g'day dhon,I said medium risk at or below 3c because i believe...

g'day dhon,

I said medium risk at or below 3c because i believe there is essentially 3c of intrinsic value in NWE as a company. This would sometimes suggest low risk however we need to remind ourselves that we are dealing with a very small company that is exposed to risks that larger, more stable companies are not or to a far lesser degree.

I don't think anybody would seriously argue with me that WPL/BHP/etc have a vastly different risk profile than NWE. And yet a majority of analysts i've been reading of late have a medium risk rating on most large resource plays. This is a fair evaluation as they are exposed to the whims of commodity prices and factors beyond their control.

NWE face all the usual risks that go hand-in-hand with being a small explorer (i know technically, they are part producer but lets not quibble) such as ongoing funding, potential dilution, unfavourable farmout percentages, and a host of other factors. Even NWE's said intrinsic value is based on the merits and confidence in AED, which themselves are a higher risk company.

Don't get me wrong, I hold and wouldn't do so if i didn't expect to make $ out of holding. I just think it's a little unrealistic to suggest a 3c stock that has little or no regular income being generated is anything less than medium risk. To the contrary, many would argue with me that they are HIGH risk and speculative.

As for price targets, I think estimating targets for small explorers is a bit of a fool's game if you try and use fundamental arguments for your projections; kinda like guessing where gold prices will be 1 yr from now. Thus i usually divert to charts for explorers and fundamentals + charts for producers or companies with actual revenue. I like the monthly chart for NWE, which suggests a multi-month uptrend is close at hand. I use the 90+150dma cross as a useful - allbeit slightly lagging - indicator and this cross occurred recently.

In any case, if you study the price movement of explorers, it's common to observe price not being highly correlated to fundamentals. Usually, price overshoots until the company actually produces at which point the hype factor wears off and price can be pinned to more traditional quantitative analysis.