Cliffs Natural Resources Inc (CLF): Roller Coaster Ahead for This Mining Stock

BHP Billiton Limited (ADR) (NYSE:BHP) is engaged in the exploration and production of oil and gas; it mines copper, lead, zinc, molybdenum, gold, uranium, iron ore and met coal. Rio Tinto plc (ADR) (NYSE:RIO) is as diversified as BHP Billiton. Prices for various resources have dropped this year, but they stay on various levels, which give these companies more flexibility.

As everyone is fighting their own battle, no one wants to curb its output. The market remains flooded. This means we need to see improvement on the demand side, which would enable the prices to rise. The European economy does not show signs of improvement. Almost every company from nearly each industry which has to deal with Europe indicates that it is a problematic region right now. Data from China is not encouraging either.

Bottom line

The bright spot is that Cliffs Natural Resources Inc (NYSE:CLF) trades at 0.5 P/B. The dark spot is that the company needs prices to rise before the stock could follow. At current levels, the stock could attract risky bargain hunters. You can expect a lot of volatility to come. The company is dependent on the price environment, and this environment does not seem to get better. My take – it’s a risky bet, so if you are risk averse, this one is not for you.

The article Roller Coaster Ahead for This Mining Stock originally appeared on Fool.com.

Vladimir Zernov has no position in any stocks mentioned. The Motley Fool recommends Nucor. Vladimir is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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