Replies to post #6139 on The Rising Influence of Rising Affluence

[go seek]

5 Stocks Pushing The Metals & Mining Industry Lower

1. As of noon trading, Cliffs Natural Resources (CLF) is down $2.86 (-8.3%) to $31.80 on heavy volume Thus far, 9.4 million shares of Cliffs Natural Resources exchanged hands as compared to its average daily volume of 8.3 million shares. The stock has ranged in price between $31.18-$33.30 after having opened the day at $33.15 as compared to the previous trading day's close of $34.66.

Cliffs Natural Resources Inc., a mining and natural resources company, engages in the production of iron ore pellets, fines and lump ore, and metallurgical coal. Cliffs Natural Resources has a market cap of $5.0 billion and is part of the basic materials sector. The company has a P/E ratio of 5.5, below the S&P 500 P/E ratio of 17.7. Shares are down 43.3% year to date as of the close of trading on Monday. Currently there are 4 analysts that rate Cliffs Natural Resources a buy, no analysts rate it a sell, and 11 rate it a hold.

TheStreet Ratings rates Cliffs Natural Resources as a hold. The company's strengths can be seen in multiple areas, such as its attractive valuation levels and notable return on equity. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, poor profit margins and weak operating cash flow.

TheStreet needs to... ;-)

[DewDiligence]

CLF—There's a sizeable school of thought, possibly misguided, that a Goldman downgrade means that the firm is actually bullish and wants to buy at a cheaper price.

Or that GS simply shorted CLF before issuing the report.

I’ve been trying to ascertain which additional (bearish) NA iron-ore production GS was referring to in the report, and I can’t pinpoint any such announced production plans from any public company. Perhaps GS has inside information that one of CLF’s US steelmaking customers is planning to produce more iron ore from its own captive mines and therefore take less from CLF, but seems counter-intuitive to what the steelmakers would want to do in the current environment.

Alternatively, the GS pronouncement about increasing NA production may be a canard; the fact that GS offers no details or even a time frame for such a production increase adds credence to this interpretation, IMO.

If anyone has read the full GS report and can shed light on the above, please post!