2 metal stocks that will shine in 2010
It's going to be a huge year for commodities like palladium and copper. Get in before the big money does.
By John Lansing, InvestorPlace.com
Gold was one of the biggest investing stories of 2009, and I venture to guess that it will be the No. 1 sector to invest in for 2010. But gold isn't the only metal that is going to soar to new highs this year. In fact, 2010 is going to be a huge year for many metal commodities and metal stocks.
While I can't cover them all, I would like to highlight two of my favorites -- palladium and copper -- and give you two of my top metal stocks.
Palladium may just become the momentum play of 2010. Palladium appears to be in a rare bullish descending triangle. If it is able to break the downtrend line of this pattern, it should explode higher.
My favorite stock here is Canadian-based North American Palladium Ltd. (PAL), which mines palladium, platinum, gold, nickel and copper. The stock is up more than 25% in 2010 alone after breaking out of a falling wedge reversal chart pattern. It looks like investors and traders are trying to get in at relatively cheap levels and valuation while they still can.
Now, I don't believe in chasing stocks, so I suggest waiting for a pullback. For PAL, the $4 area around the monthly pivot is ideal for an initial position. My target for the stock is in the $7.75 area later this year.
With the exception of gold, no metal tells the story of the 2008 commodity collapse better than copper. Copper sold off about 70% in 2008, plummeting from a high above $400 to around $125 in roughly half a year's time. It then turned around and rallied on heavy volume back up toward the $350 level.
I believe copper will challenge its all-time highs later this year, and the stock I like for taking advantage of this is Vale (VALE). This diversified metals and mining company produces copper, iron ore, nickel, aluminum, coal, platinum-group metals, gold and silver, to name a few. So with VALE you can benefit from the rise in other metal commodities as well.
The stock is forming what should be a very large bullish ascending triangle leading to a breakout to new all-time highs.
VALE will likely be one of the hottest plays of the next two years. Currently trading around $30, the stock could easily see $55 in 2010 and could go as high as $70 in 2011. (Get another hot metal stock to "shine" up your portfolio here.)
At the time of this writing, John Lansing did not own shares of PAL or VALE in personal or client portfolios.
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Serious issues like drought and the deterioration of the developed world spell opportunity for this industry leader.
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