Is Coeur d’Alene’s Stock a Buy After Its Precipitous Drop?

With shares of Coeur d’Alene Mines Corporation (NYSE:CDE) trading at around $23.26 is CDE an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalyst for the Stock’s Movement

Coeur d’Alene has been a volatile stock over the past five years. The only great entry point during that timeframe was late 2008 when it was trading below $5. If you bought at that time, then you did quite well. Finding another entry point over the past five years hasn’t been easy. The stock has hit $15 on several occasions. Those have proven to be the best entry points since January of 2010, but who has that kind of timing?

The shorts are lurking here. The short percentage of the float is at 6.40%. That’s much higher than the short position of 2.60% on competitor Newmont Mining (NYSE:NEM). Newmont Mining also offers a 3% yield while Coeur d’Alene offers no yield. Coeur d’Alene does win on the balance sheet, though, which we will cover further below.

From a business standpoint, the macro picture has been looking good at Coeur d’Alene, but there have been some bumps along the way. For instance, San Bartolome was shut down for several days in August due to power trouble. This led to poor production and increased costs. 76 Clavo at Palmarejo has seen disappointing production due to unexpected underground problems (these problems are claimed to be temporary.) On the positive side, Rochester and Kensington have been performing well. Outstanding debt has also been reduced by $100 million over the past year. Want more numbers?

Coeur d’Alene has produced 14.2 million ounces of silver and 165,000 ounces of gold over the past nine months. For 2012, they expect to produce a total of 18.5 to 19 million ounces of silver and between 215,000 and 225,000 ounces of gold. There has been no guidance on 2013 yet…