hey guys,We're experiencing a little bit of bad sentiment in the...

hey guys,

We're experiencing a little bit of bad sentiment in the market atm which has given us opps to buy good quality growing producers such as this company on very low forward multiples!

If youre in it for the long term and not just a 'trader', then a little bit of analysis suggests that FUNDAMENTALLY this stock should perform well for you with accumulation at such a P/E.

Commsec has this company forecast to make circa 58 cps.

With companies of this size and nature in the mining biz its sensible to assign a P/E of between 5,6,7,8 or so.

At this point I think 6 or 7 to stay conservative, and over time itll only re-rate if and when the 'prices stronger for longer' hypothesis continues to hold true over the LONG-TERM because of the BRIC countries and esp the china india industrialisation factors (hey we're talking about a few billion people here, many of whom are gonna get richer by the yr whilst their governments invest heavily in their countries growth and industrialisation to be like and have the things that we do)

For now though people still havent fully bought the 'metals stronger for longer' , and itll take a bit more time; given this I think a P/E of 5 or 6 will re-rate over time to 10ish , especially with added production growth + exploration upside over time in the equation.

PEM can comfortably trade at P/E 5 or 6 or even 7 with a bullish market - i.e if you buy at these levels i think theres limited downside risk and quite a bit of upside potential.

Personally I like to buy at P/E no more than 6-7 MAX just to ensure minimal downside risk. Anything around 5 or lower is IDEAL for a 'buy'.

Right now PEM is trading on a forward P/E of around 5, which suggests to me that its gr8 buying at these levels and or lower.

Lets face it, a stock like this cannot really trade over the long-term at a P/E of lower than 5 IF metals prices continue to be higher than in past yrs.

So like i said, IF the 'prices stronger for longer' theorem proves true over time, and more people become confortable to adopt it, you cant really go wrong buying a stock like this at a P/E of 5 or lower!

Its a no brainer and purely fundamental.

Dont forget too that EPS forecasts are conservative using a zinc price for example of $1/lb!

When results come out soon/production+exploration growth, the stock will re-rate if prices hold.

At P/E 5 thus, theres very very little downside and very good upside - and thats what a long term investor like me wants!

According to my investment rules of IDEALLY buying at P/E less than or equal to 5, PEM is a buy for the long-term at any price below $3!

think about it