Replies to post #407 on AS IRON SHARPENS IRON

[downsideup]

Others on the list highlight categories as well as individual stocks...

So, shipping seems to offer some good bargains right now, but, if you know the business, you might be reluctant to rely on recent past earnings as any indicator of next quarter.

Those that popped up on the list include GNK, DRYS, EXM and ULTR. It happens that I've looked at shipping before, so know some of what is going on. ULTR was my pick of the litter, posted a while back. Others like DRYS. My concern is with the financial condition and with the market. Dry bulk shipping will be down with the economy down... come back as the economy does, with a higher level of sensitivity than many other industries. Leverage is good when it is working for you, bad when it is not, or when it is getting close to not... so looking at Debt/Equity, I'd pick ULTR again, but, the real reason I did pick it is they are providing services to the oil industry developing off shore Brazil. They WILL stay busy, about as busy as they are now, pretty much whatever the economy does over the next year... since you don't just stop a bunch of multi hundreds of millions of dollars projects half way through, just because the economy burped...

There WILL be a point where you want to buy and hold the shipping stocks. When they turn, they can deliver powerful earnings and pay down debt fast. The group is known for having the occasional sleeper that pays off big debts with no one noticing, then delivering a dividend that is more than the price of the stock. If they can buy boats in a down market, pay them off, and sell them when there is a shortage driving high rates... they can make bundles.

Since the category was highlighted by the screen, you might re-screen only for the category and see what else pops up ?

Airlines I already follow, so nothing new to me re PNCL... I'll follow it and see if it gives better trading opportunities. Look at XJT over the last week ? MESA, GOL ? Airlines are good traders... still probably not yet time to buy and hold them ?

Etc.

[MikeDDKing]

SLT's business is mainly smelting and mining of base metals. The price of base metals has dropped tremendously.

An example is copper that has dropped from a high of over $4/lb to $1.39/lb. Below is a chart of copper:



You can find more base metal prices and charts here:
http://www.kitcometals.com/

SLT's profitability is going to drop significantly because their revenue will drop and their costs will not drop by the same amount thus their margins will shrink. I suspect that they likely will be losing money going forward. At the very least they will be making a fraction of what they were previously. I'm sure that is why they are trading at less than the cash on their books. Without spending a few hours I can't estimate their profitability or losses going forward.

In any case they are certainly a shrinking company and not a growing company. I like to buy growing companies.

Mike