Top Metal for Profits Right Now
A look at precious metals shows gold and silver are devoid of any momentum at this time, while copper has been steadily retrenching from its recent highs.
Copper is playing off of the global economic growth, but a metal that is surging on the charts and catching the imagination of metal traders on the London Metal Exchange is zinc.
Zinc is used in numerous industrial and consumer applications. Steel companies use zinc as a rust inhibitor, so it’s quite important to manufacturing. The United States Mint also uses zinc to make pennies.
The problem is that the world supply of zinc is contracting.
However, zinc is currently around a three-year high and looks good as an investment opportunity at this time.
An intriguing small-cap zinc play that has been sizzling on the chart and is an investment opportunity in the global economic renewal and supply issues is Horsehead Holding Corp. (NASDAQ/ZINC). The company’s share price is up 62% from its 52-week low and has easily outperformed the S&P 500 over the past year with a 45% advance. But despite the company’s advance, Horsehead seems to still have upside potential, which suggests the company could offer a good investment opportunity.
Operating via its Horsehead Corp. subsidiary, the company produces specialty zinc and zinc-based products that are made from recycled materials.
The company closed an old plant and replaced it with a newer, more advanced facility that will produce better fabricated steel products along with raw materials found in the manufacturing of rubber tires, alkaline batteries, paint, chemicals, pharmaceuticals, and stainless steel.
Products include zinc metal used as a protective coating to products such as pipes and guardrails, heat exchangers, and telecommunications towers.
Looking at the price chart of Horsehead below, there is a steady upward trend that has been in place since November 2012. The chart is also showing a bullish golden cross, with the 50-day moving average (MA) trading above the 200-day MA as highlighted by the circle in the chart below. Technically, there was a bullish ascending triangle that resulted in a breakout and a potential move to above $20.00, which could be an investment opportunity.
Chart courtesy of www.StockCharts.com
The sales growth is expected to improve heading into 2015, which could also create an investment opportunity. Sales are estimated to grow 11.6% to $493.29 million this year, but this will be ramped up to 20.6% growth to $594.96 million in 2015, according to Thomson Financial consensus estimates. The estimates have been edging higher, making the stock an investment opportunity.
Horsehead is expected to earn $0.11 per diluted share this year following profits of $0.13 per diluted share in 2013. The big move will be in 2015, when the company is estimated to make $1.18 per diluted share, which would make a good investment opportunity.
Hence, if you are looking at playing the current zinc supply/demand imbalance, take a look at a company like Horsehead.
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