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In our March 12 Private Briefing report – "This Stock Trades at $2 – But Is Worth $9" – we told you that Real Asset Returns Editor Peter Krauth was really high on junior miner Paramount Gold & Silver Corp. (NYSE: PZG).
And his recent sit-down with Paramount CEO Christopher Crupi has only boosted his enthusiasm for the Winnemucca, Nev.-based firm. I told you that Peter promised to share the basics of that briefing with me – so that I could share them with you.
Today we're keeping that promise.
"What I found, Bill, was that there's a lot to like about this junior miner," Peter told me last week. "In fact, the business case is even stronger than we've been telling folks. I'd suspected as much, but my sit-down with the CEO confirmed what my analysis had been telling me."
One impressive revelation: Ongoing drilling at both the Sleeper (Nevada) and San Miguel (Mexico) projects will transform these two Paramount initiatives into even bigger assets with even higher grades than Peter had been saying (he was intentionally being conservative until he could confirm his predictions).
And that's not all. When you look at these two projects in context, Paramount's potential becomes all the more impressive. For instance, the Sleeper and San Miguel projects are:
- Situated in two of the Top Five mining jurisdictions.
- Already near the existing infrastructure (like roads and utilities) that makes commercialization of a project faster and more profitable.
- And are near other, more-established and larger miners – increasing the likelihood that the project deposits will be at least as rich as those of their neighbors.
One final point – but one that's no less important: Paramount has the cash to execute on its business plan, Peter says.
"Let's face it … a company can have the most-aggressive, grandiose plans in the world … but at the end of the day, if a company doesn't have the capital to finance those plans, they either won't get done, or it'll have to dilute the dickens out of current shareholders by going back to the money well time after time," he explained.
In that May 12 Private Briefing, Peter explained that "preliminary economic assessments," or PEAs, on the two projects said they each had a value of about $700 million.
"In other words, that's $1.4 billion worth of value, yet where the stock is trading values the company at less than $320 million – a bit more than when you and I last talked about it, but still well below its actual value," Peter said. "Given what we now know about Paramount's project values, this stock should be trading at north of $9 per share."
Think of it: That's 4.2 times higher than the $2.13 Paramount shares were trading at yesterday afternoon.
"I said this before, but it bears repeating here: The implied value in this stock is tremendous, yet it's trading at a ridiculous discount," Peter said. "If even a tiny part of you is in any way contrarian, you need to own this stock. Sentiment will change, and Paramount will shoot higher.It's totally realistic to expect that it could at least double or better within the next 12 months."
You're not going to find a stronger "Buy" recommendation, Peter says.
A Going Boeing: Back on Jan. 18, we told you to use the Boeing 787 "Dreamliner" safety fiasco (and the media feeding frenzy that was further stoking the controversy) as a buying opportunity for The Boeing Co. (NYSE: BA). We took some heat from folks who mistakenly thought we were minimizing a real safety problem – which we absolutely wouldn't do. But folks who took our advice and bought that day have done very well. Boeing shares closed at $75.04 that day, and traded as low as $74.29.
Fast-forward six weeks and look where the stock is now.
Boeing's shares surged as much as 2% yesterday to set a new 52-week high of $86.84 after the jetmaker said the first flight test of its reconfigured Dreamliner battery system went "according to plan" – enabling the company to move on to more formal testing. That means the shares have surged 17% since we recommended that readers buy on Boeing's bad news. Even better: Wall Street pros believe the stock has room to run. Just yesterday, Schaeffer's Research reported a 30% surge in "Call" option buying, which means institutional players are betting on an even higher stock price.
Boeing's shares are up 40% since we recommended them in late 2011 – 45% if you include the $2.67 in dividends.
[Editor's Notes: Unless otherwise specified, we recommend investors employ a 25% "trailing stop on all holdings. Peter recommends a 30% "trailing stop" on Paramount.]