Hudbay Minerals (HBM.TO)

(A Top Pick May 9/17, Down 9%) It had a heck of a run and then dropped. The mining sector is probably the best contrarian, undervalued sector out there. You have to ask what is the cost to replace the reserves in the ground. These guys have done a great job. These guys make a lot of cash flow. It is a great investment and it has been overdone. People don't by these stocks.

A late-cycle play. A copper and zinc producer. Low cost and good balance sheet. They have new projects in Arizona, Peru and Manitoba. It's recovered over the past few years, then has gone sideways. It's a good trading vehicle if you buy below $8 and sell it at $11 within that channel. (Analysts' price target: $12.83)

This is a great way to play copper and zinc. They have some new mines coming into production and the big capital spend is behind them. The Rosemont mine in Arizona is soon to begin. Extremely well-managed company. Buying here is a good discount to his valuation estimate. Yield 0.2%. (Analysts’ price target is $12.98 )

Zinc and copper. That story takes over in 2020 from a supply perspective. Copper peaked in 2011 and has not got up to those levels so trust in the industry has been hurt. No capital and no mines mean higher prices in the future. (Analysts’ target: $13.26).

As a base metal company, he does not see anything compelling to drive them to the next level. He chose Cameco (CCO-T) instead.

Trading along the lower range. Good support currently. A buying opportunity now. There's good volume on price drops. From a tech perspective, it looks good. Stop level at $8.50. Probably will hit $10 short term and possibly reach $11. He's bullish minerals.

He likes the material space. He is not long yet. He needs to see more stability in the share price.

He thinks the material stocks are a tough call right now. It has been experiencing very violent trading cycles, but it does have an up and to the right profile on price. They do have positive earnings. However, he believes it is at a valuation level that does not make sense.

All copper and base metal stocks have had a huge move up in the last 6 weeks. A lot of that probably had to do with the US$ selling off. Also, there are more articles and rumblings about India being in the next area of growth. As we see big projects take shape, activity begins to happen, and base metals are consumed. This is a company that falls right into that category.

We’ve just entered into the period of seasonal strength for copper and zinc stocks. Now is usually the time when copper stocks start to show positive seasonality. Currently it's in a trading range, but has started to outperform the market. If it moved above its current trading range, which would take it into a multiyear high, that would be very, very bullish. This is a nice opportunity to buy the stock on any kind of weakness in the next couple of weeks.

There’s been a number of base metal companies running a little recently, on the prospect of better copper and zinc markets coming forward, particularly with increasing production globally and demand for these metals. This is very well positioned, but not getting much credit for some of the things they have. Their flagship mine, Constancia, is performing very well. Yield of 0.2%. (Analysts' price target is $12.75.)

Generally, he doesn’t own base metal stocks, because they are very cyclical and are not big dividend payers.

Hudbay (HBM-T) or Lundin Mining (LUN-T)? The great, great history going back in time is this one. The shorter-term great history is Lundin, and has been much more active on the world scene. Very successful and one of the few decent sized names. We are not marching to great heights with these companies. He holds both.

Over the last years they developed some significant mines that are now contributing to their bottom line. The stock was punished not too long ago after doing an issue around $10.10. We’ve got to see improvements in earnings and cash flow now. Probably one of the best risk/reward company you can buy in the materials sector at this time.

(A Top Pick July 24/17. Up 15%.) 64% of revenue comes from copper. There is some zinc in there as well. They are in pretty good locations as far as geopolitical risks go. He liked that they had an improving Return on Capital (ROC).