Metal prices took a hit at the end of last week, but it was nothing more than what you'd expect from a bull market, says Jim Jubak on MSNMoney.co.uk. The case for metals is still fundamentally sound: 20 years of underinvestment has meant that existing mines are stretched to capacity and there are precious few new sources at a time when demand is booming. Prices may have "become unglued from the positive long-term fundamentals" in recent weeks, creating the potential for a pull-back, but otherwise "the metals boom will run for the rest of the decade".
This is a cyclical story and sooner or later (as copper and gold producer Freeport-McMoran's CEO recently attested) prices will become so high that they will depress demand and encourage substitution or the development of new resources. In all probability that will herald another decades-long period during which prices plateau. But, for investors looking for a secular growth story, there are exceptions to this generalisation, says Terry Savage on TheStreet.com.
The first is uranium. Up from $7.10/lb to more than $41/lb for yellow cake (uranium oxide) since 2001, uranium is described by some as the "new black gold". According to James Dines ("the original uranium bug"), the soaring cost of fossil fuels has already "left nuclear power increasingly cheap on a relative basis". For exposure to uranium, Dines suggests Cameco (CCJ, $41.56) on a p/e of 30.6 times, Fronteer (FRG, $6.66), Pinetree Capital (PNP.TO, C$17.50), Mega Uranium (MGAFF.PK, $8.1038) and Laramide Resources (LAM.V, C$7.66).
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The other metal poised to undergo a similar transformation, says Jim Cramer, also on TheStreet.com, is beryllium. Stable across a wide range of temperatures, the metal is "very conductive" and "one of the lightest metals in the world". That makes it perfect not only for telecom and computer parts (where it is already used), but also in the aerospace industry, where the need for "lighter, more fuel-efficient planes" could transform its economics. It is also "a necessary component" in atomic bombs. Brush Engineered Materials (BW, $24.00) is "practically the only fully integrated producer of beryllium in the world", trading (according to Yahoo) on a p/e of 18.9 times forward earnings.
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