Monday 8 February 2010

The stock to watch in 2010!

I have been following Thompson Creek Metals for some time now and the company has taken quite a beating over the past two years. TCM is the 2nd largest Molybdenum producer in the world and it is therefore highly correlated with the Moly price.

Source: Stockhouse.com

In 2008 the Moly price reached its peak at US$ 36/lb and TCM was generating over $1.2 bn in revenues with $341 m in net profits. Due the financial crisis the price of the steel-hardening agent dropped rapidly to almost $7 in March 2009. TCM's profits dived as a result and the company's mining operations were scaled back.

Moly has recovered somewhat and TCM is benefiting big time.
The company will soon announce its full year 2009 numbers and although they won't be very exciting, expecting $ 90 m profit compared with $ 341 m in the previous year, the outlook remains very promising.

The current moly price stands at $15.10/lb and the board sees a much stronger demand for the metal in 2010. With production targets set between 29 to 32 million pounds, we can expect Sales in excess of $600 million and profits of $ 100 m to $ 200m this year.

Furthermore the company has more than $ 500 million cash with almost no debts and TCM's Price/Book ratio is just 1.48. So probably a stock to buy rather then a stock to watch!

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