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Strategies & Market Trends : Value Investing
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To: Spekulatius who wrote (44513)10/1/2011 3:06:56 PM
From: Spekulatius  Read Replies (3) of 78667
 
Little discussion on mining stocks that have absolutely getting hammered recently on fears of a Chinese slowdown. These stocks are dirt cheap based on current prices. Even if one were to discount metal prices another 20%, the PE ratio would be very low.

finance.yahoo.com

I own some Vale and a little bit of TC. I believe from the remainder of the list that XTA.L and Rio are the most attractive plays. I would like to hear other opinions.

One hears a lot about the Dr Copper, supposedly smart indicator. Copper is used in a lot of constructions but with all those influences from the future exchanges (don't tell me that futures don't matter because there is no physical settlement) I am wondering if anything is a reflection of anything else but expectations of players in the future markets rather than real demand right now.

I believe we should look at balance sheet leverage, including cash flow commitments from mining expansion projects, production costs and management quality. What we don't want at this point of the cycle is buy a company that runs out of money and needs to dilute at the bottom like Rio did. I know that BHP (BBL is the cheaper twin) and Vale are very safe from this perspective but I am not quite sure about the others.
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