Coeur d'Alene (CDE) A 'special situation' in silver Digg It!...

Coeur d'Alene (CDE) A 'special situation' in silver Digg It!
Thursday, 06 March 2008
Leo Fasciocco is a technical expert who specializes in finding stocks that are breaking out of a base; his latest is Idaho-based silver miner, Coeur d'Alen Mines Corp. (NYSE: CDE).

In his Ticker Tape Digest, he explains, "CDE is a special situation breakout stock. It has the benefit of good near-term technicals, strong earnings outlook and is part of a strong industry group."

"CDE's primary properties are the Silver Valley mine in Idaho and the Rochester mine in Nevada. It also has two mines in Chile and Argentina. The company is also developing mines in Bolivia and Alaska. Almost all of CDE's annual production of nearly 15 million ounces of minerals is in primary silver.

"Annual revenues are $222 million. Silver has become one of the world's most vital and indispensable metal. It plays a vital role in the development of new technologies.

"Silver is being used for its unique bacteria-fighting qualities. It is being used for critical healing conditions ranging from severe burns to Legionnaires Disease. The most powerful treatment for burns is silver sulfadiazine, which is used in every hospital in North America to promote healing and reduce infection. Silver is also being used for surgical threads, bandages and dressings.

"Silver is also considered one of the best electrical conductors of all metals. It does not corrode. A fully-equipped automobile may have over 40 silver-tipped switches to start the engine, activate power steering, brakes, windows, mirrors, locks and other electrical accessories.

"The stock has shown a solid up trend over the past six months from 3.50 to 5. The subsequent basing work was well defined as a cup-and-handle set up. CDE has broken out from a 10-week, cup-and-handle base and recently made a new 52-week high.

"The breakout comes with a nice expansion in volume. We see that as the key for the stock's potential to move higher. We caution, however, that the stock's momentum indicator is bearish. We see that as a sign to be very watchful of as as the stock now as it tries to follow through on the breakout.

"Meanwhile, CDE has a big plus going for it in that earnings growth this year and next will be very strong. This year, analysts expect CDE's earnings to surge 145% to 32 cents a share from 13 cents a year ago. So, the stock sells with a price-earnings ratio of 16.

"Normally, that would be okay for a metal stock. However, earnings for 2009 are expected to climb another 87% to 60 cents a share. So, based on 2009, net the stock sells with a p/e ratio of just 8.

"CDE is benefiting from the high price for precious metals. For the upcoming first quarter, analysts expect net to be flat at 5 cents a share. However, for the second quarter net should increase 50% to 6 cents a share from 4 cents a year ago.

"There have been some key buyers lately. Fidelity Low-Priced Stock Fund, 4-star rated, was a recent buyer of 1.6 million shares and 3-star rated Vanguard Small Cap Index Fund picked up 1.3 million shares. We are is targeting CDE for a move to 6.50 to 7 within the next few weeks