UNDER THE RADAR: Special Report on Mining Services
Under the Radar Report subscribers have made almost 50% since we tipped Southern Cross Electrical (SXE) just over 3 months ago. In the past 12 months its shares have more than doubled. Can we do it again?
We asked subscribers for questions and we have had a big response. We’ll reply to each individually, but there were a lot of subscribers asking about mining and mining services, which is lucky, because this week we’re doing a Special Report on Mining Services.
Under the Radar Report has picked some duds in the sector over the past four years. We did not foresee the extent of the commodities downturn and its associated destruction of value. But lately we have found some form. In the past two years we have more than doubled our money on the mineral processing plant specialist GR Engineering (GNG) and more recently, the stock Southern Cross Electrical (SXE) has shot up, delivering Under the Radar Report subscribers almost 50% since we tipped it just over 3 months ago! In the past 12 months its shares have more than doubled.
This week's report (issue 189) covers what to look for in order to find the next GNG and SXE. We go over some hot tips in the sector. We cover off on some of these issues:
- Higher Risks due to short-term contracts
- Value in Mining Services, but you must be diligent.
- Will demand for Lithium and Graphite be reflected in share price performance?
We will be doing a special report on the hot sectors of Lithium and Graphite in coming weeks.
Lithium and Graphite are great stories because you can see the industry dynamics working in these commodities’ favour. There is big demand due to the increasing need for batteries; while there is limited supply; especially when it comes to lithium.
Anything to do with mining involves big capital expenditure, and hence risk. You’ve got to find it; get the resources and reserves proved up, find the capital to dig it up and then meet budgetary requirements.
Each step involves risk; general rule highly speculative it’s a toss of a coin; digging in the ground for resources that may or may not be there.
Does Mobile Payment Technology present risk or opportunity?
Similarly on the speculative side we were asked about Mint Wireless, a mobile phone payments and technology specialist. This is highly speculative because it is operating in an industry where it has to partner with gorillas like Telstra & Google to survive. But there is big leverage simply because if they get it right, there are billions of mobile phones that can use their product.
When do you take profits on a speculative investment?
We had a subscriber very happy sitting on a big profit from one of our tips, Boart Longyear. She wanted to know whether to sell down or not.
You should sell down to your own comfort zone when you invest on a speculative basis. Whatever the level of profits you are comfortable with. What we’re talking about is a speculation and the mentality of a speculation depends upon you. You need to evaluate the alternatives. How disappointed would you be if you took the profit now versus if that profit completely disappears? Your level of upset determines how much you should sell. You sell down to the point where you don’t care either way. What you care about, you’ve got in the bank; everything else is money for jam.
You don’t invest more than you care about losing; and you don’t leave on the table more than you would be upset about missing out on.
This is what speculation is about; speculation is about your internal sentiment; investing is about external qualities of the company.