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5 Industrial Metals & Minerals Stocks Heading for Trouble?

By  +Follow October 2, 2013 5:25AM
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Prices for hard commodities are always subject to unexpected fluctuations that typically result from disruptions to the delicate supply-demand balance.

So far in 2013, iron ore has been one example of how the relationship between supply and demand can affect an industry and the companies operating within it. For instance, the so-called miracle of Chinese economic growth that has been one of the most enduring features of the global economy in the new millennium saw the world’s most populous nation consuming ever-larger amounts of iron ore to feed enormous investments in housing and infrastructure projects.

Major mining companies in the industry, such as BHP Billiton (BHP) , shifted their operations accordingly, even selling off assets in other less lucrative metals in order to make more iron ore. But then Chinese growth started to slow, relatively speaking, in late summer, sparking fears that the ride was coming to an end. Financial institutions from Deutsche Bank AG (DB) to Goldman Sachs (GS) all of a sudden were predicting that iron ore prices would drop dramatically as a result of oversupply.

The coal industry, by comparison, is in even worse shape, especially in the US and Canada, where the view of the commodity as a major, and unnecessary, environmental menace has become a very mainstream one. Coal-related stocks, of course, have suffered as a result of this scenario, and there does not seem to be a very promising outlook for the immediate future.

The following companies, mostly coal miners, have been selected from the Industrial Metals and Minerals industry, based on a number of criteria:
-a relatively low price-to-cash ratio of less than 3, indicating that the company may not have enough cash on hand to make the changes necessary to adapt to an industry downturn.
-a negative Return-on-Equity rate, indicating that investor cash is not being spent to the best effect.
-a relatively high debt-to-equity ratio, over 0.5, indicating that the bills for these companies could constitute a significant source of pressure in the event of a further misfortunes for coal

Alpha Natural Resources Inc. (ANR)            

Price: $5.82
Market-Cap: $1.3 billion
P/C Ratio: 2.51
ROE: -9.60 percent
Debt/Equity Ratio: 0.72

The Bristol, Virginia-based company operates over 100 mines and 25 production facilities throughout the US, in Virginia, West Virginia, Pennsylvania, Wyoming, and Kentucky. While the stock has rebounded, adding about 10 percent in the current quarter, shares have lost almost half their price in 2013, down over 40 percent.

Arch Coal Inc. (ACI)

Price: $4.02
Market-Cap: $852.6 million
P/C Ratio: 0.96
ROE: -13.60
Debt/Equity Ratio: 1.88

The St. Louis, Missouri-based miner operates over 30 mines in the US that the company boasts represent over 5 billion tons of proven reserves of coal, and is often cited as one of the better coal stocks to own. That said, the company has seen its share price drop nearly 45 percent year-to-date, despite a 10 percent rally over the course of the present quarter.

Thompson Creek Metals Company Inc. ($TC)

Price: $3.54
Market-Cap: $605.7 million
P/C Ratio: 1.5
ROE: -36.70 percent
Debt/Equity Ratio: 0.78

The Denver, Colorado-based company mines gold, copper and molybdenum throughout the US and Canada, and provides an instructive contrast to the coal companies on this list. While Thompson has seen shares amost 20 percent lower in 2013, the stock has rallied by about as much during the present quarter.

MFC Industrial Ltd. (MIL)

Price: $8.37
Market-Cap: $523.56 million
P/C Ratio: 1.58
ROE: 27.80 percent
Debt/Equity Ratio: 0.52

The Vancouver, Canada-based company makes its business primarily from the storage and transporation of commodities and materials, including but not limited to coal. MFC is the exception on this list, with a positive return-on-equity. THe stock has not moved significantly throughout the year, but is up over 3 percent during the current quarter.

James River Coal Co. (JRCC)

Price: $2.04
Market-Cap: $71.34 million
P/C Ratio: 0.75
ROE: -32 percent
Debt/Equity Ratio: 1.66

The Richmond, Virginia-based companies mines coal in Kentucky, Indiana, and West Virginia, and claims over 300 million tons of coal reserves to its credit. Shares have had a rough year like all the other coal miners on this list, down 36 percent in 2013, despite a 12 percent jump on the quarter.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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Results for BHP
Karen  Toms
18 Dec 14 07:35:32
RT @FinancialReview: $BHP will cut about $2b capex says Deutsche - the bank expects oil below $US80 until 2018 http://t.co/A0dibm35T3 #ausb…
Fish4Bucks
18 Dec 14 06:37:06
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18 Dec 14 06:36:30
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Stockaholics
18 Dec 14 04:41:05
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StockNewsWires
18 Dec 14 03:33:08
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StockNewsWires
18 Dec 14 03:23:05
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HotKeyTrading
18 Dec 14 01:30:04
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ProVesting
17 Dec 14 23:11:04
$XOM $BHP: Oil Slump Threatens Future Australian LNG Projects http://t.co/TGqG4Sh2uH http://t.co/0KyZeDaNHX
Claire Kou
17 Dec 14 19:04:58
RT @SHMining: BHP Billiton shifting focus to copper from iron ore http://t.co/0yCyG05DEe $BHP #mining #copper #business
luckypete
17 Dec 14 18:31:31
ASX AUS Giant Miner ADR $BHP opened 28.12 + 2.22%, FIG projects a POS open for Ger xetra $DAX, 1st TARGET for ^GDAXI + 1.71% or 9715.
dre
17 Dec 14 16:45:51
RT @CommSec: ASX 200 +68pts/1.3% at 5230 in early trade;Materials sector leads $BHP +3.3% $RIO +3% $FMG +4.4%;Property lags $GMG -0.2% #aus…
StockNewsWires
17 Dec 14 16:28:03
$BHP: Mining stocks rally across the board http://t.co/ywmxikQ1IQ http://t.co/RMfwWKPRzu
CommSec
17 Dec 14 15:24:02
ASX 200 +68pts/1.3% at 5230 in early trade;Materials sector leads $BHP +3.3% $RIO +3% $FMG +4.4%;Property lags $GMG -0.2% #ausbiz ^TP
Stockaholics
17 Dec 14 15:05:34
Platinum Memberships Rose, After 528% Gains On Penny Stocks, In One Month! Big Update: http://t.co/BuDJZVQmcq $BHP $CADX $BSX
Andy
17 Dec 14 14:37:31
RT @FinancialReview: $BHP will cut about $2b capex says Deutsche - the bank expects oil below $US80 until 2018 http://t.co/A0dibm35T3 #ausb…
DailyStockPicks
17 Dec 14 14:20:10
$ECIG buyout target of $0.50. 400% upside. Positive EBITDA and $200MM revenue in 2015 $BHP $MDRX $RYL traders read: http://t.co/xi3978GuDs
Fe Limited
17 Dec 14 14:05:19
$BHP shifting focus to #copper, expects sales to China to grow more than #ironore http://t.co/PiHi2HHVvb #metals #mining #steel #chinabiz
Krishan
17 Dec 14 13:49:21
RT @FinancialReview: $BHP will cut about $2b capex says Deutsche - the bank expects oil below $US80 until 2018 http://t.co/A0dibm35T3 #ausb…
Market Realist
17 Dec 14 13:33:33
Vale SA: The iron ore giant deconstructed $CLF $RIO $BHP $VALE http://t.co/RICWFg25tx
HotKeyTrading
17 Dec 14 13:30:05
Downgraded: $VOLC $SWIR $TLM $DLTR $RVBD $LINE $LNCO $EVEP $TQNT $UPS $BHP $AGN $RFMD $HOV $VLCCF http://t.co/TRx9EnjwT5 #dow #stocks #nyse
Ariel Silahian
17 Dec 14 13:17:44
Algorithmic trading: OPEN Dec/17 SELL: $WFT $OGE $X $TRQ $ANGI $AREX $SE $MHR $BHP $VNR $KBH $GLOG $EQT $HUN $UPL $STO $ALJ $BIG $HFC $TCK
Mark Conway
17 Dec 14 13:11:46
RT @FinancialReview: $BHP will cut about $2b capex says Deutsche - the bank expects oil below $US80 until 2018 http://t.co/A0dibm35T3 #ausb…
Paavfc
17 Dec 14 13:11:26
RT @FinancialReview: $BHP will cut about $2b capex says Deutsche - the bank expects oil below $US80 until 2018 http://t.co/A0dibm35T3 #ausb…
Financial Review
17 Dec 14 13:10:54
$BHP will cut about $2b capex says Deutsche - the bank expects oil below $US80 until 2018 http://t.co/A0dibm35T3 #ausbiz
Mark Trader
17 Dec 14 12:58:07
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Stock Market Scanner
17 Dec 14 12:43:50
$WLT $ANR $ACI $BTU $BHP $CLF "Coal imports rise 7% to three-month high in November" http://t.co/9SIsKRztOm
Stock Market Scanner
17 Dec 14 12:31:47
Even less coal regulations on the way. http://t.co/emItkpCtlV Looks like the beginning of a bull market for coal $WLT $ACI $ANR $BTU $BHP
Fish4Bucks
17 Dec 14 08:57:32
60m $BHP 46.250 Price action Crossing up Median Resistance #stocks Signals based on the Fish4Bot indicator P... http://t.co/lSMcM5bjRW
Energize Minnesota
17 Dec 14 08:23:04
A few #Mining Stock Picks for December http://t.co/mbcys9WSpo $BHP We in Minnesota say it's #TimeToMine & get #GoPolyMet approved = JOBS
Chart Street
17 Dec 14 07:41:17
Was looking for lower but $BHP short ended for now after reaching measured target area in red. http://t.co/Xiu2Zh1KHf
Stockaholics
17 Dec 14 07:15:38
Platinum Memberships Rose, After 528% Gains On Penny Stocks, In One Month! Big Update: http://t.co/2W3yKD2d5Q $BHP $CADX $BSX
HGS Ltd.
17 Dec 14 06:45:21
RT @SHMining: BHP Billiton shifting focus to copper from iron ore http://t.co/0yCyG05DEe $BHP #mining #copper #business
Media Sentiment
17 Dec 14 06:15:12
$BHP received a new alert. Find out why at http://t.co/5lwmDm2SCs #stocks #daytrading #trading #mkt #NYSE #NASDAQ #markets 165
Market Int Center
17 Dec 14 06:14:29
BHP Billiton $BHP Showing Bearish Technicals With Support At $43.51 ( http://t.co/oFR9rJpaym )
TP Strategic Partner
17 Dec 14 06:06:55
$SPY $BHP $RIO So is everyone okay with the free land giveaway to these companies hidden in the Defense budget? Not even a smelter Royalty.
John C Mueller
17 Dec 14 06:02:22
Iron ore price woes deepen DANIEL PALMER BUSINESS SPECTATOR DECEMBER 17, 2014 7:16AM IRON ore prices have fal $BHP http://t.co/4KfOw08hRn
ProVesting
17 Dec 14 05:28:05
$BHP: BHP Billiton: When Iron Ore Miners Act Like They're OPEC (BHP) http://t.co/llpQEqvkme http://t.co/dSXb5978Kq
Seeking Alpha
17 Dec 14 05:24:23
BHP Billiton: When Iron Ore Miners Act Like They're OPEC http://t.co/2M2txKiMyO $BHP
Alysia Sarkisian
17 Dec 14 05:20:38
RT @SeekingAlpha: 2 Countries You Might Be Surprised To Find Hallgarten's Chris Ecclestone Likes Now http://t.co/wvc6nkfQjJ $ABX $AEM $AUY …
Seeking Alpha
17 Dec 14 05:15:09
2 Countries You Might Be Surprised To Find Hallgarten's Chris Ecclestone Likes Now http://t.co/wvc6nkfQjJ $ABX $AEM $AUY $BHP $CHPGF $GG
Klondike Strike
17 Dec 14 04:49:07
RT @SHMining: BHP Billiton shifting focus to copper from iron ore http://t.co/0yCyG05DEe $BHP #mining #copper #business
PDAC
17 Dec 14 04:34:12
RT @SHMining: BHP Billiton shifting focus to copper from iron ore http://t.co/0yCyG05DEe $BHP #mining #copper #business
Southern Hemisphere
17 Dec 14 04:30:12
BHP Billiton shifting focus to copper from iron ore http://t.co/0yCyG05DEe $BHP #mining #copper #business
INVERTIR EN BOLSA
17 Dec 14 03:41:19
$GLD $SLV $NUGT $DUST $ABX $AUY $FCX $NEM $RIO $VALE $BHP $USO $UNG $DGAZ $UGAZ - Today is a key day for gold http://t.co/J5RMCs2YVM
#SaveTheBees
17 Dec 14 02:31:44
RT @PhillipsRiver: $BHP chief sees #potash as its 'fifth pillar'http://t.co/8KWbtVQxaF #ASX #mining #makets #investment #China #agribiz
HotKeyTrading
17 Dec 14 01:30:04
Downgraded: $DLTR $RVBD $LINE $LNCO $EVEP $TQNT $UPS $BHP $AGN $RFMD $HOV $VLCCF $BBEP $TRV $TOL http://t.co/TRx9EnjwT5 #finance #stocks
luckypete
16 Dec 14 23:14:09
$DAX futures ~ 9450, pre-market 9461, closed at 9563,<< -100 pts lower?? AUS $BHP projecting $DAX up - very confusing, markets never easy<
Christophe Pons
16 Dec 14 22:45:39
RT @Cape_Lambert: Big 3 miners set to control more than 85% seaborne iron ore trade by end of decade http://t.co/9UL1qVA3pc $VALE $BHP $RIO…
Jo Masters
16 Dec 14 22:02:34
RT @Cape_Lambert: Big 3 miners set to control more than 85% seaborne iron ore trade by end of decade http://t.co/9UL1qVA3pc $VALE $BHP $RIO…
luckypete
16 Dec 14 21:12:24
ASX AUS Giant Miner ADR $BHP Billiton opened 27.66 0.88%, FIG projects a POS open for Ger xetra $DAX, 1st TARGET for ^GDAXI 0.72% or 9629.
				
				
By  +Follow October 2, 2013 5:25AM
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