UBC Theses and Dissertations

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UBC Theses and Dissertations

An approach to copper mining security analysis. Roper, Edward Cecil


The objective of this thesis is to examine an approach to copper mining security analysis which measures the quality and projects the market value of the common shares. The accepted approach is the Multiplier Theory as advanced by Graham & Dodd and represented by the formula: Estimated market value equals the multiplier times the sum of the projected dividends paid and one-third of the projected earnings all adjusted for asset values. General application of the theory is qualified to conform with pertinent tangible and intangible factors which influence the basic components of the formula. The basic components are defined and the range of adjustments necessary for the Intangible factors influencing the multiplier are developed before the tangible factors affecting the quality of the security are examined. The performance of the Copper Industry as compared with other industries is measured by the rate of return on the common stock. The securities of the three leading integrated United States' copper mining companies are appraised on this basis. The quality of these copper mining common stocks depends on the economics of the companies and the Copper Industry. An abundance of statistical data is examined to illustrate the body of knowledge required to appraise and project the costs, earnings and copper prices. A projection was made of the rate of return on a hypothetical investment in the common stocks of these companies. The projection incorporated the adjustments and the prevailing economic trends. The estimated future market value of the common shares was deduced by applying the projected components to the standard formula. The variations between the actual and the estimated rate of return on the hypothetical investment were beyond the limits which would have proven the approach to be conclusive.

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