Hello Haim, <<fundamental point of view after all it helps>> ... not meaning to be contrary, but ...
I went through the trouble of building models and evaluating the business fundamentals of the energy royalty trusts because they generate a stream of distribution flows based on which their valuation partially depends on.
These royalties therefore deserve to be evaluated on the same basis as one would a bond any company. The bonds are easier, since they are studied to death and rated by the ratings agencies. The royalties I must evaluate by self.
I needed to understand their business, and flow of funds, in order to make a guess at the drivers and sustainability of the distributable cash flow.
When I buy reasonable dividend yielding shares (4+%?), I make a judgement on their dividend rate, sustainability of same, and may at times use such short cuts such as PE etc.
When I buy non-dividend generating shares, I am merely making a guess at what a greater fool may pay for the share, because, as far as I am concerned, stocks such as Intel has zero value to me otherwise, since they do not pay out (hardly) anything of value, and probably never will.
NEM is a 'hardly paying out anything' type of share, and its value to me is only what others may be willing to pay for it later on, based on whatever, on almost anything except fundamentals.
To summarize: No distribution = no fundamentals, for me.
NEM is leveraged to the price of gold. What is the price of gold that would make NEM worth more? Anything north of USD 400/oz.
Chugs, Jay |
