A shell-shocked economy, spiraling debt at financial institutions, or just plain bad management -- on any given day, investors can name a number of reasons to sell a stock. Yet while panic never helps investors, it's still a good idea to play devil's advocate with investments.
In Motley Fool CAPS, more than 135,000 members have weighed in on nearly 5,300 stocks, sharing bullish and bearish opinions alike.
Consider major miner Newmont Mining (NYSE: NEM). Gold has been flying high in recent years, but in Motley Fool CAPS, a significant number of the 922 members weighing in on the company still offer reasons to be bearish. I've already plucked out some of the common bullish rationale backing Newmont Mining today, so here are three counterpoints, courtesy of CAPS:
1. Falling profits: Unlike Goldcorp (NYSE: GG), which had a jump in first-quarter earnings, Barrick Gold (NYSE: ABX) and Newmont posted falling profits in their most recent quarter. Newmont's results suffered from falling revenue, lower gross margin, and weak copper sales, and some investors see the same difficult operating environment continuing.
2. Rising costs: While Yamana Gold's (NYSE: AUY) strong showing in its recent quarter included falling costs and Golden Star Resources' (NYSE: GSS) cost control programs began to show results, Newmont's costs applicable to gold sales rose to $435 an ounce compared to $396 an ounce a year ago. And a recent report by PricewaterhouseCoopers predicts a tough short-term road ahead for global mining companies, as rising costs eat into profit margins.
3. Too soon to hedge: As the dollar has lost value over recent months, gold and silver producers like Goldcorp, Newmont, Silver Wheaton (NYSE: SLW), and Coeur d`Alene Mines (NYSE: CDE) have enjoyed big share price gains as some investors seek defensive investments. But some investors, like economist Nouriel Roubini, who foresaw the now omnipresent global financial crisis, predict that deflation will outweigh the risks of inflation in the short term and that it's too early to be buying gold as a hedge against inflation.
Of course, Newmont Mining has survived despite dozens of past obstacles. But the question about whether the company will thrive now is why CAPS is such a great resource to augment your own analysis.
To see what the very best CAPS members are saying now about Newmont Mining, just click on over to Motley Fool CAPS and have a look.
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