RE:RE:RE:RE:RE:RE:RE:RE:Mr fire!Bentlyt,
When I read your comment that USA is "due for some catch up to our favorite Panther", that comment made me cringe, for it tells me that you are into a story stock for the story.
I read the same sort of posts on the Teranga board, where the average bulletin board reader is going nuts because a billionaire David Mimran is buying a large stake in TGZ, and noone is focusing on the balance sheet impact or the stock dilution resulting from the acquisition of Gryphon. The consensus on the bulletin board is that TGZ is going to $2 USD per share, while in reality the share price has dropped from 90 cents to 55 cents since the Q3 financials were released.
So your real question is are you better off owning a STORY stock that everyone wants to buy, or an undervalued stock like USAPF where the stock has a history of being a DOG? So if you own both GPL and USAPF, how do you decide to allocate your funds between these two stocks?
That is a very interesting question. My response is to go out and get a copy of Microsoft Excel 2007 Data Analysis and Business Modeling by Wayne L. Winston and read Chapter 62 on Simulating Stock Prices and Asset Allocation Modeling. That chapter has a fairly detailed step by step instructions on how to do Monte Carlo Simulation modeling for stock allocation. What that chapter gives you is an optimization tool for modeling a portfolio of 10-20 stocks and provides a number for the optimum stock allocation for each equity. The downside is that unless you are an advanced Microsot Excel user and have the skill to import monthly data sets for each of the stocks in your portfolio, execute a Monte Carlo simulation on each stock, and then take your result set and import it to the summary allocation model, you are likely to get lost.
Another approach which I think is useful is to do a what if calculation based on the stock fundamentals and current metal prices. So for GPL, let's wave a magic wand over GPL and assume that the Guanajuato Mine and the Topia Mine are producing at Q3 2016 production levels, and then add the production from the Coricancha Mine in Peru at current metal prices.
With this hypothetical scenario, Great Panther's revenue would be $25.2 million dollars and the throughput from their 3 mines would total 1659 tpd for a silver equivalent quarterly production of 1.89 million ounces.
Now let's wave that magic wand over USAPF and put San Rafael into production! At current metal prices, the result is $29.7 million USD in revenue, and 2.18 million ounces of silver equivalent production with daily throughput of 2199 tpd. The details of this calculation are shown in the following graphic, but the bottom line is that USAPF with two mines outproduces GPL with 3 mines, and so the comparative fundamentals would point in the direction of an overweight position in USAPF and an underweight position in GPL.
I like to confirm the results from my fundamental analysis with what the technical chart is telling me. The following link shows the ratio chart of GPL with USAPF, and IMHO, the chart is saying go long USAPF on a relative basis. Here's a link to my ratio chart.
Please note that there may be more to this story than a simple comparison between USAPF and GPL, but I will leave that to another post.