Newmont Corp.

NEWMONT MINING $42.18 (New York symbol NEM; Shares outstanding: 479.0 million; Market cap: $20.2 billion; SI Rating: Average) has completed the purchase of the 33.3% of the new Boddington gold mine, in western Australia, that it does not already own from AngloGold Ashanti. Newmont paid $1.1 billion. Newmont took advantage of rising gold prices earlier this year to sell $517.5 million in bonds and 34.5 million common shares for a total of $1.7 billion. The company will use the funds to pay for the Boddington acquisition, as well as to expand production at its other mines. Boddington will begin operating later this year, and will increase Newmont’s annual production by at least 10%. It should also immediately add to the Newmont’s earnings. Boddington’s reserves should last 20 years, so owning all of it enhances Newmont’s long-term prospects....

The U.S. newsletter publishing business is crowded and erratic, so publishers continually try to come up new gimmicks to lure subscribers. Some publishers have recently taken up the idea of a “secret gold currency” as a direct-mail offer. This is supposed to be a form of gold, but, as the marketing material states: “it has nothing to do with owning gold bullion, gold mining stocks, gold mutual funds, gold options or futures, or any other type of gold investment you’ve likely considered before.” The “secret gold currency” appears to consist of bullion coins that are valued by collectors for more than their bullion content. Modern gold coins issued by countries such as the U.S. (American Gold Eagle), South Africa (Gold Krugerrand) or the U.K. (Gold Sovereign) generally trade at a small premium to the spot price of gold — usually 4.5% or so. It appears the “secret” coins are older. Such coins sometimes trade at higher premiums to their gold content, depending on their rarity and condition....

COMPTON PETROLEUM $0.80 (Toronto symbol CMT; SI Rating: Speculative) (403-237-9400; www.comptonpetroleum.com; Shares outstanding: 125.6 million; Market cap: $100.5 million) explores for oil and natural gas in western Canada. Its $829.3-million debt is over eight times its $100.5-million market cap. However, most of its debt is not due until 2013, so it shouldn’t face liquidity problems until then. Compton will cut its capital spending and production until natural gas prices improve. Even so, it expects to generate cash flow of $65 million, or $0.50 a share, this year. The company still has lots of reserves and drilling prospects, so it will be in a good position to boost its output and pay down its debt when gas prices rebound. Compton Petroleum is still a hold....

FORD MOTOR CO., $3.25, New York symbol F, reported that its U.S. sales dropped 40.9% last month, to 131,465 vehicles from 222,337 in March 2008. However, sales were up 30% from the previous month. Ford has launched a new insurance plan that will cover a buyer’s monthly car payments for up to a year if they lose their job. This plan will probably hurt Ford’s earnings. However, Korean carmaker Hyundai uses a similar incentive to bolster its sales. Other carmakers, including General Motors, plan to follow suit. Unlike GM and Chrysler, Ford has not asked for government assistance. Ford could increase its market share if these competitors go bankrupt or cut production further. However, the bankruptcy of GM and Chrysler would probably force several parts suppliers to go out of business. A parts shortage would hurt Ford’s ability to keep operating....

Gold moved up from $300 an ounce in the early part of this decade to over $1,000 in 2008. It fell to $700 in November 2008 as the stock market bottomed out. Like the stock market, gold has regained some of its losses and now trades at around $900. We feel gold could eventually surpass its recent highs with a corresponding impact on many gold stocks. That’s mainly because investors fear that low interest rates and government stimulus spending will spur inflation. Gold prices, and gold investing, should continue to gain as the credit crisis makes it harder for gold companies to fund new projects and expand production. Regardless of what happens with gold investing in general, speculative and promotional gold stocks will make significant gains from time to time on hopes of a gold discovery. You can say something like that about any sort of speculative or promotional stocks, but most investors who dabble in them still wind up losing money. That’s because it is much easier to launch penny gold stocks than to find a gold mine....

AEROPOSTALE INC., $25.23, symbol ARO on New York, reported higher sales and profits this week. Notwithstanding the weak economy, the teen-clothing retailer took market share from its rivals, mainly on the strength of its lower prices. During the quarter, Aeropostale posted positive same-store sales, while rivals The Gap and American Eagle saw their same-store sales drop. In the three months ended January 31, 2009, Aeropostale’s revenue rose 16.7%, to $690 million from $591.3 million a year earlier. Same-store sales rose 6%, and online sales jumped 88%, to $41.4 million from $22 million, as more Christmas shoppers chose to make their purchases through the Internet. Aeropostale also added 86 new stores, which brings it to a total of 914. It operates 28 stores in Canada. Aeropostale’s wide variety of clothing, low prices and aggressive promotions continue to drive up the company’s sales. Its earnings rose 5.4%, to $68.2 million, or $1.02 a share, from $64.7 million, or $0.96 a share. Higher holiday sales were offset by markdowns, which lowered profits....

UNIVERSAL CANADIAN GROWTH FUND $16.35 (CWA Rating: Conservative) (Mackenzie Financial Corp., 150 Bloor St. West, Toronto, Ontario, M5S 3B5. Web site: www.mackenziefinancial.com. Tel: 1-800-387-0780; Load fund: available from brokers) holds companies with strong management and sound business prospects. The fund holds fewer than 40 stocks at all times. Universal Canadian’s top holdings include Thomson Reuters, Rogers Communications, Edwards Lifesciences, ShawCor, John Wiley & Sons, Dun & Bradstreet, Enerflex Systems, EnCana Corporation and Research in Motion. The fund’s breakdown by economic sector is as follows: 17.7% in Consumer Discretionary, 16.5% in Information Technology, 13.5% in Energy, 7.1% in Health Care, 6.3% in Telecommunications Services and 5.1% in Metals & Minerals....

NEWMONT MINING $39.99 (New York symbol NEM; Shares outstanding: 477.6 million; Market cap: $19.1 billion; SI Rating: Average) has agreed to buy the 33.3% of the new Boddington gold mine, in western Australia, that it does not already own from AngloGold Ashanti Ltd. Newmont will pay $1.1 billion. Boddington will begin operating later this year, and will increase Newmont’s annual production by at least 10%. It should also immediately add to the Newmont’s earnings. Boddington’s reserves should last 20 years, so owning all of it enhances Newmont’s long-term prospects. Gold is now just over $900 an ounce, up 30% since November 2008. That’s mainly because investors fear that low interest rates and government stimulus spending will spur inflation. Gold should continue to gain as the credit crisis makes it harder for gold companies to fund new projects and expand production....

Some investors base buy and sell decisions in part on p/e ratios (the ratio of a stock’s price to its per-share earnings). When we provide a p/e, we try to eliminate all one-time items from earnings. These include writedowns, investment gains or restructuring charges. This gives you a clearer, truer view of a company’s profitability. For decades, investors have used p/e’s to spot undervalued stocks. But a low p/e can signal danger rather than a bargain. That’s why you need to look at p/e ratios in context. In addition to p/e’s, we look at a variety of measures that identify value and risk. One of our favourites is the price-to-sales (p/s) ratio: the share price divided by sales per share....

NEWMONT MINING CORP. $39 (New York symbol NEM; Aggressive Growth Portfolio, Resources sector; Shares outstanding: 454.3 million; Market cap: $17.7 billion; Price to- sales ratio: 3.4; WSSF Rating: Average) is one of the world’s largest gold mining companies, with major operating gold mines in the United States, Canada, Australia, Peru, Bolivia and Ghana. Gold accounts for about 85% of Newmont’s revenue. The remaining 15% comes from copper, zinc and other metals. Most of Newmont’s copper comes from its 45% stake in the large Batu Hijau mining complex in Indonesia. Newmont reached its current size mainly through its 2002 acquisitions of Canada’s Franco-Nevada Mining Corp. and Australia’s Normandy Mining Ltd. As part of these acquisitions, Newmont inherited their hedging contracts, which let them lock in future delivery prices. However, Newmont prefers to sell its gold at the floating price. The company maximizes profit by adjusting production based on the prevailing price....