Newsletter Watch: Canadian resource stocks
This week in Newsletter Watch, Adrian Day, editor of The Global Analyst, analyzes his favorite Canadian resource stocks that include Miranda Gold Corp. (CVE: MAD), Virginia Mines Inc. (TSE: VGQ) and Altius Minerals Corporation (TSE: ALS).
"The recent market action has investors wondering what to do; some are wanting to sell everything in sight, others simply frozen. A few are taking advantage of lower prices to scoop up bargains," says Day, who is a noted authority on resource stocks.
"My answer is that investors should never sell into a panic,” he says. “Investors who are over-invested or nervous or need some money, should sell some stocks while they are strong, on the way up, and be prepared to miss some of the upside.
"This is particularly true of thinner, more volatile stocks like junior gold stocks. This is an opportunity to lighten up in the U.S. and global markets, raising cash for what will be better opportunities ahead."
And if you didn't sell, he suggests, "Then wait for the immediate panic to subside, wait for some orderliness to return to markets and then sell. We should see some calm over the next few days or weeks.
"Investors shouldn't react to markets,” he says. “Rather, have an objective; know what you want to buy and what you want to sell, and if the market allows you to do that, then act swiftly and decisively. This allows you to take advantage of the market's exuberance or panic. So by all means, there are opportunities to buy, as long as investors remain selective."
With those caveats in mind, he says, "Our long-term advice is that investors should buy great companies when they are on sale. And with this in mind, I believe there are some great buys in the market right now."
One such opportunity, he believes is small-cap mining stock Miranda Gold.
"Miranda fell sharply after some disappointing results on one of its exploration projects in Nevada was announced, but there was encouragement and the project is still alive, while it is only one of several to be drilled this coming year,” he says.
In addition, he says, "Virginia Mines is one of our favorite long-term holdings and the shares are now at a very good buying level." The stock, he points out, is down almost C$2 this year. Another small-cap favorite of Day's is Altius Minerals. He says that "though the stock has shown a near-term rebound, it is still fallen sharply this year."
Regarding Altius, he says, "The Newfoundland government has just accepted the Environmental Impact Statement for its oil refinery, a critical step in the project's development."
He does, however, recommend patience. The advisor suggests, "There is no need to be overly aggressive. But if you are, [choose] underweight income-oriented stocks that you are prepared to hold for the long term.
"I'm not suggesting that the prices of these stocks could not fall even more in coming days or weeks,” Day says. “But these are solid companies and the stocks prices are at attractive levels."
In particular, he sees this as an opportunity to buy for those with a view to holding for capital appreciation over the medium- to longer-term.
"Long-term investors who are underweight in junior resource stocks, should take advantage of the market's gift and buy," he says.
For 25 years, Steven Halpern has conducted an annual survey asking the leading newsletter advisors to select their favorite stocks for the year. His 2008 report features 120 top picks. You may download the report for free by clicking here.
