Chasing Value: Anglo American diamonds and gold are your ideal friend
Posted by: in Companies Competitive StrategyFiled under: International markets, Competitive strategy, Chasing Value, Commodities, Anglo Amer ADR (AAUK), Ideal Stocks for 2008
To me Anglo American plc (ADR) (NASDAQ: AAUK) is another must-own stock that could end up in M&A discussions, and in this year of uncertainty that’s all the more likely. Let’s see, it’s a global player in diamonds, gold, silver, platinum, coal, and more. This is a currency play, a commodities play, a global play, and an inflation hedge — got to love that if you can get it at the right price. It was higher, but the closing price on December 28, 2007, for AAUK was $30.79.
Unlike oil prices that may be affected by the weather, new technologies, or alternative sources, these commodities will remain in demand. Gold may be used instead of silver, platinum instead of gold, but except for locating new supplies the demand for these precious metals and commodities can only grow with the growth of the new economies and the wealth of their citizens.
AAUK was one of my superior calls during 2007, up about 30%, but I take pause wondering if it will do well based on economic fear driving precious metals up, or whether it will have to rebalance its mining efforts based on less demand for commodities if there is a slow down.
As the five year stock chart indicates, global economic expansion has been good to AAUK, which is a reflection of the commodities market and further supported in the rise in value of gold too. The economy is sputtering now but I do not think I would get much argument even from perma-bears that AAUK is a good bet on the long-term demand for commodities. This trend should last for decades.
Some of the stocks included in my 2008 picks were selected to create a well-balanced strategic long-term portfolio. I think that can be accomplished with seven to ten stocks. However, if I were to create a tighter group with four or five I would still think about AAUK.
To find potential opportunities and verify my track record, read Chasing Value and Serious Money.
DISCLOSURE: I currently own shares of AAUK.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.
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