On Jan 6, we upgraded our recommendation on mining company
Cliffs Natural Resources
) to Outperform. We are encouraged by the company's cost
management initiatives which will bear fruit in the future
Why the Upgrade?
Cliffs saw higher profit in the third quarter of 2013, reported
on Oct 24, riding on its cost reduction measures and higher iron
ore pricing. However, its earnings fell short of the Zacks
Consensus Estimate. Sales rose modestly and beat expectations.
Estimates for Cliffs are on the upswing following the release of
the third quarter results. The Zacks Consensus Estimate for 2013
has gone up 9.5% to $2.99 per share. Moreover, the Zacks
Consensus Estimate for 2014 has jumped around 45% to $2.00. With
Zacks Consensus Estimates for both 2013 and 2014 going up, Cliffs
now has a Zacks Rank #1 (Strong Buy).
Cliffs remains optimistic regarding prospects for cash generation
and the opportunities that will fund organic growth projects and
return cash to shareholders. It also has a significant presence
in the Asia-Pacific region, where demand is still robust, lending
support to shipments.
Moreover, Cliffs has taken up initiatives to drive organic growth
including developing assets within its existing project pipeline.
The company is also boosting its mining and transportation
capacity globally. It sees steady end-markets for its customers
on the back of a mending U.S. economy.
We also expect Cliffs to gain from its cost-saving initiatives.
Management is focusing on improving the cost structure amid a
weak pricing environment, reflected by reduction in exploration
costs target for 2013 and cost cuts in the North American Coal
Other Stocks to Consider
Other companies in the mining industry with a favorable Zacks
Tahoe Resources Inc.
General Moly, Inc.
African Minerals Limited
). While Tahoe Resources retains a Zacks Rank #1 (Strong Buy),
both General Moly and African Minerals carry a Zacks Rank #2
AFRICAN MINERAL (AMLZF): Get Free Report
CLIFFS NATURAL (CLF): Free Stock Analysis
GENERAL MOLY IN (GMO): Free Stock Analysis
TAHOE RESOURCES (TAHO): Free Stock Analysis
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