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Why Stillwater Mining Company Shares Fell 13% in May

By Reuben Gregg Brewer - Jun 9, 2016 at 2:39PM

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Stillwater Mining pulled back in May, along with the metals it mines.

Stillwater's facilities at work. Image Source: Stillwater Mining Company

What: Stillwater Mining Company's (SWC) shares lost 13% of their value last month. But this year has been something of a roller coaster ride. Through the first two weeks or so of January the stock fell around 30%. Then, between mid-January and late April, the stock basically doubled. Add in the May pull back and Stillwater's shares were up about 18% through the first five months of 2016.

So what: At the end of all the ups and downs, the one thing that should be pretty apparent is that Stillwater's stock is pretty volatile right now. And that's in large part because this platinum and palladium miner's fortunes are tied to the price of the metals it produces. There's not a whole lot anyone can do about that, though management has been working hard to control the things it can (keeping costs low, for example).

And the company's first quarter earnings, announced in early May, didn't help much, either. Although progress was made on the cost front, with all in sustaining costs down nearly 20% year over year, lower selling prices led to a loss of $0.08 a share. Although the news release noted the strength its two main metals had seen since mid-January, the May pullback obviously left investors wondering how much Stillwater would ultimately benefit going forward. But the big rally this year was driven by the commodity market upturn that took place. And the drop off in May was similarly driven by a commodity pullback. Specifically, platinum was off by 9% in May, with palladium down a more painful 13%. So it makes sense that Stillwater shares were lower last month.

Now what: Stillwater Mining is one of the few pure play platinum group options. And while it is losing money, management has been working hard to adjust the business to current market conditions. Moreover, it has more cash and short-term investments than it does long-term debt, so, financially speaking, Stillwater is on solid ground. If you like the platinum group space and can stomach volatile commodity prices, this is a miner worth looking into.

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