Platinum is one of the most valuable metals. Up until recently however smelting it was an expensive process, controlled by the three ‘majors’ in the industry –Anglo American Platinum, Impala Platinum and Lonmin; but things may be about to change. The reason for that is Jubilee Platinum, a small company with exclusive rights to a new smelting process that is particularly effective for platinum ore from UG2, one of the main seams from which the metal is being increasingly sourced. Its smelters are smaller, cheaper to run and produce far less harmful waste gas. This may allow the company to substitute the larger mining outfits in smelting material for smaller producers, which they do so now in exchange for sizeable fees. Small miners fell out of favour last year as the financing environment deteriorated, but Jubilee is making money from smelting ferroalloys for steel. As well, Jubilee still owns a 63% stake in the Tjate mine, one of the largest undeveloped platinum projects in the world. The mine is several years from production but it is a prestigious asset, particularly as the metal is predicted to be in short supply over the coming decade. At 12 1⁄4p the company´s shares are a bargain. Small miners are never risk-free, but even if Jubilee hit trouble, it would almost certainly be snapped up by a big rival. Buy, says the Financial Mail on Sunday´s Midas column.
In this weekend´s edition of the Financial Times David Scwartz calls attention to his “first 2012 purchase”: TT Electronics. The company designs and manufactures electronic components and sensors for a variety of industrial sectors, including the auto sector, where it provides emission controls, electric vehicle components and electronic sensors. Worth noting, many of its contracts are in the premium auto segment, where sales are booming. No less relevant, the company´s new management has carried out a significant restructuring, closing some divisions and reducing the employee headcount. Revenues rose in the first half of 2011, pre-tax profits rocketed by 56% and net debt has been eliminated. Despite the aforementioned the company´s shares are trading on a forward price-to-earnings ratio a little below 9, while the sector average is closer to 12. Furthermore, Mr.Schwartz has the suspicion that revenue and margin improvement could cause the share price to do even better. Lastly, despite the fact that the City is ignoring the company last week the firm´s shares broke a ‘down-trend’ line, which may indicate that investors are waking up to the change in its fortunes.
Last week, Canadian bank RBC named FTSE 250 titanium miner Kenmare one of its top picks of 2012, with a price target of 90p a share. That’s because of a supply crunch in the commodity it produces – and its 50% expansion projects will be completed later this year, probably in the third quarter. The company operates the Moma titanium mine in Mozambique. Approximately 5m tonnes of titanium dioxide are consumed each year worldwide, mainly in the coatings, plastics and paper industries, and there is insufficient new production of the mineral sands when compared with the potential demand. Furthermore, Kenmare itself is seeing legacy contracts come to an end, so it can lock in higher prices when new contracts are negotiated. There is also talk of a further expansion once the current one is completed in the third quarter of this year. The shares are trading on a December 2012 earnings multiple of 8.7, falling to just 5.1 in 2013. The shares are up an impressive 161% since being tipped on September 5 2010 at 18¾p, compared with a FTSE 100 up 4%. Obviously, after such a strong run, some investors may want to top-slice this investment and sell half of their holding, but Questor’s rating on the shares remains buy, The Sunday Telegraph writes.
Not all High Street operators had a terrible Christmas – and bakery chain Greggs is one of them. In the five weeks to January 7th, like-for-like sales were up 5.1%, with total sales rising 10.8%. This was ahead of analysts’ expectations after the company said it expected the number would be “marginally positive”. In total, a net 84 new stores were opened, bringing the estate to 1,571 stores, with 90 openings expected in 2012. The shares are trading on a December 2012 earnings multiple of 13.4 times, falling to 12.2 next year. The valuation is supported by the dividend, with the shares yielding a prospective 3.7%, rising to 4.1% next year. The company has increased its dividend payments every year for the past 26 years. The shares were first tipped on August 12 2009 at 400p and are now 28% ahead, compared with a market up 19%. The company has proved that it can still grow in difficult times by introducing new product ranges such as porridge. The shares are below their peak of 550 ½p in July, but they are now a hold given the market backdrop, says the Questor team at the Sunday Telegraph.