LONDON, January 25, 2018 /PRNewswire/ --
The charming mysticism of precious stones is the stuff of legend, and today, these 'tears of the gods' are opening up major
new opportunities for investors. Now estimated to be worth north of $100 billion, the gemstone
industry is growing in leaps and bounds, with analysts projecting that demand for diamonds and gemstones will continue to outstrip supply.
While diamonds have led the gemstone surge in recent decades, its emeralds, rubies and saphires that are poised to boom, with
Technaviot predicting that the global gems and jewelry market will reach $292 billion by the end of 2019. Included in today's commentary: Sotheby's
(NYSE:BID), BHP Billiton Ltd. (NYSE:BHP), Tiffany & Co. (NYSE:TIF), Signet Group Plc (NYSE:SIG), First Majestic Silver
(NYSE:AG).
One only needs to look at the prices of colored gemstones today to see where this market is going.
A 5-carat sapphire that was sold for $10,000 in 1965 fetched $1,000,000 at a recent auction.
- In June 2017, the famous Rockefeller Emerald sold for an eye-watering $5.5 million, making it the most expensive emerald - per carat - ever sold at auction.
- An 8.62 carat unheated Burmese Ruby sold for $3.62 million at Christie's in 2006, setting a
new world record of $420,000 per carat for unheated ruby.
Prices of diamonds vs. colored gemstones are traveling on opposite trajectories right now, with diamonds in a years'-long slump and rubies and emeralds on the rise.
The gemstone market is booming, and these 5 stocks have their finger on the pulse of this colorful revolution:
#1 Sotheby ' s ( NYSE:BID )
At a market cap of $2.7 billion and a trailing 12-month revenue of $886.5
million, Sotheby's is one of the largest high-end art and jewelry auctioneers around.
It's 'Magnificent Jewels' auction in New York in December raked in almost $54 million. After a revenue slump in 2016, Sotheby's has been enjoying a nice recovery with topline growth
clocking in at an impressive 87 percent during Q3 FY17.
The company announced in December that its popular 'A Life of Luxury ' series managed sales of $117.3M across six auctions, with 85.2 percent of lots sold. More than half of those sales surpassed the higher
end of their estimates, so it seems as if the strong momentum is carrying on.
Overseas buyers have been feeling particularly frisky due to a weaker dollar which gives them more purchasing power. The
greenback is going through another rough start to the year, and 2018 might turn out to be another record year for Sotheby's.
#2 Fura G ems Inc. ( FURA ; FUGMF )
This is the most exciting company in this space because it's sitting on arguably the most famous emerald mine in the world in
Colombia, and four ruby licenses in Mozambique-the new hot spot
for rubies.
Its new Colombia mine-Coscuez--is home to one of the biggest emeralds the world has ever seen, a
1.759-carat emerald that the Banco de la Republica of Colombia has deemed priceless.
Even better: This mine has only been 10 percent excavated, so Fura has acquired the raging bull of emeralds in a country that is
the emerald capital of the world.
Another find like this record-breaking emerald in Colombia could put Fura on the front page of
every news outlet in the world.
And then there's Mozambique … the world's largest supplier of rubies by volume. It's about to
get even bigger because it will fill in the gap left behind by falling supplies from Burma
(Myanmar), whose human rights issues are scaring away investors and buyers alike.
Here, Fura has acquired exclusive
rights to the most sought-after gemstone deposits with four licenses for deposits at shallow depths. It has an 80 percent stake
covering almost 400 square kilometers.
Sweetening the deal is the fact that Fura does something few know how to do: Employ a rare process of heating and treatment for
rubies that turns lower-quality rubies into high-quality gemstones for the market.
De Beers turned diamonds into a massive $80-billion industry. Gemfields has shown us the beginning of what's possible in the colored gemstone industry. And the same man behind
two huge Gemfields discoveries and its $1-billion ruby mine valuation is the CEO of Fura, Dev Shetty.
Fura is kicking off full production in less than a year, while revenues are expected six months later. With potential underground
precious gemstone assets that are much larger than its current $52.3-million market cap, Fura Gems
offers early-in investors a rare opportunity for strong capital appreciation from early-stage investments in a highly disruptive
and exclusive resource sector.
#3 Rio Tinto Plc
This Australian-British mining giant awed the colored gemstone industry this summer, when it revealed, in New York City, the largest Fancy Red diamond in the history of its Argyle Pink Diamonds Tender. The
2.11-carat polished, radiant cut diamond-The Argyle Everglow™--is a feather in this miner's cap. And it's on trend with
consumers' desire for color.
RIO is one of the top five largest independent diamond producers in the world. Its stock has been on the mend since early 2016
and has rallied strongly after the hammering it received post the 2011 commodities peak. The stock has rallied nearly 40 percent
over the past 12 months, and the current bull market in metals and precious stones has only just started…
Rio boasts impressive growth assets that can continue to support earnings growth for many years to come. Currently the biggest of
these is Silvergrass, whose primary product is iron ore. The project has the potential for more than 20 million tons/annum, good
for nearly $1.6 billion in revenue at current prices of $77/ton.
#4 Tiffany & Co. ( NYSE:TIF )
Tiffany is one of the largest and oldest jewelry companies with more than 100 international locations. In fact, Tiffany is
credited with developing the carat as a weight standard for gems.
The company has topped earnings estimates for the last six straight quarters and is seeing significant strength in silver
jewelry.
TIF has a new CEO, Alessandro Bogliolo, who is pushing his team hard to not only exceed investor
expectations but also to outperform its competitors.
CitiBank upgraded TIF because it sees luxury goods businesses growing their sales by about 6 percent industrywide over the next
few years, with profits growing at about 10 percent. It has pegged Tiffany's as one of the leaders.
Arguably, TIF has done a lot to improve top and bottom-line performance in the long run. It has leveraged capital investments
from the past few years in distribution, manufacturing and diamond-sourcing processes.
#5 Signet Group Plc ( NYSE:SIG )
Signet Group is the world's largest retailer of diamond jewelry. Unlike high-end players such as Sotheby's, Signet specializes in
the middle-tier market and owns several brands, including Kay Jewelers, Zales and Jared.
SIG stock has endured a tough period that saw the valuation of its shares cut nearly by half due to lackluster growth. The
company's transition to a non-bank lender rather than a pure-play jewelry has also been taking a toll due to high delinquency
rates.
But at the current fair valuation, the stock might be a decent pick for value investors. It's really trading at a discount amid
all the negative publicity over a technically disastrous in-house credit portfolio and credit practices problems, but it's under
new leadership now and we see a new strategic focus, more stability and a new acquisition of an online diamond retailer.
Honorable mentions:
First Majestic Silver ( NYSE:AG ): There's a lot of bullishness around this stock, with earnings growth
expected to be high over the next 3-5 years. The optimism is absolutely justified as this Canadian mining company has been
operating in Mexico for nearly a decade and has over $770 million
in assets including 5 of the most promising locations in the country.
BHP Billiton Ltd. (NYSE:BHP): Beginning its operations in the 1800's, BHP is a well-known name in the resource industry.
Specializing in mining, BHP also extends its reach into resources such as oil, coal, iron, copper, and nickel. With such a
huge influence across the globe, BHP has taken the role as an example in social and environmental responsibility.
By. Charles Kennedy
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Forward-Looking Statements
This news release contains forward-looking information which is subject to a variety of risks and uncertainties and other
factors that could cause actual events or results to differ from those projected in the forward-looking statements. Forward
looking statements in this release include that Fura's property can achieve mining success for quality gemstones; that the gems
when produced will be high quality; that tastes will move away from diamonds to colored gems; that Fura will be able to
increase production through modern methods and increase the value of its assets through branding and auction sales; and that Fura
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properties' development may not be successful, mining of the gems may not be cost effective, changing costs for mining and
processing; increased capital costs; marketing plans may not work out as well as expected; the timing and content of work
programs may change; geological interpretations and technological results based on current data that may change with more
detailed information or testing; potential process methods and mineral recoveries assumptions based on limited test work with
further work may not be viable; additional high value gem properties may not be available for Fura to acquire, or Fura may not be
able to afford them; competitors may offer better quality or better marketing strategies; the availability of labour,
equipment and markets for the products produced; and despite the current expected viability of its projects, that the gems cannot
be economically produced on its properties, or that the required permits to build and operate the envisaged mines cannot be
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