Try your luck with this Japanese stock

It’s good to have a little geographic diversification in your portfolio so it makes sense to have an investment linked to the world’s third-largest economy, Japan. Unfortunately, after four recessions in 15 years and one looming, an earthquake and a tsunami, investors have little interest in Japanese companies.
For years, managers of Japan-focused funds, desperate to stem the exodus of frustrated unitholders, have declared that Japanese stocks are undervalued and a turnaround is imminent.
We are, however, still waiting. It’s next to impossible to find even a modestly profitable, growing company with a reasonably sound balance sheet in Japan.
Big names such as Canon, Hitachi, Sony and Panasonic, for example, are closing factories and laying off employees.
And while analysts are more positive about the prospects for automakers Toyota, Honda and Nissan, they have their issues as well.
Demand for their cars in China — a huge market — has been hurt by political tensions. A standoff between China and Japan over the Japanese-controlled Senkaku islands in the East China Sea has sparked a boycott of Japanese-made products by Chinese consumers. Thanks partly to the dispute, Korean-based Hyundai has been taking away market share from Japanese automakers in China.
All this gloom makes diversifying into Japan challenging. We tried to find a Japanese large-cap company that was not in trouble with the help of the Google Finance stock screener. We sifted through its universe of 8,170 companies to first focus on companies with a market capitalization of at least US$1-billion and a price/earnings ratio of between five and 20, weeding out the money losers and troubled companies at one end, and the expensive high flyers at the other.
From the resulting group of 1,059 names, we sought out companies whose net profit margin over the past year was at least 5%, and whose return on equity and earnings per share growth topped at least 5% over the past five years. Finally, we asked that our candidates have a current ratio — current assets divided by current liabilities — of at least one.
Those minimal requirements left us with 283 reasonably profitable and sound names, enough that ought to have produced at least a few from Japan. But only one Japanese company, Tokyo-based Konami Corp. (KNM/NYSE), met all requirements.
Konami and its 23 subsidiaries make video games for consumers, electronic card games and other amusements for casinos, along with equipment for fitness clubs and software for websites. Konami manages fitness clubs as well.
Konami has a healthy net profit margin and strong return on equity, and its semi-annual dividend, paid at the end of March and September, yields 2.7%.
Of the 19 analysts who follow Konami, 15 see it as a buy and four say hold. Their average target price of ¥2213 ($26.67) represents a potential return of 15.4%.
Konami is best known in Japan for its pachinko machines, which are wildly popular in the country. A pachinko machine is essentially a vertical pinball game loaded with tiny balls that players capture and redeem for prizes or tokens. Since gambling is illegal in the pachinko parlour itself, players take the tokens next door or down the street to cash them in.
Even Konami, however, is facing headwinds. Revenue for the six months ended Sept. 30 was down 13.3% from the same period in 2011, and its American Depositary Receipts are down 21.1% this year.
“The business environment surrounding the Konami Group remains uncertain mainly due to the impact of the European sovereign-debt crisis and the continued strength of the Japanese yen, despite signs of a rebound in personal consumption in some quarters,” the company said in its Sept. 30 six-month report.

Article Source:http://business.financialpost.com

Pullback in this Gold Miner Might Be an Opportunity for Profit

Gold mining stocks have had a bit of a roller-coaster year. Gold mining stocks languished behind the broader market until August, when rumors of the oncoming stimulus package by the Federal Reserve brought them back to life. Gold mining stocks were, and still are, clearly undervalued, based on the fundamentals of the commodity itself. There are numerous gold mining stocks, so an investor has to carefully consider all factors before committing to a stock.

One of the more interesting gold mining stocks that have pulled back is Aurizon Mines Ltd. (NYSE MKT/AZK). This is one of the few gold mining stocks with properties in Canada, a country that has been quite favorable towards this sector for a long time. Aurizon continues to perform exploration work on its properties, and is quite optimistic about what they might yield.

The firm reported results for the third quarter of 2012 that did disappoint the market. Aurizon reported net profit for the third quarter of $5.5 million, as compared to $13.1 million during the same quarter in 2011. The reason for the shortfall was due to several reasons. The company stated the initial shortfall was due to lower ore grades; however, further drilling by the firm has determined this is an isolated occurrence. The company also incurred four days of zero production due to the replacement of a shaft cable. (Source: Press release, “Aurizon Reports Third Quarter 2012 Financial Results,” Aurizon Mines Ltd., November 8, 2012.)

The company is currently incurring a transition phase for its mine, and this will disrupt production. The needed infrastructure installation will mean lowered gold production over the next 18 months, but long-term, the firm strongly believes in the potential of this property. The President and CEO, George Paspalas, stated in the financial report that following the end of the transition period, he expects to have production levels back up to historical norms.

Setbacks can occur when investing in gold mining stocks. The key is to look for long-term opportunities. While short-term investors are exiting this stock, those interested in long-term potential for gold mining stocks might want to put this company on their radar over the next few months. As the firm progresses in transitioning and adding infrastructure, the closer it comes to resuming full production, the more interested I am in potentially investing in this firm.

Another consideration when looking at gold mining stocks is the level of cash per share, as well as debt levels. This is a company with essentially no debt and approximately $203.0 million in cash, which is equivalent to $1.24 per share. For stock trading at $3.87, this represents a large percentage of the share value in cash.

Chart courtesy of www.StockCharts.com

This is a three-year weekly chart of Aurizon. The latest setback due to production issues is certainly pulling back the stock to multi-year lows. Generally, I do not suggest buying at or near such low levels. What I do recommend is keeping an eye on this stock, as well as other gold mining stocks that pull back significantly, due to short-term reasons. The key is to wait patiently for the fundamentals to begin to turn.

The company still has significant hurdles ahead of itself, and I would need to see further developments in its transition phase that needs to be completed before I would consider investing. I do like the large amount of cash per share on hand. Gold mining stocks can be volatile, and as such, one needs to be careful to be well-diversified and cautious when accumulating any stock. Most likely, the stock will not be that active until further fundamental developments and upgrades to the infrastructure are completed.

Penny Stock Increases Copper Production by 15% and Molybdenum Production by 73%

With the recent rush into gold and silver mining stocks, investor sentiment has certainly shifted. However, there still might be opportunities among mining stocks that haven’t yet made a significant move. Part of the problem with lagging investor sentiment is that some institutions will focus on the primary trade—gold, for example. But, one market that investor sentiment has just now started moving into is copper investing.

As the chart shows, copper appears to be forming a breakout from negative to bullish investor sentiment. This can be a good thing, as some mining stocks that focus on copper and other assorted products have certainly lagged behind gold mining stocks and silver mining stocks.

 Chart courtesy of www.StockCharts.com

This is a three-year weekly chart of copper. Investor sentiment has been weak during the summer, but it then moved up substantially before pulling back recently. However, the market is now above several support lines. This might be an area in which investor sentiment might once again shift positively.

One of the interesting mining stocks is Amerigo Resources Ltd. (TSX/ARG). Not only does this stock trade in Canadian dollars, which is a great hedge against a decline in the U.S. dollar, but it also mines and sells copper and molybdenum.

For the third quarter, which ended September 30, 2012, the company reported strong results with an increase in copper production by 15%, and molybdenum production increase by 73%, higher than the same period last year. The company still expects to produce 50 million pounds of copper and one million pounds of molybdenum. (Source: Press Release, “Amerigo Announces Q3-2012 Financial Results”, Amerigo Resources, November 8, 2012.)

The company incurred several one-time charges, including a bonus payment to its Chilean workers, and a new four-year agreement with the union. The good news is that this resolves any potential labor setbacks for the next few years. Mining stocks have many hurdles when they’re extracting commodities, and labor costs are one of the most crucial for long-term profitability.

Chart courtesy of www.StockCharts.com

The stock has suffered this year, but compared to the chart of copper, it’s clearly lagging the underlying commodity. While corporate earnings have been under pressure from short-term issues, such as labor problems and spikes in power costs, if these inputs turnaround over the next year, and copper continues its move up, mining stocks in this sector should do quite well.

Also note that investor sentiment is quite neutral in the stock. This could be a great opportunity to get ahead of a positive shift in investor sentiment, since once mining stocks become “hot,” the moves can be quite fast—both to the upside and downside.

Obviously, no one can predict all of these events. However, higher risks can generate larger rewards. The stock does appear to have bottomed out. Mining stocks in this sector that have lagged behind the price of copper, such as Amerigo, may be interesting plays, if investor sentiment can catch up with the commodity.

A Bullish Penny Stock that Could Run Higher Throughout 2013

Since 2008, the Canadian lumber industry has been shrouded with weak demand. But, all that could change. Tied to the sharp and long-lasting downturn in U.S. housing, lumber, medium-density fiberboard, and particleboard manufacturers are expected to enjoy a substantial recovery in earnings in 2013. The outlook for oriented strand board (OSB), used in flooring and roofing in residential and commercial construction, is even brighter than that of lumber. (Source: “Energy, Lumber Prices Push Scotiabank Commodity Index Higher in August,” ctvnews.ca, September 22, 2011.)
Further, the destructive force of Hurricane Sandy is also expected to help boost recovery in Canada’s forest products industry in 2013 as communities in the New York City area and New Jersey rebuild. Analysts expect the impact on demand of wood consumption is probably going to materialize in the second and third quarters of 2013 with the rebuilding efforts. (Source: The Canadian Press, “Canadian Lumber Industry to Get Boost from U.S. Hurricane,” Maclean’s.ca, November 2, 2012.)
After being battered by the deep recession and financial crisis, the Canadian industry is seeing positive signs from the gradual improvement in U.S. housing starts.
Even still, during the years that new home builds in the U.S. were stagnant, Canadian producers turned their attention to China, and have made significant inroads. Lumber exports to China rose 103% in 2011 over the previous year, and now represent 23% of total softwood shipments. (Source: The Canadian Press, “Softwood Lumber: Canada and U.S. Agree to Extend Agreement.” huffingtonpost.ca, January 23, 2012.)

Chart courtesy of www.StockCharts.com

Looking at the three-year U.S. Lumber index, we can see that the industry has been bullish since November 2011. Further, it recently broke through a three-year resistance level.
Taking advantage of the strong run in lumber sales is Canadian-based Ainsworth Lumber Co. Ltd. (TSX/ANS). The penny stock manufactures and markets engineered wood products in North America and Asia. Its products are used for commercial/industrial roofing, sidewalks, curbs, slabs and non-structural concrete, flooring, beams, headers, recreational vehicles sheathing, and residential sheathing. The penny stock serves dealers, builders, original equipment manufacturers, homeowners, specifiers, wholesale distributors, building materials professionals, and other integrated forest products companies.
Ainsworth has a market cap of $327.0 million, $91.9 million in cash, and levered free cash flow of $4.2 million.
On October 31, the penny stock announced that third-quarter revenue was up 61% year-over-year at $115.6 million. Ainsworth recorded net income from continuing operations of $32.6 million, or $0.32 per share, in the third quarter of 2012, compared to a net loss of $58.9 million, or $0.59 per share, in the third quarter of 2011.
Year-to-date revenue was up 30% at $291.2 million. Net income from continuing operations increased from $5.9 million, or $0.05 per share, in the first nine months of 2011 to $22.0 million, or $0.22 per share, in the first nine months of 2012.
Subsequent to the quarter end, Ainsworth announced a comprehensive refinancing plan; one that will significantly improve the penny stock’s financial position. The plan is expected to result in a 30% reduction in total debt, lower borrowing costs, and the extension of the company’s maturity profile.
As part of the refinancing plan, the penny stock intends to raise gross proceeds of $175.0 million through the issue of common shares. The net proceeds will be used to repay in full Ainsworth’s outstanding senior secured term loan, due June 2014, and 11% senior unsecured notes due July 2015, which comprise all of the penny stock’s existing indebtedness.

 Chart courtesy of www.StockCharts.com

Like the greater U.S. lumber index, Ainsworth has been trending steadily higher all year. The penny stock’s share price has been even more bullish since the 50-day moving average crossed over the 200-day moving average in early July. During the summer and autumn months, interest in the penny stock increased with a boost in volume.
Ainsworth is a diversified, profitable, financially robust company, with growing revenues and a solid outlook. After years of downward pressure on the lumber industry, October new home sales increased 15% month-over-month to a seasonally adjusted annual rate of 872,000. New housing starts across the U.S. are 34.8% higher than in September 2011. (Source: U.S. Department of Housing and Urban Development, and U.S. Department of Commerce, “New Residential Construction in September 2012,” U.S. Census Bureau News Joint Release, October 17, 2012.)
Buoyed by strong quarterly growth, and hopes of a rebound, Ainsworth’s share price has been bullish. While 2013 is expected to be a strong year for the lumber industry and new home builds, this could change quickly. But, with new refinancing in place, Ainsworth’s financial position has been significantly strengthened.

Gold and the World in 2013

Nothing can happen unless it is based on today's present world structures, events and leaders in politics, and money. The first major point we have to recognize is the structures we see around us, within which everything is bound together, together with the current leaders and their will for the future –these things will shape the years ahead.
Much as we might hunger for reform in so many areas, we must be pragmatic in looking forward. The world is not pure – far from it— so it is realistic to look at what is here today that will shape tomorrow. Looking at the future through these leader's eyes gives us a clear perspective.
Underlying the developed world society is the state of the family, which underpins the state of the nation. This in turn describes the state of national and global cohesion within world structures. For instance, by contrasting the progress of China's economy with that of the developed world, we get a focused picture of the economic and monetary capabilities of civilization in the two blocs.
If you doubt what we have said, look back to the start of the credit crunch in 2007 and see that it has been over five years since it began. The problems that exploded on us then –have they been resolved? Has the political system been reformed? Is the developed world showing a clear direction forward or is it a mélange of contradicting power bases, in dispute with one another. Has the financial system been reformed?
Or is it reliant on a series of rescue operations attempting to hold together structures that have failed so far to provide what we are looking for in our future? Are the fundamental structures of government and finance working cohesively to provide solutions that will lead the developed world to a growing future? It does seem that political parties keep promising a solution to our problems (with little to no details) and manage to avoid letting us see that the problems we face are a consequence of past actions by the same dominant structures.
Do we have a strong workable monetary system to take us into the future? No we don't. Are the powerless ordinary people more confident in their future? No they are not.
What we see is a growing discontent among the bulk of mankind that their future is so uncertain. That discontent breeds instability and uncertainty, a state that has not lessened in the last seven years. As the developed world points down to more economic underperformance, this rising tide of discontent threatens to worsen substantially. It is against this backdrop that we look at the future.

We still have the political gridlock that has rendered the leaders of the US powerless to lead, let alone reform over the last few years. No attempts to really promote growth and jobs have come out of Washington. The emphasis in the political and financial world has been to save the buckling banking and monetary system from spiraling down into a Depression. Hats off to the Fed because they have succeeded in doing that, but little more!
The hopes inside the US have been to see no further decline and to hope that the tenacity and resolve of the consumer will lift the US out of its doldrums. Perhaps one should ask, "Are politicians qualified to provide economic growth or simply lessen the burden government puts on the productive facet of a nation?" The last five years –when growth has been so badly needed—has not seen that happen. What convinces us that next year thing will change for the better? And reality demands specifics, not just vague, hopeful generalities.
The use of quantitative easing has boosted the money supply enormously and will keep on doing so until growth takes off, growth that is not just well-established but sustainable. If this does not happen and growth remains below inflation and population growth, then the bloated money supply will turn back on the system and create monetary inflation while the economy is shrinking. Combine that with shrinking confidence at that time and the mercurial impact of the two factors joining each other, and this may well go beyond a simple recession and lead to a massive drop in the Dollar's buying power. It could easily then swing out of control.
A failure to resolve the 'debt-ceiling' crisis and the 'fiscal cliff' could ignite that state of affairs. So we enter 2013 with that economic backdrop. Political gridlock, which will last until the election of Congress and the House of Representatives, will continue to render government inadequate to handle the current crises. The consequences could be dire. It's well-known that the leading institutions of the US are going through planning for a possible Dollar collapse, the possible scenario of having to withdraw military personnel from outside the US, and the pay of government employees being insufficient to provide for their families. These are very real scenarios for the future that must be addressed ahead of them happening.
So 2013 appears to promise more of the same as the last five years in the US and its economy except that conditions have become more fragile. The economy appears to have a small element of growth and by way of hope, does not seem to be headed into a slump. This is contingent on the politicians not mucking it up at the start of 2013.
But there's a major change coming in the next four years within the economic structure of the States that may help it survive and maybe even prosper despite these handicaps.
The inadequacy of the political structure of the Eurozone has been evident for all to see in the last few years when the 'credit crunch' morphed into the Eurozone Sovereign Debt crisis. It has been with us for far longer than anybody expected and has succeeded in highlighting the weakness of the bloc's diverse national bases. The leadership performance of the Eurozone's politicians has been underwhelming and continues to place partisan interests over those of the EU We see no reason why that should change. But the reinforcing of that failure in 2013 and beyond is against a disenchanted population that is increasingly inclined to social unrest as their financial and employment situation worsens.
We believe that the recession now underway in the Eurozone will feed on itself and worsen in 2013.
The situation in the Mediterranean nations of the south side of the Eurozone seems to be worsening and removing hope in the process:

• We expect Greece will leave the Eurozone in the next 12 months. 
• The weaknesses being seen in Spain are not going away and will worsen in line with the ongoing recession there too. Spain is expected to find requests for a further bailout irresistible. 
• Italy is beginning to spiral down to potentially need help too. This would bring the entire EU into question.

Once this happens the contagion effect will worsen for other members, including Germany, which relies on the Eurozone for 40% of its exports.
How will the Euro fare under these conditions? Undoubtedly it will fare poorly. As a currency passing its twelfth year in existence, never has it looked more tenuous as it does now.
Are the Eurozone's leaders up to the task of turning the Eurozone economies around? A look at their performance over the last few years does not point to this. Expect that as the recession bites, the value of the Euro will decline and what faces the US will happen in the Eurozone, only to a greater degree.
But there's a major change coming in the next five to ten years within the economic structure of the Eurozone that could well let it survive and prosper despite these handicaps.
The controlled nature of China and its people's love of regimentation and cooperation has been the prime cause of China's rapid development. Its reliance on cheap labor to date developed not only its export markets but its own expertise in all facets of economic life. The target of double digit growth remains plausible there, but the threat of social unrest at the uneven distribution of wealth as it develops is a worry to the government.
This is particularly true when the financial playing fields were relatively flat two decades ago. Its population of 1.3 billion people in itself is a huge number. Even if 1 billion people do well out of its growth, then that leave 300 million still waiting for an exit from poverty. This is the same as the population of the entire US.
But even China must see its economy reach a self-sustainable, internalized dependency level, before it can be confident of its future. To achieve that it has to become less reliant on its export markets and outside investments, unless they support the needs of its structure. The thought that it will contribute to the developed world's growth is somewhat fatuous when we see it manufacturing goods cheaper, but of the same quality and slowly removing its reliance on imported goods, except of a basic nature.
Given time, it will be manufacturing everything as well as and cheaper than the developed world can. This makes the shift of wealth from the West to the East a long-term facet of the global economy.

Article Source: www.goldnews.bullionvault.com

How to Trade a Pullback in this Silver Miner

With the recent swings in the price of commodities like silver, it is easy for the average investor to get whipsawed. Every once in a while, there is a storm. While silver is continuing to swing up and down on a daily basis, this does leave the door open for junior mining companies to become undervalued, and offer a good entry point for the long-term investor. Other times, the stock can get ahead of itself, and one must be patient for a pullback to a more favorable level.

MAG Silver Corp. (NYSE/MVG) is a Canadian exploration company that is focused on its silver properties in Mexico. Junior mining companies that are too spread out can be problematic, as their interests become divided. In that situation, having a focus on one country can be seen as a potential benefit. A country like Mexico has been shown in the past to be friendly to junior mining companies.

MAG Silver is an exploration company, so the stock can be volatile, as each time it releases news of drill results, the share price can move in an exaggerated fashion. This is true for many junior mining companies. The company recently reported initial inferred mineral resource estimate for its property in Northern Chihuahua, Mexico. The inferred mineral resources that the company is reporting are estimated at 12.45 million tons at 132 grams per ton (g/t) of silver, 0.24 g/t of gold, 6.47% g/t zinc, and 2.86% g/t lead.

Like all silver junior mining companies, these are just the first steps to truly understanding what the extent of these commodities truly is beneath the ground. The company will conduct further drilling to determine what level of inferred resources can be converted into indicated resources. We would need to see what the full report is for this property to fully evaluate this stock for an investment, although these initial estimates are promising.

 Chart courtesy of www.StockCharts.com

Looking at the chart of MAG Silver, there are several things to note. The stock has had a strong run, as have many silver junior mining companies. However, one should not simply chase a stock higher. Nothing goes up in a straight line. Recently, some technical signals are indicating that a pullback is possible in MAG Silver. The Relative Strength Index and the moving average convergence/divergence (MACD) indicators are showing a divergence, in which the stock price has made new highs, but the indicators have not. Also, it will take some time for the full analysis of their property to come to light. This time, length might shake out weaker holders of the stock.

One strategy would be to look at previous areas of support as possible entry points. Of course, silver junior mining companies are extremely tied to the price of the commodity. If silver prices drop precipitously, then obviously so will MAG Silver. And, anytime one enters an investment, thorough research must be conducted in addition to understanding the technical analysis of the stock.