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Strategies & Market Trends : Natural Resource Stocks
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To: yard_man who wrote (1648)10/8/2003 10:40:01 PM
From: orkrious  Read Replies (3) of 108683
 
maybe it's time to buy more droopy?

Date: Wed Oct 08 2003 10:40
trotsky (ladybug@DROOY) ID#377387:
Copyright © 2002 trotsky/Kitco Inc. All rights reserved
it is well-known that DROOY has difficulties at the current Rand PoG. however, what often is missed in commentary is that it therefore is also the most leveraged call option on the Rand PoG out there. what's more, recent financings have it swimming in cash ( and its number of shares outstanding is still relatively small compared to most NorthAm small to mid tier producers ) , and it's likely to do a significant acquisition in the Pacific rim, diversifying its asset base a bit. the jury on that is still out, in view of past botched attempts to do the same ( under the Kibble mafia ) . but if the rumor mill is right about the types of assets under consideration, i'd regard the proposed acquisitions as a positive for the company. DROOY ( the stock ) has tested people's patience lately with its seemingly directionless performance. but that is true of most SA based stocks - a result of the Rand trying to prove that trees do indeed grow to the sky sometimes. of course a strong Rand isn't all bad - for instance, it strongly mitigates domestic SA inflation, which has always managed to eat away the gains the gold miners made on a softening Rand.
the following should be taken with pinch of salt, as i'm one of the few publicly acknowledged DROOY supporters: i think the stock is going to surprise everyone and shed its current laggard status. if you are patient and can stomach the volatility, you should probably sit on it, or buy it if you don't have it ( with stops situated at the lower end of its recent multi-month trading range ) .
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