China: Assaying Newmont?In just a week, Newmont Mining (NEM), one of the world's top producers of gold, saw its stock leap to 51.24 from 43. The jump is no surprise, since Newmont's third-quarter profits more than doubled as gold hit $1,100 an ounce. But there's something more intriguing: The speculation on Wall Street that China may be eyeing Newmont.
"The buzz is that if China wants to protect its currency and diversify its assets, it makes sense to buy Newmont," says Vincent Carrino of Brookhaven Capital Management, which owns stock. In 2008, Newmont's proven and probable gold reserves were 85 million oz., in such places as Nevada, Peru, and Australia. Carrino figures Newmont is worth 70.
China this year acquired a majority stake in Australia's OZ Minerals for $1.7 billion after an unsuccessful run at mining giant Rio Tinto (RTP). China's current No. 1 gold producer is China National Gold, accounting for 20% of the country's output. In 2007, China mined 9.7 million oz.—7% of the global yield.
Jared Levin of investment firm A.R. Schmeidler, which owns Newmont stock, says China is also rumored to be interested in buying gold from the International Monetary Fund. A Chinese consulate spokesman wouldn't comment beyond saying that China's sovereign wealth fund "is always a stabilizing force in the international market."
Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.More Bounce at Cooper TireDespite major roadblocks, including a recession that paralyzed the auto industry and crimped driving habits, Cooper Tire & Rubber (CTB), North America's No. 4 tire maker, has sprung back and is expected to turn a profit this year after a huge loss in 2008.
Cooper, which posted solid sales and operating earnings in the second and third quarters, has cut costs and improved efficiency while gaining market share overseas, says Zacks Investment Research, which rates it outperform. The shares have climbed to 18.38, up from 2.96 in March.
A near-term sales opening for Cooper, says Saul Ludwig of KeyBanc Capital Markets, is remedying the inventory shortage caused by cutbacks at dealers. So Ludwig raised his 2009 earnings projection to $1.80 a share from $1.40, and his 2010 forecast to $2.10 from $1.75. He rates the stock a buy, lifting his target to 25 from 23.
Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.A Promising Israeli BiotechLittle-known Protalix BioTherapeutics (PLX) has surprised the Street. The stock has hit 11.33 on NYSE Euronext, up from 4 in June.
The Israeli company's lead drug, prGCD—a treatment for Gaucher's disease, a genetic disorder that causes blood problems and enlargement of the liver and spleen—showed favorable results in phase III clinical trials. It also met efficacy and safety targets, says Brian Abrahams of Oppenheimer (OPY) (it has done banking for Protalix), who rates it outperform. He figures a large U.S. drugmaker may partner with Protalix or offer to buy it. If prGCD gets FDA approval, the drug will compete with Genzyme's (GENZ) big-selling Cerezyme, which is in short supply, says Abrahams. The clincher for Protalix, notes Raghuram Selvaraju of Hapoalim Securities, is its low-cost, plant-cell- based method of producing enzymes. He rates Protalix a buy.
Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.