On the other hand, Golden Star Resources Ltd. (USA) (NYSEMKT:GSS)’s seemingly endless mine and permitting expansion looks as if it’ll finally get under way. The immediate allure of Golden Star is its Prestea underground mine, which holds an indicated 660,000 ounces of gold, but has an indicated ore grade of 13.2 grams per ton. If those indicated measurements prove to be anywhere near accurate, gold recovery will be swift and Golden Star’s bottom line boost will be sizable.
There are sizable hurdles Golden Star will have to overcome, such as labor and mine expansion costs, but its Bogoso/Prestea mine is producing enough cash that it should be able to cover those costs without too much trouble even at current gold prices.
Alcoa Inc (NYSE:AA)
Just because gold and silver prices are dropping, that doesn’t mean aluminum giant Alcoa got a reprieve. Earlier this month, Alcoa Inc (NYSE:AA) reported better-than-expected first-quarter results and stuck to its global forecast of 7% aluminum growth in 2013. However, this week’s first-quarter GDP figures from China that showed 7.7% growth, a 20 basis-point sequential decrease from the fourth quarter, have investors concerned that emerging-market aluminum usage may not be as strong as originally expected.
Despite these concerns, I think Alcoa Inc (NYSE:AA) could represent an incredible value at these levels. Aluminum prices should stabilize this year and head higher moving forward as construction levels in the U.S. and China improve, and as automobile production overseas ramps up. Between Brazil and China, I’m not sure which car market looks more exciting right now.
Further, Alcoa Inc (NYSE:AA) has done an incredible job of controlling costs, even as some of its production capacity sits idle, with capital spending down $163 million over the sequential fourth quarter. It may not seem like a fantastic deal at 10 times forward earnings and with the company sporting negative free cash flow, but over the long run, this price could turn out to be a steal of a deal.
Foolish roundup
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The article 3 Stocks to Get on Your Watchlist originally appeared on Fool.com is written by Sean Williams.
Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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