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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
Gavin Purcell
22 Sep 14 19:20:21
RT @CommSec: BHP Billiton $BHP -1.5%; -3.2% this wk & -6.4% in Sept. Union workers at Escondida Copper mine in Chile said started 24hr stri…
CommSec
22 Sep 14 19:19:19
Reports of planned 700 job cuts at BHP's BMA joint venture. $BHP -1.1% or 38c to $34.48. $BHP hit a high of $39.74 in mid-August #ausbiz ^SD
Stephen Veness
22 Sep 14 19:18:49
RT @FinancialReview: 700 jobs go at $BHP Billiton coal business http://t.co/8HZcxibM1v
A Macdonald-Smith
22 Sep 14 19:13:48
Tough times in #coal 8% of BMA jobs to go $BHP Billiton cuts 700 coal jobs in Queensland http://t.co/J4YHApYJEp
ray clarke
22 Sep 14 19:05:50
RT @FinancialReview: 700 jobs go at $BHP Billiton coal business http://t.co/8HZcxibM1v
Blind Mango Chutney
22 Sep 14 19:00:50
But yesterday they said it was activist propaganda? "@FinancialReview: 700 jobs go at $BHP Billiton coal business http://t.co/fgwM19SpC7"
Lyndsay Farlow
22 Sep 14 18:58:43
RT @FinancialReview: 700 jobs go at $BHP Billiton coal business http://t.co/8HZcxibM1v
Financial Review
22 Sep 14 18:58:28
700 jobs go at $BHP Billiton coal business http://t.co/8HZcxibM1v
simone
22 Sep 14 18:53:43
RT @CommSec: BHP Billiton $BHP -1.5%; -3.2% this wk & -6.4% in Sept. Union workers at Escondida Copper mine in Chile said started 24hr stri…
Alexander Katyk
22 Sep 14 18:52:10
RT @CommSec: Larger mining stocks reversing a good chunk of earlier losses following Chinese data. $BHP -0.75%, $RIO +0.25% & $FMG +2.2% #a…
CommSec
22 Sep 14 18:50:31
Larger mining stocks reversing a good chunk of earlier losses following Chinese data. $BHP -0.75%, $RIO +0.25% & $FMG +2.2% #ausbiz ^SD
Rafael Ferri
22 Sep 14 18:47:33
RT @CommSec: BHP Billiton $BHP -1.5%; -3.2% this wk & -6.4% in Sept. Union workers at Escondida Copper mine in Chile said started 24hr stri…
CommSec
22 Sep 14 18:46:23
BHP Billiton $BHP -1.5%; -3.2% this wk & -6.4% in Sept. Union workers at Escondida Copper mine in Chile said started 24hr strike #ausbiz ^SD
Yellen's Yodel ™
22 Sep 14 18:06:58
@iam_kevdidit Waiting for $BHP < $60 and $VALE < $10
Richard Glass
22 Sep 14 16:53:32
RT @FinancialReview: $RIO Tinto, $BHP Billiton had expected swathes of high-cost Chinese #ironore capacity to shut #China #economy $ASX $a …
ASX small caps
22 Sep 14 16:37:07
RT @Washseile: Before the Bell - $A falls below US89¢ as #China jitters sink Wall St http://t.co/Cr96am6zyT #ASX #economy #ironore $BHP $RIO
Oxbow Advisory
22 Sep 14 16:36:13
RT @FinancialReview: $RIO Tinto, $BHP Billiton had expected swathes of high-cost Chinese #ironore capacity to shut #China #economy $ASX $a …
CMCMFIN
22 Sep 14 16:29:12
RT @FinancialReview: $RIO Tinto, $BHP Billiton had expected swathes of high-cost Chinese #ironore capacity to shut #China #economy $ASX $a …
CMCMFIN
22 Sep 14 16:28:26
RT @Washseile: Before the Bell - $A falls below US89¢ as #China jitters sink Wall St http://t.co/Cr96am6zyT #ASX #economy #ironore $BHP $RIO
gordon gekko is god
22 Sep 14 16:19:24
Cliffs Natural Resources hits 52-week lows as China concerns mount http://t.co/Bkd7wFOm7N $CLF, $BHP, $RIO, $VALE, $ANR, $WLT, $ACI, $CLD,
Adrian Prendergast
22 Sep 14 16:15:33
#IronOre drops below $80/t. $BHP & $RIO down 3% in London. Dont try to pick the bottom, but at some point there'll be good buying op.
NASDAQ
22 Sep 14 15:40:16
$BHP - ADR Shares End Lower; Mechel Shares Trade Actively http://t.co/nSMv62v9a3
JPU
22 Sep 14 15:39:32
RT @SeekingAlpha: Expect Vale To Rebound In The Mid-Term http://t.co/mvZ4N36cGT $BHP $RIO $VALE
Bitcoin fxRevolution
22 Sep 14 14:34:06
RT @FinancialReview: $RIO Tinto, $BHP Billiton had expected swathes of high-cost Chinese #ironore capacity to shut #China #economy $ASX $a …
gail simmons
22 Sep 14 14:29:18
RT @FinancialReview: $RIO Tinto, $BHP Billiton had expected swathes of high-cost Chinese #ironore capacity to shut #China #economy $ASX $a …
Financial Review
22 Sep 14 14:28:02
$RIO Tinto, $BHP Billiton had expected swathes of high-cost Chinese #ironore capacity to shut #China #economy $ASX $a http://t.co/Sf4XJXt47U
sarah dinh
22 Sep 14 14:21:44
RT @FinancialReview: #ironore down another 2.3pc; $BHP $RIO shares suffer on London market, down more than 3pc #SPI lower #economy #china h…
Smart Investor
22 Sep 14 14:10:10
RT @Washseile: Before the Bell - $A falls below US89¢ as #China jitters sink Wall St http://t.co/Cr96am6zyT #ASX #economy #ironore $BHP $RIO
BRW.com.au
22 Sep 14 14:10:10
RT @Washseile: Before the Bell - $A falls below US89¢ as #China jitters sink Wall St http://t.co/Cr96am6zyT #ASX #economy #ironore $BHP $RIO
Financial Review
22 Sep 14 14:10:10
RT @Washseile: Before the Bell - $A falls below US89¢ as #China jitters sink Wall St http://t.co/Cr96am6zyT #ASX #economy #ironore $BHP $RIO
Elise Shaw
22 Sep 14 14:06:39
Before the Bell - $A falls below US89¢ as #China jitters sink Wall St http://t.co/Cr96am6zyT #ASX #economy #ironore $BHP $RIO
BigAl
22 Sep 14 14:05:32
RT @FinancialReview: #ironore down another 2.3pc; $BHP $RIO shares suffer on London market, down more than 3pc #SPI lower #economy #china h…
Financial Review
22 Sep 14 14:02:26
#ironore down another 2.3pc; $BHP $RIO shares suffer on London market, down more than 3pc #SPI lower #economy #china http://t.co/XVNnRngod2
Craig Garbers
22 Sep 14 12:59:21
RT @MarketCurrents: Cliffs Natural Resources hits 52-week lows as China concerns mount http://t.co/CDRfeECEtm $CLF $BHP $RIO $VALE
MarketCurrents
22 Sep 14 12:47:52
Cliffs Natural Resources hits 52-week lows as China concerns mount http://t.co/CDRfeECEtm $CLF $BHP $RIO $VALE
TheTell
22 Sep 14 12:46:04
Iron ore industry headed for a brutal shakeout http://t.co/rj9im9ScmZ $VALE $BHP $RIO http://t.co/0uVAAc77vD
US Banking News
22 Sep 14 12:42:55
BHP Billiton Limited Hits New 1-Year Low at $60.90 $BHP http://t.co/9gpZdmA6ge
Interactive Brokers
22 Sep 14 11:57:06
#IBTI Technical Analysis - Waverly Advisors Update http://t.co/mPjwQ3CTHs $DRC $TKMR $BHP $MAT $UBNT $RLGY $LGF $INVN $EMC
awolam
22 Sep 14 11:53:14
RT @SeekingAlpha: Expect Vale To Rebound In The Mid-Term http://t.co/mvZ4N36cGT $BHP $RIO $VALE
Seeking Alpha
22 Sep 14 11:52:05
Expect Vale To Rebound In The Mid-Term http://t.co/mvZ4N36cGT $BHP $RIO $VALE
Options Idea Central
22 Sep 14 11:33:19
OIC Midday Options Recap – 09/22/2014 – $AAPL, $BHP, $BAC http://t.co/MDLFXs26ci
Yellen's Yodel ™
22 Sep 14 10:59:59
After lunch madness... Losers- $VALE $FSLR $BHP Winners- $LAND $EMC $MO
Market Int Center
22 Sep 14 09:58:55
Potential BHP Billiton $BHP Trade Has 4.22% Downside Protection ( http://t.co/LeFe554eg1 )
D Robertson
22 Sep 14 09:24:12
@docjck $CLF -8% even $RIO $BHP down 3-4%
Fish4Bucks
22 Sep 14 09:21:35
60m $BHP Lower Trendline Area 61.070 #futures #stocks 12:21:04 PM http://t.co/WZwETG8am0 Signals based on ... http://t.co/WZwETG8am0
NASDAQ
22 Sep 14 09:14:27
$BHP - EUROPE MARKETS: European Mining Stocks Hurt By China Growth Worries http://t.co/eiL9JapPPY
4-traders.com
22 Sep 14 09:00:04
EUROPE MARKETS: European Mining Stocks Hurt By China Growth Worries http://t.co/g69NLPNnbD $PX1 $DAX $F100 $EURUSD $SIAL $DRC $BHP $RIO $MRK
D Robertson
22 Sep 14 08:27:55
$CLF $VALE $TCK wow but even best in class $BHP looks horrible
Yellen's Yodel ™
22 Sep 14 07:40:58
An hour in... Losers- $VALE $BHP $FSLR Winners- $EMC $BURBY $DD
Interactive Brokers
22 Sep 14 07:27:55
#IBTI Technical Analysis - Waverly Advisors Morning Update http://t.co/mbSFWeOGHl $DRC $INVN $RLGY $TKMR $GNRC $HOLX $UBNT $BHP
				
				
By  +Follow October 2, 2013 5:25AM
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