Thompson Creek Metals on sale
Thompson Creek Metals Company Inc (USA) (NYSE:TC) is a diversified mining company which primarily deals in molybdenum, copper, and gold. Over the last 12 months, the stock has lost 31% as financial performance deteriorated under the effect of depressed molybdenum prices. The company’s finances were also crippled by increasing costs at its Mt. Milligan copper-gold mine, which was initially expected to involve capital expenditure of $1 billion but has already run over $1.5 billion. On the positive side, the stock is attractively placed at a 54% discount to its book value of $8.3 per share.
A forward price earnings ratio of 4.1 and a debt equity ratio of 0.72 further add to its attractiveness. However, a more important factor is the rapidly improving financial and operational performance of the company. Thompson Creek Metals Company Inc (USA) (NYSE:TC)’s molybdenum production from all mines during the first quarter of 2013 was 7.7 million pounds, up 73.8% from 4.4 million pounds in the same period last year. This sterling performance has been overshadowed by softer molybdenum prices in international markets, but the latest set of numbers is still good.
During the quarter, Thompson Creek Metals Company Inc (USA) (NYSE:TC)’ operations displayed higher production and sales volumes while still maintaining lower operating expenses. As a result, revenue fell only 4.3% to $108.7 million and profits dropped slightly from $1.1 million to $0.9 million.
Coal is another sector which has remained in doldrums for a while. Even though natural gas is still capturing market share from coal, Arch Coal Inc (NYSE:ACI) — which recently posted first quarter results — has managed to get positive rating from analysts. Goldman Sachs raised the stock from Sell to Neutral while Morgan Stanley also raised it from Underweight to Equalweight. This was because the company reported better than expected quarterly results. For the quarter ended March 31, 2013, Arch Coal Inc (NYSE:ACI) posted narrower losses on a sequential basis. Losses dropped to $70 million during the three months, down from $295.4 million in December quarter. This was despite revenue dropping during the aforesaid period.
Following the upgrades, the stock has seen better quotes although a high debt equity ratio of 1.8 still remains a concern. The stock currently trades at multi-year lows and remains deeply discounted despite the fact that natural gas prices are gradually inching up, potentially opening the field for coal.
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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