nem

Newmont Mining's (NYSE: NEM) stock continues to meander, despite an average, higher price for gold so far in 2009. The primary culprit? An average, lower price for copper.

Still, with a likely FY2009 revenue gain of 6-7%, I'm Reiterating my Buy rating for the company, first recommended on June 3, 2009 at a price of $46.42.

When gold miners and gun-toters lag the broader economy, it's usually a good sign that conditions are on the mend. Both sectors outperform when times were tough, but this year, their growth has slowed relative to the market has a whole.

The S&P 500 index has gained 57% since March 9, 2009, according to a USA Today report, while Barrick Gold (NYSE: ABX) and Newmont Mining (NYSE: NEM) are up 36% and 21%, respectively, for the same period. Smith & Wesson (NASDAQ: SWHC) is up 30%. Again, these are definitely respectable results, but they aren't keeping pace with the index.

Despite the U.S. stock market's recent run up, the decline in the U.S. dollar and inflation fears have investors searching for safety in these uncertain times. A popular strategy that has emerged is to hedge market and currency risk with commodities, namely gold, oil, and uranium. What specific stocks and investments in these sectors are likely to outperform?

ETFs like the US Oil Fund (NYSE: USO) and the SPDR Gold Shares (NYSE: GLD) will obviously track any rise or fall in these commodities to a T, but perhaps individual companies in these sectors are a better fit for you. Below are some industry giants, as well as speculative plays that are also drawing attention from investors.

This post was written by Minyanville contributor Lance Lewis.

Just after the close yesterday, Newmont Mining (NYSE: NEM) guided up 2009 production and guided 2009 cash costs lower. NEM also announced that it would be purchasing the remaining interest in its majority owned Boddington Mine from Anglogold Ashanti (NYSE: AU) (which equates to 6.6 mln reserve ounces). That's an increase of 8 percent in NEM's Proven & Probable (P&P) reserves at a price tag of $1.2 bln, which will be raised via an equity offering of 19 mln shares.

Based on NEM's 441 mln shares outstanding, we're looking at dilution of just over 4 percent. Thus, in theory, the deal is not even dilutive, given the 8 percent increase in P&P reserves that the company is acquiring with only a 4 percent dilution in equity. Based on what I have seen so far, this looks like a spectacular deal for NEM.

This post was written by Minyanville contributor Lance Lewis.

Banro (NYSE: BAA) jumped 13% yesterday after the company announced that it had finally completed its bankable feasibility study on its Twangiza project and proved up nearly 4 mln ounces of its 10 mln ounce resource. Thus, we can now calculate an NAV for BAA.

BAA has no debt. So, assuming $1,000 gold, 3.67 mln ounces of Proven & Probable reserves, an average cash cost of $429 per ounce over the life of the mine (which is based on the feasibility study), and the estimated $410 mln required for cap ex, we get an NAV of almost $15 a share (which gives zero value to the company's current cash balance of around $20 mln and its remaining 5.6 mln ounce resource at Twangiza, not to mention the resource estimates at its other properties).

It seems that everywhere you turn you hear something about the price of gold, from analysts to commercials encouraging you to sell your old jewelry for big bucks. If you're tempted, how about a bit safer investment in the commodity? Let your money work for you -- invest in an Exchange Traded Fund (ETF) that hold shares in several different gold producers, and you can ride the wave of the industry.

Market Vectors Gold Miners ETF (AMEX: GDX) is a perfect opportunity to ride this wave with as the fund's goal is to mimic the price and yield performance of the AMEX Gold Miners index, before fees and expenses. This is a nondiversified fund that is comprised of several well known companies whose main operations involve gold and silver mining.

There are two reasons to buy GDX instead of the SPDR Gold Trust (NYSE: GLD) or the iShares Comex Gold Trust (NYSE: IAU) both of which are pure gold ETFs (you own a share of gold sitting in a safe). First, the ratio between gold and the value of the gold held by miners has been relatively stable for 30 years. But today, the gold miners are selling at 33% of that historical ratio, so bulls say it's better to buy the miners, not the metal. Second, the biggest expense of a mining company is energy. Oil today hit $54 per barrel, down 63% from a peak of $147. This adds to the profits of the Gold Miners.

Newmont Mining (NYSE: NEM) shares are trading higher today as gold futures prices have risen to break above $900 per ounce once more. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on NEM.

After hitting a one-year low of $38.01 in August, the stock hit a one-year high of $57.55 in January. NEM opened this morning at $48.35. So far today the stock has hit a low of $47.95 and a high of $49.31. As of 12:30, NEM is trading at $49.28, up $0.96 (2.0%). The chart for NEM looks bullish and steady, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bullish hedged play on this stock, I would consider a July bull-put credit spread below the $42.50 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. This particular trade will make an 8.7% return in just six weeks as long as NEM is above $42.50 at July expiration. Newmont would have to fall by more than 13% before we would start to lose money.

NEM hasn't been below that level since August and has shown support around $46 recently. This trade could be risky if the price of gold futures drops in the next few months, but even if that happens, this position could be protected by the support the stock might find at its 200 day moving average, which is currently around $47.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in NEM.

Newmont Mining (NYSE: NEM), the world's largest non-hedged gold producer, is recently up $1.53 to $51.63. Gold is recently up 2.31% to $988.60, according to Bloomberg.

NEM April option implied volatility of 42 is near its 26-week average of 40 according to Track Data, suggesting non-directional price risks.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Here are a few highlights from this past week's earnings coverage from BloggingStocks:

• Amkor Technology Inc. (NASDAQ: AMKR) easily beat estimates and raised its guidance.
• Crocs Inc. (NASDAQ: CROX) posted solid fourth-quarter results on strong overseas sales.
• DealerTrack Holdings (NASDAQ: TRAK) fourth-quarter revenue rose, but the credit crunch hurt results.
• Garmin Ltd. (NASDAQ: GRMN) fourth-quarter earnings soared on strong holiday sales.
• Gilat Satellite Networks Ltd. (NASDAQ: GILT) posted strong quarterly and full-year results.
• HJ Heinz Co. (NYSE: HNZ) raised its guidance productivity gains and favorable exchange rates.
• JAKKS Pacific Inc. (NASDAQ: JAKK) posted solid results, lifted by Hannah Montana and Disney toys.
• Marvel Entertaiment Inc. (NYSE: MVL) earnings doubled despite investment in films not yet released.
• Newmont Mining Corp. (NYSE: NEM) swung to a fourth-quarter loss despite rising gold prices.
• Safeway Stores Inc. (NYSE: SWY) met fourth-quarter earnings estimates, ending its best year since 2001.
• Wal-Mart Stores Inc. (NYSE: WMT) posted its first $100 billion quarter but lowered its forecast.

Also, Jim Cramer sees Hewlett-Packard as a market bellwether, and Ted Allrich looks at some other bellwether stocks. Sheldon Liber gets a sense of deja vu from Exxon Mobil's (NYSE: XOM) big profits and its tussle with Chavez.

Upcoming results to watch for include Nordstom Inc. (NYSE: JWN), Macy's Inc. (NYSE: M), Washington Post Co. (NYSE: WPO), Dell Inc. (NASDAQ: DELL), Sprint-Nextel Corp. (NYSE: S), and Sears Holdings Corp. (NASDAQ: SHLD).

Visit AOL Money & Finance for more earnings coverage.

Among companies reporting quarterly earnings on Thursday were Safeway Stores Inc. (NYSE: SWY), the largest food retailer in North America, and Newmont Mining Corp. (NYSE: NEM), one of the world's largest gold producers.

Despite ongoing efforts to upgrade the image of its stores, Safeway, which reported that fourth-quarter earnings in-line with the consensus estimates of analysts surveyed by Thomson Financial, also reported that same-store sales slowed.

The quarterly earnings came to $301.1 million, or 68 cents per share, for the period that ended December 29, down 2% from $307.9 million, or 69 cents per share, in the same quarter of 2006, when tax benefits lifted results. Excluding that gain, earnings per share would have climbed by more than 11%. Fourth-quarter revenue rose 7% to $13.36 billion, which beat the analysts' average estimates.

Despite signs of a slowdown, the fourth quarter capped Safeway's most profitable year since 2001. The company earned $888.4 million, or $1.99 per share, on sales of $42.3 billion, compared to earnings of $870.6 million, or $1.94 per share, on revenue of $40.2 billion in 2006. For 2008, Safeway forecast earnings of $2.25 to $2.35 per share, in-line with analysts' expectations.

Safeway shares fell more than $3 in morning trading, reaching a new 52-week low of $28.80.

Barrick Gold Corporation (NYSE: ABX) acquires, explores and develops mining properties. Products include gold, copper, silver and zinc. The firm is the top producer of gold in the world, taking eight million ounces annually from nearly thirty mines in North America, South America, Australia-Pacific and Africa. It has proven and probable mineral reserves of over 120 million ounces of gold, 6 billion pounds of copper and 964 million ounces of silver. Major competitors include Newmont Mining (NYSE: NEM) and Rio Tinto (NYSE: RTP).

The stock popped over the past week, as analysts predicted further upside in the price of gold. They anticipated that the prospect of more Federal Reserve rate cuts will continue to weigh on the dollar and expected that more investors will turn to gold as a hedge against inflation. The shares have begun to consolidate the gain in a bullish "pennant" pattern. Equities frequently exit pennants moving in the same direction they were traveling on entry. In this case, that would be to the upside.

Normally, I try to avoid overall market prediction. I think it's a waste of time. But just as my Scooby sense told me
that Solarfun (NASDAQ: SOLF) looked ripe for a fall yesterday -- even as the stock was breaking out to new highs on news of yet another contract -- I'm feeling pretty bearish on the overall stock market for 2008.

I won't bet on it because a.) I don't have the patience and b.) I'm a momentum stock trader, what do I know about the macro picture? But that's the beauty of blogging; it's all about the sharing of ideas. And since, even with all my mistakes, my cumulative nine-year investment return is 4,832% (a little better than most, as detailed in my book), I know a little something about nearly everything stock market related and maybe I might be able to make/save you a buck or two. So, here we go, please comment as I'd like to get your opinion too!

Sure, today's jobs report is tanking the market and bringing up recession talk, but this is just a blip in the grand scheme of things. For the past few weeks/months, the stock market has been heading lower and there are tons of articles talking about how 2008 is going be another tough year for the stock market. (As if a 10% year for the Nasdaq is "a tough year" LOL, you spoiled, spoiled people, you ain't seen nothin' yet!)

Newmont Mining Corp. (NYSE: NEM) stock is rising this morning, helped by positive movement in gold futures, which crept above $815 an ounce for February delivery, its strongest level since Nov 28. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on NEM.

After hitting a one-year low of $38.01 in August, the stock hit a one-year high of $56.35 in November. NEM opened this morning at $50.72. So far today the stock has hit a low of $50.49 and a high of $51.34. As of 11:05, NEM is trading at $51.17, up $1.14 (2.3%). The chart for NEM looks bullish but deteriorating, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.

For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $45 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 11.1% return in just 6 weeks as long as NEM is above $45 at January expiration. Newmont would have to fall by more than 11% before we would start to lose money. Learn more about this type of trade here.

Where can you find the "Wall Street of the West?" In Colorado, of course -- specifically, Denver's 17th Street financial district.

Colorado's economy has come a long way from its foundation on trapping and mining. Denver's location, equidistant between Los Angeles and Chicago, between Seattle and New Orleans, has helped the Centennial State become the economic center of Rocky Mountain states -- even Denver's time zone and elevation help it keep in touch with the rest of the world. It's no wonder there's a large federal government presence in the state (U.S. Air Force Academy, NORAD, NOAA, Denver Mint, U.S. Geological Survey).

Companies such as Lockheed-Martin (NYSE: LMT), Qwest Communications (NYSE: Q), Comcast (NASDAQ: CMCSA), Molson Coors (NYSE: TAP), and Crocs (NASDAQ: CROX) offer a sense of the diversity of the state's economy. And so do the three companies examined here: Vail Resorts Inc. (NYSE: MTN), Dynamic Materials Corp. (NASDAQ: BOOM), and Newmont Mining Corp. (NYSE: NEM).

Newmont Mining Corp. (NYSE: NEM), the world's largest non-hedged gold producer, closed at $54.50. Gold is recently up 2.36% to $842.80, according to Bloomberg. NEM November option implied volatility is at 44, December is at 42 above its 26-week average of 33 according to Track Data suggesting larger price risks.

Freeport McMoRan Copper & Gold (NYSE: FCX) closed at $113.50. FCX, is engaged in copper, gold and silver mining and production operations. Gold is recently up 2.36% to $842.80 according to Bloomberg. FCX over all option implied volatility of 46 is above its 26-week average of 43 according to Track Data, suggesting larger risk.

Daily options Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.