Due to an indefinite extension of the Fed's QE program, many
mining stocks have been doing quite well as of late. Securities in
segments like gold or even silver have seen a bit of a bump in
recent weeks, while some industrial metal names have also seen
Unfortunately, this trend hasn't extended to every company in the
sector, as a few have seen pretty poor trading, despite the overall
neutral-to-positive trend in the space. In particular,
has been having both a horrendous short term, and a pretty terrible
Molycorp in Focus
MCP is a mining company based in Colorado that focuses on the
extraction of a variety of rare earth minerals. This includes
a variety of elements-such as lanthanum, neodymium, and yttrium to
name a few-that are used in a number of high tech applications such
as electronics, defense systems, and automobiles.
Yet despite the relatively low amount of these minerals on the
market and the high demand for many of the end products, MCP has
seen sluggish trading as of late. The stock has actually fallen by
more than 20% over the past month, while it has lost more than half
of its value so far in 2013. Clearly, MCP hasn't been able to
escape its recent tailspin, but is there hope for the future?
If you look at the recent trend on the earnings estimate front,
then it is pretty reasonable to assume that MCP still has plenty of
room to run lower. Not a single estimate has moved higher in the
past sixty days, while investors have seen a host of analysts
revise their earnings expectations lower for MCP lately.
This has actually pushed the consensus estimate for MCP earnings
significantly lower in recent days, keeping the company at a huge
loss for the current year. Estimates have moved from a loss of 90
cents a share 90 days ago (for the current year) to a loss of $1.22
a share right now.
Even more troubling is the 2014 forecast for the company, which was
showing a profit of 20 cents a share as recently as two month ago.
Now though, the stock is expected to lose 14 cents a share,
suggesting a drastic reversal in the fortunes for this company's
short and long term prospects.
If that wasn't enough, MCP is also in terrible company from an
industry rank perspective. At time of writing, the industry was in
the bottom five out of over 260 industries.
Thanks to this horrendous list of factors on the earnings front,
MCP has earned itself a Zacks Rank #5 (Strong Sell). And to top it
off, MCP has fallen to this level from a Rank of 3 just a week ago,
so we could see further losses in this embattled miner in the weeks
ahead, and especially at its upcoming earnings report.
The broad materials industry still isn't that great from a Zacks
Industry Rank perspective. However, there are a few companies that
appear to be well positioned.
In the steel space, investors may want to consider either
Alderon Iron (
Cliffs Natural Resources (
, both of which have Zacks Ranks of 2 right now, a step up from
their #3 Ranks a week ago. Meanwhile in the precious metal space,
Silvercrest Mining (
has earned itself a top rank in the silver world, while
Franco Nevada (
is a top ranked pick in the gold market.
Any of these companies appear to be better positioned than the
struggling MCP, and they have seen positive estimate revisions
lately too. As a result, investors might want to stay away from
Molycorp and focus on other segments of the industry for the time
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