Please ensure Javascript is enabled for purposes of website accessibility

Why Stillwater Mining Company's Stock Price Jumped More Than 10% Last Month

By Reuben Gregg Brewer - Sep 9, 2015 at 11:35AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

What a difference a month makes, at least for Stillwater Mining and platinum.

What: Stillwater Mining Company (SWC), which mines for platinum and related metals, saw its share price jump a touch over 10% in August. That's a welcome reprieve for investors, who lived through declines of roughly 20% each in June and July.

So what: Up until early August, the bad news for Stillwater had just kept coming. For example, the price of its main commodities have been weak all year. And that's led to red ink on the bottom line. In fact, on July 31, the company announced that it lost $0.23 a share in the second quarter. It made $0.14 a share in the same quarter last year. That's not a great backdrop for a 10% price increase.

It also helps explain why the stock is still down nearly 40% for the year, even after the 10% bounce. But that still doesn't explain what happened in August. It's pretty simple: Stillwater is a miner, and its shares will tend to follow the ups and downs of the commodities it digs out of the ground and sells.

Platinum prices started to turn higher in August. And as you might expect, investors reacted by bidding up Stillwater's shares.

Now what: It's still too soon to call a definitive bottom in Stillwater's business or for the commodities it mines. So I wouldn't get too excited here. But then Stillwater has never really been an appropriate investment for conservative investors. This type of commodity-linked business is far more appropriate for aggressive sorts. If you are such an investor and have been watching for a commodity turn, then you might want to start paying more attention, as this could be the start of a sea change. But then again, it might not be. Tread carefully.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Stillwater Mining Company Stock Quote
Stillwater Mining Company
SWC

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
330%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/21/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.