The next support is $17.5 and then $15 after that. I am sure that we will hit the first one, and probably the second if the market continues to deteriorate. A longer-term floor for this stock is $12.50, but I am not expecting to hit that unless the market falls out of bed.
I hope you are right about gold prices. However, their costs of mining an ounce of gold are a lot higher than back when gold sold for $500. Their direct cost per ounce for gold was about $850 an ounce last year per their 10K and it seem to be going up every year.
If gold prices were to average $1200 an ounce this year (certainly a possibility) compared to the $1670 an ounce that they averaged last year, then NEM would see a cut of about $2.5 billion in income for 2013 versus 2012. This would likely cause them to report a loss for this year and would also wipe out their cash flow from operations. Their reported net income last year was $1.9 billion and their reported cash flow from operations was $2.3 billion. Maybe they can jiggle their non-production costs down somewhat, but it probably won't have that much of an impact. Unless gold prices rebound up soon, expect a slashing of the dividend as they won't be able to pay out $700 million in total dividends as last year. i would also expect to see the share price fall to at least book value of around $27 per share.
With $38 taken out the next support is around $35. The last time NEM was at this price GLD was at $95. Today GLD is $148. However, the problem with NEM is that gold prices are falling. As long as gold keeps falling I don't see the disparity between the miners and gold improving. It is more likely that the disparity will only get worse until gold prices bottom.
This stock is cheap as it is selling for about 9x adjusted earnings per share of about $.66/share. This compares to FVE which is selling for about 31x its adjusted eps of about $.21 per share. However, FVE is expected to double its earnings to about $.40 in 2014. SKH is expected to show very little earnings growth over the next couple of years. Still the differential in the valuation of these 2 firms is striking. Even if you assign additional value to FVE for its growth, SKH still seems cheap comparatively. Plus, SKH has significantly higher margins than FVE, even though their margins did take a hit in 2012. I like FVE, but think that at this point in time SKH has more upside potential. A price of 12-13x eps would get this up to about $8.50 - $9.00 per share.
This stock looks undervalued. It seems to be the only firm is this industry that has anything close to consistent earnings growth. Of course, that could change, but the estimates are for growth in eps of about 35% over this year and next. Yet this stock only sells for 25% of its sales per share. Most other firms in this industry (KND being the exception) are selling for for close to 100% of sales per share. Even if this stock sold for just 50% of its sales per share it would be a $12 stock. I haven't dug deeply into the details of all the firms' operations in this general area of assisted living, so maybe there are some justifiable reasons for this firm's lack of love by the street. However, from a cursory analysis this stock seems quite undervalued.
If NAV can even become half as profitable as PCAR in the future this is easily a $50-$60 stock. At a 3% profit margin they would earn close to $400M or about $5 per share. The question is how long will it take them to get there?