Last week, one of Wall Streets top analysts, Credit Suisse, upgraded North American Palladium Ltd. (NYSE AMEX: PAL) to an “outperform” rating. Following the path of Wall Street’s elite is sometimes the best method for going long on penny stocks, especially when it’s one of the big boys throwing out upgrades on a Company. Investors looking to go long on a proven mining company may want to have PAL stock on their list since they now appear to have a $15.00 price target according to the Analyst Ratings Network. The 715% potential upside makes this a must watch stock.
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PAL Stock Chart
Market Cap: 321.16M
Close: 1.84, down -0.01 (-0.54%)
Volume: 762,217
High: 1.88
Low: 1.80
Trades: 1,699
Average Trade Size: 448
Avg Vol (3 month): 1,362,390
Avg Vol (10 day): 1,091,550
Shares Outstanding: 174.54M
Float: 154.57M
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With the rush to precious metals in recent years, it makes sense for one of Wall Street’s elite to be bullish on North American Palladium. The Company is expanding their Lac des Iles mine to transition from mining via ramp access to mining via shaft while utilizing a high volume bulk mining method which will allow the Company to increase its underground mining rate and palladium production. Other firms have covered PAL stock, but none with such a bullish, possible typo, aggressiveness.
The company recently completed a convertible debt offering which could scare some investors way due to dilution issues. However, including the recent offering of debentures, the June 30, 2012 pro-forma cash position is $64.7 million, more than sufficient for the Palladium and Platinum miner to be able to continue its expansion project. With revenues still strong, $40.6 million for Q2 compared to $51.4 million for the same period in the prior year, realized palladium prices are going to be a factor moving forward. The net loss was only $3.1 million for Q2, 0.02 per share, and EBITDA was approximately $400,000 which isn’t so bad considering the closure of the Company’s Sleeping Giant gold mine at the beginning of this year..
About PAL Stock
North American Palladium Ltd. is an established precious metals producer that has been operating its flagship Lac des Iles mine located in Ontario, Canada since 1993. The Lac des Iles mine is one of only two primary producers of palladium in the world, and is currently undergoing a major expansion to increase production and reduce cash cost per ounce. The Company also operates the Vezza gold mine located in the Abitibi region of Quebec.
Click here to view the SEC filings for PAL.
Bottom Line: If you like mining stocks and going long on penny stocks, add PAL to your list of stocks to watch. Chances are, although we attempted to verify them via several avenues, that the $15 price target from CS is a typo. The two ratings changes prior to last weeks’s on PAL Stock came from RBC Capital and Scotia Capital in September. Both firms lowered their price targets on North American Palladium Ltd. to $3.00 and $2.75, respectively. (see here)
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