Stillwater Mining Company (NYSE: SWC) engages in the development, extraction, processing, refining, and marketing of palladium, platinum, and associated metals. If you can handle volatility then Stillwater Mining Company could be a stock to add to your portfolio.
Discovered in 1803, palladium would eventually be used in everything from tuberculosis treatments to multilayer ceramic capacitors; jewelers, photographers, artists, and every auto manufacturer later employed this versatile metal.
Along with platinum, palladium is an essential component in the catalytic converters that transform most of the harmful greenhouse gasses emitted by automobiles into harmless carbon, nitrogen, and water.
Without palladium it would be impossible for catalytic converters to efficiently operate. As China continues to outpace the United States in auto manufacturing, palladium resources are tapped. And the palladium demand from China has stayed strong. Recently, China hit an all time high of 1.11 million sales, despite the global slowdown. This means sustained palladium demand.
In addition to known uses, palladium has promise for the not-so-distant future. And once considered-junk science, new researchers are exploring cold fusion possibilities again -- made possible by palladium rods. Granted, this technology is years from market, but it shows how versatile palladium is and how valuable it could become. If cold fusion did become reality in the future demand for palladium and prices would shoot up.
Stillwater Mining Company has rights to the largest known palladium deposit in the US. The company mines palladium, platinum, and similar metals in the Stillwater Mine near Nye, Montana. They are the only significant palladium producer in the Western Hemisphere; their competition consists mainly of Russian and South African interests.
With the renewed interest in precious metals, palladium looks poised to rise with similar metals. SWC should enjoy those benefits of appreciation. However keep in mind that because of the volatility SWC is not for the faint at heart. However, if you can stomach the volatility this stock could be a huge winner in the end.
Technically Stillwater Mining Company has been in an uptrend since early March. SWC’s recent down move could be a great entry before it continues the uptrend. Look for Stillwater Mining Company to climb as palladium rises.
The stock price of Stillwater Mining Company during the week of 4/27/09 slightly violated a 61.8% Fibonacci retracement ($4.50) from the April high of $5.29 to the April low of $4.01. During the uptrend which started in Mid March the 20 & 50 day EMA has been providing SWC nice support. A good risk reward entry point into SWC for a trade is in the $4.25-4.40 range. This range is zone between the 20 & 50 day EMA. I would set a 1-3 month trading target of $5.25-5.50, SWC will face a lot of overhead resistance in that zone were the April, March and January highs were set. And I would place a protective stop loss under the 50 day EMA currently at $4.18; I would wait for two consecutive closes below the 50 day EMA to stop out of the position.
Note: I do not own SWC
