Which coy are they talking about here? I assume they are ASX listed....
But whilst we are excited and confident about the prospects of those two companies, their potential pales into insignificance when compared to the one of the cheapest gold stocks we've ever seen.
We think this South American gold miner has been completely overlooked and ignored by the market.
In such unprecedented times, when equities are on the nose and cash is king, it's not really surprising that many stocks have been hung out to dry. To be honest, many deserve the share price hammering they've received, because they've been proven to have questionable assets and sometimes even more questionable management.
Yet in the case of this South American gold miner, the facts versus the current share price seem to completely defy logic.
The company's share price is just 19 cents and the whole company is valued by the stock market at just $28m. As most investors know, buying small and unloved companies can be a great way to significantly increase your wealth.
In a very recent update to the market, the company said it expects its net profit after tax for 2009 to be in the range of $7m to $13m.
That places this profitable gold producer on a price to earnings ratio (P/E) of between just 4 and 2.
On top of that, the company has some attractive exploration assets, and one in particular in Peru is described by the company as "most encouraging". These Shares Were Once 5 Times Higher Than They Are Today
The company is rightly being conservative in its outlook, but we think it is being overly conservative. On its top end estimate of net profits of $13m, it is assuming a gold price of US$943 throughout the whole of 2009.
If, as we fully expect, the gold jumps significantly above US$1000 an ounce, the shares will look even cheaper still, with a P/E of below 2 not being completely out of the question.
As ever, patience will be required, but at this level, we believe it is a matter of if, not when, the market recognises just how cheap these shares are and re-rates them appropriately.
It was not too long ago the shares were close to $1, almost 5 times higher than today's depressed share price.
