Should We Follow Mohnish Pabrai Into HORSEHEAD HOLDING CORP. (ZINC)?

Teck Resources could be considered one of the biggest diversified mining companies in the world, with the leading global positions in steelmaking coal, metallurgical coal and zinc mining. Recently, the company just received the regulatory approval for its share buyback program renewal. Under the program, the company might buy back up to 20 million class B subordinate voting shares until Jun 2014, accounting for around 3.53% of the total outstanding class B shares. It does not only return cash to shareholders via share buybacks, but also dividends as well. At the current trading price, the dividend yield is quite juicy, at 4.1%.

US Ecology Inc. (NASDAQ:ECOL) has the highest earnings valuation. At $27.90 per share, the company is worth $510.3 million on the market. The market values US Ecology Inc. (NASDAQ:ECOL) the most expensive, at more than 16 times its forward earnings. In the first quarter 2013, the company reported an impressive growth in its earnings results. While revenue experienced the growth of 30% to $42.9 million, its net income increased by 20% to $5.4 million. Excluding Fx translation loss, its adjusted EPS came in at $0.32 per share, 52% higher than the EPS of $0.21 last year. For the full year, the company expected its business to continue the growth. In 2013, the estimated capital expenditure was around $22-$23 million to invest in new landfill space construction in Quebec and Texas as long as to purchase land in Texas for the business expansion in a long run. The EPS was estimated to stay in the range of $1.45-$1.55 per share, with a growth of up to 12%. At the current price, US Ecology also pays a good dividend yield, at 2.7%.

My Foolish take

Personally, I do not like Horsehead from the quantitative analysis. Horsehead is not cheap in terms of both earnings valuation and price-to-book valuation. Moreover, Horsehead could be considered an indirect commodity play on zinc and nickel volatile market prices. Among the three, I like Teck Resources the most, due to its lowest valuation, juicy dividend yield and the potential share buybacks within a year from now.

The article Should We Follow Mohnish Pabrai Into Horsehead? originally appeared on Fool.com is written by Anh HOANG.

Anh HOANG has no position in any stocks mentioned. The Motley Fool recommends Horsehead Holding. The Motley Fool owns shares of Horsehead Holding and US Ecology. Anh 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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