gold prices were appreciating steadily. That revenue growth slowed to 22% in 2012, but a new rally in gold prices that began in August has the potential to kick Royal's revenue stream significantly higher.
In addition to its producing interests, the company has a string of 26 development-stage interests, 40 evaluation-stage interests and 88 exploration-stage interests. Whatever the price of gold, Royal Gold's lower cost per ounce to acquire its royalty interests will keep its performance ahead of its dirt-digging partners.For more information on Cabot Top Ten Trader, click here.
|Royal Gold (RGLD)
1660 Wynkoop Street
Denver, CO 80202-1132
|Index Membership: N/A
Sector: Basic Materials
Full Time Employees: 19