4-Star Stocks Poised to Pop: Rubicon Minerals

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, Canadian gold explorer Rubicon Minerals (AMEX: RBY) has earned a respected four-star ranking.

With that in mind, let's take a closer look at Rubicon's business and see what CAPS investors are saying about the stock right now.

Rubicon facts

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 97% of the 784 members who have rated Rubicon believe the stock will outperform the S&P 500 going forward. These bulls include All-Star DarthMaul09, who is ranked in the top 1% of our community, and DaveG99.

Just last week , DarthMaul09 tapped Rubicon as a timely takeover target:

The recent sell off in the stock price coupled with a potential summer rally in the gold price might trigger a take over bid from a larger miner. If this were to take place, I would guess that this has to happen soon before too many miners report another quarter of good earnings.

In fact, Rubicon currently sports a financial leverage ratio of just 1.05. That's lower than much larger gold plays such as Barrick Gold (NYSE: ABX) (1.8), Goldcorp (NYSE: GG) (1.4), and Newmont Mining (NYSE: NEM) (1.9).

CAPS member DaveG99 expands on the Rubicon opportunity:

Market sentiment has turned violently against RBY, explained by the analyst community which I think feels betrayed by the company -- that they led them on with more than what the PEA delivered. The sell ratings are payback for making them look like fools.

However, the history of Red Lake cannot be ignored. The mines there took years to realize their potential. There's an excellent chance that as a working mine this company will be valued much higher than $730 mm, or $3.40 a share.

If the company refrains from diluting the shares and finances the mine with gold options and a bank loan, shareholders will be rewarded. That's exactly what Aurizon did in 2005. The shares tripled between acquisition of financing and commercial production.

$2 billion is not an unreasonable mkt cap for this one based on its peers that are in production.

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