For 2011, expect a boom in mining and infrastructure building in developing countries and a surge in demand for mining equipment prompted by rising commodity prices. These were among the messages delivered in the fourth quarter earnings report January 27 by Caterpillar, the world’s largest maker of construction and mining equipment based on revenues. Caterpillar (NYSE:CAT), a Dow component that many investors consider an industrial bellwether, expects record profits in 2011 and annual revenues to exceed $50 billion, compared to $42.6 billion in 2011, with net profits to be nearly $6 a share, up from $4.15 in 2010.
That’s the kind of outlook that could help boost a lot of other stocks, perhaps even smallcap mining and mining equipment stocks. We looked at some of these companies back in November.
Chattanooga, TN-based Astec Industries (Nasdaq: ASTE, http://www.astecindustries.com/) designs and sells equipment and components used in road building, utility and related construction activities. Its Aggregate and Mining Group segment provides a host of mining-related equipment. The company’s market cap has jumped from $660 million last November to $719 million today. The stock is trading at about $31.78 with a 52-week range of $22-$37.
Vancouver-based Nevsun Resources Ltd. (AMEX:NSU, http://www.nevsun.com/) formerly known as Hogan Mines Ltd. is a natural resource company that mines and produces mineral properties. Many of its properties are based in Eritrea in northeast Africa including a gold, copper and zinc project called the Bisha Property. NSU put out a release January 27 suggesting that progress is being made on the Bisha mine and that “we are on track to be a mid-tier gold producer by the end of this quarter.” Only two years ago this was a 65-cent stock that is now trading for nearly $6.
South Africa-based DRDGOLD Ltd (Nasdaq:DROOY, http://www.drdgold.com/) is purely a gold mining company with assets including underground mines and surface retreatment operations. DROOY, with a market cap of $175.5 million, may strictly be a gold play. The stock is currently trading at nearly $5 and hit its 52-week high of $7.90 about a year ago.
British Columbia-based Polymet Mining Corp. (AMEX: PLM, http://www.polymetmining.com/) is a natural resources company with a $314 million market cap formerly known as Fleck Resources Ltd. It owns the Erie Plant, a large processing facility in the mining district of the Mesabi Range in northeastern Minnesota. Earlier this month PLM announced it had closed the $10 million first tranche of a financing with Glencore AG, a Connecticut-based subsidiary of privately-held, Switzerland-based Glencore International AG, a diversified natural resources company. The stock is trading at $2.10, about in the middle of its 52-week range of $1.26-$3.38.
Queensland, Australia-based Industrea Limited (OTCQX: IULTY, http://www.industrea.com.au/) is a strong play on the China coal mining sector, which represents 40 percent of the company’s revenue. Industrea comprises a group of companies involved in the global mining products and services business and their products and services are sold in the U.S., South Africa, Russia, Indonesia and Papua New Guinea. Customers include BHP Billiton, Rio Tinto Coal, Anglo American, BMA, Barrick Gold, Vale, Xstrata and several of China’s leading mining groups. To enlarge its global shareholder base, the company has established an ADR listing. A recent report by investment bank Madison Williams notes that investor focus on the recent floods in Queensland has created a buying opportunity. The company’s stock price has climbed 30 percent since the middle of last year.