Thompson Creek Metals Company Inc (USA) (TC), Arch Coal Inc (ACI), & Molycorp Inc (MCP): Beaten to Pulp, Now Time to Buy?

Ugly duckling turns black swan

Molycorp Inc (NYSE:MCP) is the perennial poster boy for rare earth enthusiasts, for good and bad reasons. The stock trades at a fraction of the lofty valuations seen in 2011 as the target markets of rare earth metals did not take off as initially thought. A traders’ favorite, the stock crossed $70 in 2011 but fell to single digits in the later part of 2012, and has remained in this range since. On an annual basis, the stock is down 78% although it cannot be ascertained if this is the bottom.

In the latest update, the company reported first-quarter results which were better than what the Street was expecting. Since the company is in the process of ramping up production, sequential performance is a better indicator of performance and Molycorp Inc (NYSE:MCP) seems to have delivered on this front. Its revenue improved 9% sequentially to $146.4 million during the quarter, while a loss of $47.2 million was down substantially from $362.4 million. This is still a loss-making company but latest results could offer a tailwind to the stock.

Foolish bottom line

These oversold stocks have a history of downward movement, and better results could act as a major trigger for a reversal. When the market panics, many times gems are left out for those brave investors. All three of these stocks could provide a nice return for those would have the stomach for them.

The article Beaten to Pulp, Now Time to Buy? originally appeared on Fool.com.

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