The large-cap, big name stocks are all you hear about in the media. You know the names… Apple (APPL), Google (GOOG), and Caterpillar (CAT) are just a few. After listening to the hype, you’re probably salivating to buy some of these big name stocks.
However, $600, $100 and even $50 stocks are just out of most investors reach…
If you can’t justify paying the big price tag, not to worry… we have a small-cap penny stock alternative you can buy instead. Not only will it cost less, you’ll be able to buy more shares!
This week, we found a great alternative to metallurgic coal miner, Cliffs Natural Resources (CLF). If you’re not familiar with CLF, it’s one of the world’s largest coking coal and metallurgic coal miners.
Unfortunately, the entire industry has been in a massive slump as steel and coal prices have collapsed…
But just yesterday, CLF reported earnings and beat Wall Street estimates on both the top and bottom line. Better still, the company is forecasting improved revenue and earnings over the remainder of 2013.
Now, Cliffs is one of the stocks in the S&P 500, and even after losing 50% of its value this year… shares still trade at $19 a piece.
If that price tag is still more than you’d like to pay, we’ve found one junior miner is also coming off a bottom and look like a strong penny stock investment at current levels…
Rio Alto Mining (RIOM)
Rio Alto Mining is into exploration and development of mineral properties in Latin America. The company explores for gold, copper, and silver properties. It focuses on the development of the La Arena project, which comprises 44 concessions that covers an area of approximately 20,673 hectares located in northern Peru. The company was formerly known as Mexican Silver Mines Ltd. and changed its name to Rio Alto Mining Limited in July 2009. Rio Alto Mining Limited is headquartered in Vancouver, Canada.
So what makes RIOM a buy?
Two factors led me to recommend RIOM to our readers. And the first has everything to do with CLF and the mining industry…
As you know, CLF is trading all the way down near its 52-week low. But it appears like the stock has finally put in a bottom. And with the earnings and revenue beat yesterday, I’d say that we have nothing but upside moving forward in this beaten down sector.
What’s more, the chart for RIOM looks almost identical to that of Cliffs… and for our penny stock to track the Mega-cap stock so closely provides statistical support for our trade.
Secondly, RIOM is one of the few penny stock mining companies with a P/E ratio in the low single digits. That means new investors in this trade are getting a great value for the earnings potential Rio Alto is set to deliver.
Given the strong correlation to fellow mining stock CLF… and the great valuation currently seen on RIOM shares, Rio Alto is a stock that’s worth adding to your portfolio.
Keeping you one step ahead,