The shares of Timmins Gold Corp. (TSE:TMM), (PINK:TMGOF) are on the positive move again. They are trying to compensate their recent fall on the Toronto Stock Exchange (TSE) and have almost done so. The stock is looking up towards its 52-week high of $2.80 again. This is happening without any new company releases.
Yesterday’s 6.4% rise in the price may look, perhaps, not so striking. It was the trading volume that made the brighter impression here. The turnover of 1.6M shares surpasses more than four times the average from the last 30 days. The story gets even nicer – making some simple calculations will show us that TMM has advanced by 15% since last Thursday.
Presently, the stock is priced at $2.51, which is only 10% below the 52-week high mentioned above. In addition, some technical indicators imply the shares’ rise could continue in the coming days. Having bounced off the lower Bollinger band, TMM has gone beyond the 20-day simple MA. In such a case, as the theory says, it is rather probable that the shares progress further to the upper Bollinger band.
The solid fundamentals of the company are another factor, that could give justice to the assumption for a future advance of the shares. This factor is certainly far more reliable than the technical analysis. In the end of 2010, Timmins was in a stable financial state, proved by these figures:
* $4.6M in cash and a working capital of approximately $2.3M in the end of last year;
* A very pleasant net income of $7.5M for the fourth quarter of 2010. Metal revenues for the nine months ended Dec. 31, 2010 reached $62.6M;
* A 28% rise in gold sales for the three months ended Dec. 31, 2010 over the prior quarter.
The fact that in late March Timmins’ shares were listed on the Toronto Stock Exchange, considered to be the senior and very prestigious Canadian stock market, can be regarded as another success for the corporation.
It is time now to mention something negative about Timmins Gold. The current market value does not seem to be truly supported by the fundamentals of the company. Timmins is overestimated by investors – the market cap of $344M is nearly five times larger than the $70M net worth of the business. Does it seem too much to you?
Of course, in case the corporation manages to keep the positive net income and the stable metal revenues, it will have almost nothing to worry about.
