Gold prices are near 19-month lows, hammering the stocks of many gold companies and gold ETFs. The decline has been consistent throughout the precious metals arena. However, platinum has shown some resilience, making the stocks of the metals companies that derive a substantial portion of their revenues from platinum safer bets than those that are primarily gold. What is platinum? Not only is it used in jewelry, it has applications in electrical circuits and medicine.

There is reason to think platinum prices could be ready to rise longer term, but for the time being, the price of the commodity is likely to remain pressured. What could yield higher prices longer term is basic supply and demand. Several platinum mines have closed while demand remains strong. If supply continues to trail demand, the price could go up dramatically. (See also: These Charts Suggest Now Is the Time to Buy Platinum.)

Source: SFA (Oxford) via World Platinum Investment Council 

The three stocks we've chosen have all posted declines of at least 40% in 2018. They were chosen, therefore, not so much based on year-to-date performance, but rather on the companies’ abilities to quickly deliver increased amounts of platinum if demand soars.There are no startups on this list. However, there are stocks here that are priced under $5 per share. When a stock is that cheap, it tends to be more volatile than higher-priced stocks. Of course, when an inexpensive stock makes a move upward of even a few cents, this can mean a higher percentage gain for investors when compared to a more expensive stock that moves a few cents.

All figures are current as of September 28, 2018.

1. Ivanhoe Mines Ltd. 

The stock price for Ivanhoe Mines (IVN.TO) has been volatile over the last five years, not to mention 2018. The stock is down 40% so far in 2018 and currently stands at $2.54 per share. Nonetheless the outlook for the next 12 months is positive with analysts' consensus forecast at $4.80 per share, which would mark a rise of around 65%. Analysts’ consensus rating is a “buy.”

The company has a market cap of $2.566 billion.

This is an African company that mines several metals, including platinum. The diversity of metals in the portfolio helps stabilize Ivanhoe’s share price because it is not entirely dependent on platinum.

  • Avg. Volume:     1,095,309
  • Market Cap:       $2.566 billion
  • PE Ratio (TTM): 11.87
  • EPS (TTM):       $0.21
  • Dividend & Yield: N/A (N/A)
  • 1y Target Est:    4.86

2. Nickel Creek Platinum

Nickel Creek Platinum Ltd. (NCP.TO) is based in Canada. It mines both platinum and nickel. The company was previously known as Wellgreen Platinum but rebranded in early 2018 as Nickel Creek. The stock has seen a sharp drop since November 2016, and is currently trading at $0.11 per share, down 60% year-to-date.

Nickel Creek engages in open pit mining, which keeps the company’s costs lower than those of underground miners. The open-pit approach allows the company to use large equipment, and therefore increase productivity. The company is focusing its efforts in the Yukon. The land being mined is next to a highway, which will further reduce the company’s transportation costs for its product.  

  • Avg. Volume:     126,498
  • Market Cap:       $24.84 million
  • PE Ratio (TTM): N/A
  • EPS (TTM):       -0.02
  • Dividend & Yield:            N/A (N/A)
  • 1y Target Est:    1.20

3. Sibanye Gold 

Don’t let Sibanye Gold's (SBGL) name fool you. The company owns Stillwater Mining, which produces platinum. While its gold revenue is likely to remain challenged, due to gold prices standing near 19-month lows, its platinum assets are helping to offset that. The company recently reported a 26% jump in adjusted earnings and 24% jump in revenue in the first half of fiscal 2018, versus the same period a year ago. The gains were attributed to strong production of platinum group metals in South Africa and the U.S., which managed to temper the impact of lower gold production.

The stock price has taken a big hit in 2018, losing more than 50% as the price of precious metals, particularly gold, have been on the slide. Some analysts have cautioned that it would be better to hold off on this stock for now. Investors will have to decide if this is a bargain. If platinum prices rise, this mine could respond with increased production and capitalize on the uptrend.

  • Avg. Volume:     3,489,298
  • Market Cap:       $1.425 billion
  • PE Ratio (TTM): 44.11
  • EPS (TTM):       0.06
  • Dividend & Yield:            0.41 (10.50%)
  • 1y Target Est:    5.90

The Bottom Line

Investing in platinum stocks presents two tasks for investors. The first duty is to find viable companies, and the second need is to correctly predict the rise in the price of platinum. The stocks on this list that have exposure to Africa will always have to deal with labor force problems, so that could affect their productivity.

As for the metal itself, expect volatility to continue throughout 2018, but watch for a generally upward trend in the longer term. (See also: A Beginner's Guide To Precious Metals.)

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