Time to add some bling to my portfolio

Yes, I'm talking about gold, starting with an established Canadian producer.

By Jim Van Meerten Aug 30, 2010 1:06PM
It's time to add a little bling to the portfolio. I'm adding Agnico-Eagle Mines (AEM) to my Wall Street Survivor portfolio.

It is an established Canadian gold producer with operations principally in northwestern Quebec and exploration and development activities in Quebec, Ontario and Nevada. In addition, it owns producing properties in Finland and Mexico and is focused on the expansion and large-scale exploration program of its LaRonde Mine, which is expected to result in increased gold production and expanded gold reserves.

Gold is both a trading commodity and a major production component for the jewelry and electronics industries. As the economy recovers, the demand for jewelry will increase. Right now, the Europeans, Chinese and Russians are investing heavily in gold coins and bullion. Good producers like this can always make a profit.

Wall Street brokerages have 9 buy recommendations distributed to their clients based on some out of sight projections. They estimate that sales will increase by 122.40% this year and 25.80% next year. As the price of gold is expected to increase the projections for earnings per share are predicted to have increases of 162.30% this year, 42.50% next year and maintain a 5 year annual EPS growth rate of 59.00%. I can't ignore projections like this in the roller coaster market we are experiencing.

The recent price momentum is very positive. The stock hit 15 new highs in the last 20 sessions and has appreciated 17.18% in the last month. Barchart has an 80% technical buy signal and the stock trades above it's 20, 50 and 100 day moving averages. The 14 day Relative Strength Index is 72.35% and rising. The recent price of 65.10 is well above its 50 day moving average of 59.25.

The stock has a very large and positive following on Motley Fool with the CAPS members voting 1077 to 86 that the stock will beat the market and the All Stars agree 329 to 26.

I added the stock because:
  • The production properties are in stable countries
  • Gold can be used both as an investment and for jewelry and other products
  • Wall Street projections for both sales and earning increases are very aggressive and they are pushing this stock to their clients
  • The stock has a wide and positive general investor following
  • Recent price momentum tells me we're not too late for the party.

Jim Van Meerten is an investor who writes on investing here and on Barchart Portfolio Blogs. Please leave a comment below or email JimVanMeerten@gmail.com.


Disclosure: No positions in the stock mentioned at the time of publication

Tags: gold


Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.


StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

123 rated 1
262 rated 2
480 rated 3
651 rated 4
649 rated 5
629 rated 6
616 rated 7
496 rated 8
346 rated 9
111 rated 10

Top Picks

TAT&T Inc9



Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.