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Certain Stock Market Prospects

18 September 2006 - Features - Editor

Why is a company with access to significant nickel reserves always a good buy on every stock market? It is common to see cyclical fluctuations in the fortunes of base metals on a stock market floor, and nickel is not an exception. Some leading miners have substantial revenues from lines of business other than nickel-hence overt stock market fluctuations often do not reflect the prospects for nickel accurately. The sector, like many of its peers, is also the subject of periodic merger and acquisition speculation. It is therefore easy for a stock market investor to be misled on the true future worth of nickel.

The matter needs an industrial rather than a purely technical stock market approach. Though there are the inevitable safety questions common to all base metals, it has to be said that one cannot match nickel in terms of versatile, broad based and superior features for so many industries. The list of industries which cannot do without nickel starts with some as basic as iron and steel, and extends to ones as sophisticated as aerospace and specialty chemicals. It is an elegant metal, and its catalytic properties require it to be used in just very small amounts. Reserves of nickel are therefore far more productive in financial terms than other base metals which are used in much larger amounts.

The stock market future of nickel is secure because of its essential use in industries of the future. Batteries in hybrid automobiles use it, as do most electronic components and goods. This combines very well indeed with bludgeoning demand from countries such as China and India. Indeed, the demand for nickel looks set to grow by leaps and bounds, with sizeable growth from both established and new uses.

Not all nickel mines are run with the same efficiency, and this reflects in corporate performance and stock prices. This can work to the advantage of a discerning investor, because there are some bargains to be had in joining the ownership of companies with good reserves of the metal, regardless of the present management team at the helm. Such aggressive investing may not suit everyone, but all stock market portfolios should include sound investments in nickel.

 


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