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October 20, 2009 Stock Pick: Richmont Mines, Inc. (RIC)

Stock Price: $3.19

Richmont Mines, Inc. has extensive experience in gold exploration, development and mining and has produced over 1,000,000 ounces of gold from its operations in Quebec, Ontario and Newfoundland since 1991. The company is looking to cost-effectively build its North American reserve base through a combination of organic growth, strategic acquisitions and partnerships.

RIC looks like a solid gold play with revenue increasing from $30.99 million in 2006 to $38.81 million in 2007 to $57.76 million in 2008. Net income for 2008 came in at $2.92 million.

We believe RIC is undervalued compared to their peers in the gold industry. RIC is trading at a market cap of only around $83.30 million.

Gold continues to rise and is very near reaching all-time highs again. A lot of gold stocks have already moved huge recently, but RIC has been trading between $2.50 and $3.50 over the last 2+ months.

RIC's balance sheet is strong with $21.38 million in cash and no long-term debt as of December 31, 2008. RIC has its 200-day moving average underneath at $3.08 and its 50-day moving average at $2.98. We believe RIC is a solid way to play the move in gold.

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