Cliffs Natural Resources Inc (CLF): Would the CEO’s Departure Help This Mining Stock?

As prices go lower, more miners would be considering selling some of their assets. As you could see from Rio Tinto plc (ADR) (NYSE:RIO)’s example, it’s not that easy to do so. Such decisions must be taken fast, as there would be no buyers or the prices would be extremely low if everyone decides to sell.

Valuation

If you do not believe in the apocalyptic scenario, Cliffs Natural Resources Inc (NYSE:CLF) has gotten cheap enough with a forward P/E of 9 and P/B of 0.5. The stock currently yields 3.66%. Analysts are optimistic about short-term prospects, giving the stock a $22.50 mean price target, a 35.5% upside.

BHP Billiton Limited (ADR) (NYSE:BHP) trades at a forward P/E of 18.2 and P/B of 2.33, while Rio Tinto trades at a forward P/E of 7 and P/B of 1.61. Both stocks are dividend plays. BHP Billiton yields 3.88%. Rio Tinto yields 4.49%. Analysts’ targets are favorable as well, giving BHP Billiton 32% upside and Rio Tinto 59% upside. To me, this looks overoptimistic.

Bottom line

I think that the departure of the CEO does not change the outlook for Cliffs Natural Resources Inc (NYSE:CLF). If you like risk and can afford it, this is a very interesting stock. If you are conservative, stay away from it as it would be volatile and can fall further if the worst-case scenario comes into play in the iron ore market. BHP Billiton and Rio Tinto are more diversified. Their dividend yields look attractive, however, they are not free from the downside risk either.

The article Would the CEO’s Departure Help This Mining Stock? originally appeared on Fool.com and is written by Vladimir Zernov.

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

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.