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August 31, 2011 Dear Friend,
Our 732 444 1083 and 732 444 1085 phone
lines resumed operations midday today as Comcast made repairs and
electricity supplies for some "booster box nodes" in our neighborhood were
restored. We maintain a 732 946 3809 backup Verizon land line, my cell at
732 740 3574 and my son Charles' cell at 732 882 6984.
We were encouraged that RTI International Metals already has shipped 70 shipsets of titanium seat rails for the Boeing 787 and 100 shipments of semifinished titanium as long lead-time items to other suppliers. Further, it notes that titanium scrap and sponge spot prices have been rising, which are favorable lead indicators for higher mill products realizations for ATI, RTI or Timet. It expects Boeing to move towards 10 or more 787 deliveries per month in 2013 or 2014. We were encouraged concerning our Overweight or Buy rating for Allegheny Technologies. In our August 21, 2011 “Spot Markets” report we raised our gold price forecast for 2011 from $1,525 to $1,700, for 2012 from $1,500 to $2,300, for 2013 from $1,200 to $2,000, and for 2014 onwards from $1,200 to $1,500. Newmont’s dividend scale could result in a 3.6% yield in 2012 based on their current stock price of $62.62 and an dividend of $2.25 if gold averages our estimated $2,300 per ounce.
We increased our earnings
estimates for 2011 through 2015 by 25% to 160% from $5.20, $3.81, $4.50,
$4.88, and $4.49 to $6.56, $10.08, $8.95, $6.21, and $6.28,
respectively. The increase was mainly due to our higher gold price
estimates. The increases per year
were $1.36, $6.27, $4.45, $1.33 and $1.79 per share, respectively, to total
over $15 cumulatively. Price target increased to $71 from $60, based
on $11 in cumulative EPS increases we made in 2011 to 2013 herein. We expect
investors to value the cash buildup. Following
our gold price revisions we are increasing our price target from $60 to $71,
an increase of $11 per share or exactly the amount of cumulative increase in
this report that we estimated 2011 to 2013 EPS. Further, it equates to about
eleven times estimated 2014-2015 EPS at $1,500 gold prices.
We published 27 investment reports in
August, up from 15 in July, and above our history since inception of 19 to
20 reports per month. We believe the hiring of two additional research
analyst trainees involves time and training, and that we will be more
productive over time as our larger team becomes productive. We also adjust
to the execution of special projects, new marketing channels and other
efforts to become more effective.
We hope everyone got through the East Coast storms in one piece, and can enjoy a restful weekend as Summer concludes. Faithfully,
John C. Tumazos, CFA
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Copyright © 2008 John Tumazos Very Independent Research,
LLC
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