commodity

Last week, Newmont Mining (symbol NEM on New York), one of the world’s biggest gold producers, said that it believes that gold could rise as high as $1,350 U.S. an ounce this year. Gold has fallen from the all-time high of $1,214.80 U.S. that it reached in late 2009, and now trades around $1,092 U.S. We cover Newmont in our Wall Street Stock Forecaster and Canadian Wealth Advisor newsletters. See below for more on this gold mining stock’s wide-ranging operations.

Gold investing can expose you to unique risks

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In mining exploration, an “anomaly” is a geological formation that might attract a prospector’s interest. However, one rule of thumb is that you have to look at 1,000 anomalies to find one prospect. And fewer than one prospect in a thousand turns into a mine. In other words, finding a mine is a million-to-one shot. That’s one reason why junior mining stocks are highly speculative. Another reason is that it’s much easier to launch and promote one of these stocks than it is to build a profitable business. So junior mines attract more than their share of unscrupulous operators and stock promoters. But there are little-known ways to cut your risk. Here are 9 “secrets” we use to pick junior mines to analyze in our Stock Pickers Digest newsletter. We’re sure they can help you find the gems among the rocks in this fast-changing industry:...

CAMPBELL SOUP CO. $33 (New York symbol CPB; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 342.9 million; Market cap: $11.3 billion; Price-to-sales ratio: 1.5; Dividend yield: 3.3%; WSSF Rating: Above Average) is the world’s largest maker of canned soups. It also makes Prego canned pasta and sauces, Pepperidge Farm cookies and V8 vegetable juices. Like Heinz, Campbell aims to spur long-term growth by increasing sales in emerging markets, such as China and Russia. The company now gets 30% of its overall sales from international markets. Campbell is also doing a good job of developing new products. For example, it now sells low-sodium soups and baked goods made from whole grains. These premium products should appeal to health-conscious consumers. These foods also generate higher profit margins than Campbell’s regular products....

GENERAL MILLS INC. $72 (New York symbol GIS; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 329.5 million; Market cap: $23.7 billion; Price-to-sales ratio: 1.6; Dividend yield: 2.7%; WSSF Rating: Above Average) is the second-largest maker of breakfast cereals in the U.S., after Kellogg. The company’s major brands include Cheerios, Wheaties and Total. General Mills also makes Betty Crocker baking mixes, Green Giant canned and frozen vegetables, and Yoplait yogurt. In its second quarter, which ended November 29, 2009, General Mills earned $565.5 million. That’s up 49.5% from $378.2 million a year earlier. Earnings per share rose 52.3%, to $1.66 from $1.09, on fewer shares outstanding. Without unusual items, such as gains on commodity-hedging contracts, earnings per share would have risen 13.2%, to $1.54 from $1.36. Even though General Mills cut the prices of certain products, its sales rose 1.7%, to $4.1 billion from $4.0 billion....

CONAGRA FOODS INC. $23 (New York symbol CAG; Income Portfolio, Consumer sector; Shares outstanding: 443.4 million; Market cap: $10.2 billion; Price-to-sales ratio: 0.8; Dividend yield: 3.5%; WSSF Rating: Above Average) makes a wide variety of packaged foods, including Chef Boyardee canned pasta, Hunt’s tomato sauce, Peter Pan peanut butter and Orville Redenbacher popcorn. The company gets 64% of its revenue by selling its products to consumers, so the company benefits as more people eat at home because of the slow economy. That has helped offset slower sales to businesses, such as restaurants, which account for the remaining 36% of its revenue. ConAgra continues to benefit from its plan to lower its annual costs by $250 million. These measures mainly include selling slow-growing, low-margin brands. Falling ingredient prices are also helping increase earnings....

Food processors like the seven companies we analyze below add stability to any portfolio. That’s because they’ve built brands that have strong customer loyalty and produce steady, predictable revenue streams. These seven firms’ strong brands are also helping them expand in developing markets, such as Asia and Latin America. These seven stocks trade at reasonable multiples to earnings, and have long histories of rising dividends. We see all seven as buys for long-term gains. KRAFT FOODS INC. $28 (New York symbol KFT; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 1.5 billion; Market cap: $42.0 billion; Price-to-sales ratio: 1.0; Dividend yield: 4.1%; WSSF Rating: Above Average) is the world’s second-largest food company after Switzerland-based Nestle S.A. Its leading brands include Kraft cheese, Maxwell House coffee, Nabisco cookies and Oscar Meyer meats....

INTERNATIONAL BUSINESS MACHINES CORP., $125.50, New York symbol IBM, is our Stock of the Year for 2010. IBM is the world’s largest computer company, with operations in over 170 countries. It specializes in making large mainframe computers for business and government clients. However, the key to its appeal is that it is shifting from manufacturing to designing computer systems and managing them on behalf of its clients. IBM gets dependable revenue streams from the resulting long-term maintenance contracts....

Claymore Natural Gas Commodity ETF, $5.36, symbol GAS on Toronto (Shares outstanding: 57.4 million; Market cap: $307.7 million), aims to track the performance of the benchmark NGX Canadian Natural Gas Index, less fees and expenses. The ETF provides exposure to the Alberta natural-gas market by investing in natural-gas futures contracts. An ETF like Claymore Natural Gas Commodity is one way to speculate on price movements. But unlike a stock (such as EnCana), which can profit from expanding production by developing and exploring for reserves, an ETF like Claymore doesn’t give you any growth, but it does entail fees of 0.80% per year for costs. We don’t recommend the Claymore Natural Gas Commodity ETF....

Next week, Wall Street Stock Forecaster, our newsletter that focuses on the U.S. stock markets, will reveal its #1 pick for 2010. Don’t miss this unique opportunity to profit. If you’re not already a Wall Street Stock Forecaster subscriber, click here to learn how you can get one month free when you subscribe today. SUNCOR ENERGY INC., $36.71, Toronto symbol SU, will cut 1,000 jobs by the end of 2010. That’s on top of the 1,000 jobs Suncor has already cut following its takeover of Petro-Canada in August 2009. In total, these cuts represent about 16% of the 12,900 employees who worked for both companies before the takeover. Suncor did not say how much these new cuts would cost it, but it still expects the Petro-Canada takeover to save it $300 million to $400 million a year....

Blue chip stocks are well-established companies that have demonstrated their financial strength through good times and bad. They typically pay dividends, and are considered to be less risky, based on their historical patterns. There are many blue chip stocks in the consumer sector. Typically, the strongest of these companies sell staples, like soap, beverages and soup, that consumers must buy no matter what the economy is doing. Strong consumer blue chip stocks share a number of characteristics. These include geographic diversity (which helps protect them from regional economic problems), a record of rising cash flow and a strong balance sheet....