Stillwater's Mine Runs Deep

All that glitters is not gold. Platinum and palladium--metals used in industrial and other applications--have sparkled recently, making little-known Stillwater Mining (PGMS) a star almost overnight. The only major U.S. producer of platinum and palladium, Stillwater has climbed to 223/4 a share--a lofty 108 times estimated 1995 earnings--up from 13 last December, when the company went public.

"Stillwater will continue to outperform both its precious-metals peer group and the general market," predicts Vahid Fathi, a metals analyst at Kemper Securities. He sees the stock hitting 35 by the middle of next year.

A big surge in demand for platinum and palladium last year has driven prices of the metals to four-year highs. Prices could go even higher because both are necessary in auto catalytic converters. Palladium is also used in computer chips. And platinum is popular in jewelry.

Stillwater's mine in the Beartooth Mountains of Montana is the main source for both metals outside Russia and South Africa, notes Leanne Baker, an analyst at Salomon Brothers. For significant proven reserves, says Baker, "there's no other in the U.S."

With 18 million ounces of reserves, "we control the world's richest deposit of platinum-group metals," says Chairman and CEO Charles Engles. The company, which had earnings of 11 cents a share in 1994 on sales of $58.6 million, is expected by Baker to earn 21 cents this year. By Sandra Dallas.

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