Cliffs Natural Resources Inc (CLF): Can It Bounce Back?

Even though the growth opportunity for Cliffs seems to be on hold for the foreseeable future, some are looking at the stock as a value play. With shares fetching just 70% of tangible book value, investors are clearly concerned about the impact of the company’s huge debt load on its ability to avoid measures like dilutive equity offerings in the future. Yet unless the global economy falls back into recession, long-term fundamentals for the steel industry still appear favorable, and when a recovery comes, demand for iron ore and metallurgical coal should rise.

In Cliffs Natural Resources Inc (NYSE:CLF)’s quarterly report, look closely at the company’s financial condition to see how long it can handle adverse conditions without having to take more dramatic capital-raising measures. If China’s latest signs of slowing down keep the steel industry dormant too long, then Cliffs Natural Resources Inc (NYSE:CLF) may find itself running out of time to take action that could nevertheless hurt current shareholders.

The article Can Cliffs Natural Bounce Back? originally appeared on Fool.com and is written by Dan Caplinger.

Motley Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool has no position in any of the stocks mentioned.

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