What: Stillwater Mining Company , 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.
The article Why Stillwater Mining Company's Stock Price Jumped More Than 10% Last Month originally appeared on Fool.com.
Reuben Brewer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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