The outlook for Agnico-Eagle Mines Ltd (AEM) looks good according David Garofalo, CFO, who was interviewed on BNN yesterday regarding credit conditions and sales prospects following a report by the Bank of Canada that they were the worst on record.
David gave an upbeat view of Agnico's future stating that they had five new mines coming into production, two this year, two next year and one in coming on stream in 2010. They are hiring people and buying machinery as production will double this year and double again next year. He added that gold was being driven by fear and with the continuing debasement of paper currency which would lead to inflation etc. His take on bank lending was that they were only lending to the best investment grade companies and that credit had otherwise pretty much dried up.
Taking a look at the geo-political areas of investment Agnico-Eagle operates in Canada, Northern Mexico and Scandinavia, which in our humble opinion is low risk, although we will be watching developments in Mexico as a certain amount of unrest exists there at the moment.
To watch this interview on BNN please click here.
We do own this gold producer and are happy to keep holding this stock but we are not buyers at this price level, the P/E ratio of 97.90 is a little on the high side for us, especially when compared with a company like Yamana Gold Incorporated (AUY) which has a P/E of 13.39. The P/E ratio is not everything but it is worth keeping an eye on.
Agnico-Eagle Mines Limited trades on the NYSE under the ticker symbol of AEM and on the Toronto Stock Exchange under the symbol of AEM.TO.
Agnico-Eagle Mines Ltd (AEM) has a market capitalization of $7.62 billion, average volume of 4.72 million shares traded, a 52 week high $80.72, a 52 week low of $20.87, a P/E ratio of 97.90 and closed yesterday at $49.06.
Trading decisions belong entirely to you as your circumstances are different from ours and we trade to suit our investment criteria and cash position.
For those readers who are also interested in the silver bull market that is currently unfolding, you may want to subscribe to our Free Silver Prices Newsletter, just click here.
To stay updated on our market commentary, which gold stocks we are buying and why, please subscribe to The Gold Prices Newsletter, completely FREE of charge. Simply click here and enter your email address.
For those readers who are also interested in the nuclear power sector that is currently out of fashion, you may want to subscribe to our Free Uranium Stocks Newsletter, just click here.
As we can see from the chart above AEM has recovered well from the 2008 lows, expect some consolidation from here and wait for a buying opportunity, if possible wait for the RSI to get closer to 30 before buying.