Diversifying is costly and staying with the plan will help maintain or even reduce the cost of operations thus even if it would go down another to $80/ton at last quarters volume that would erode earnings approximately another $.15/share and with out the write off earnings so at higher volumes they would probably maintain earnings just for argument. However, the $80/ton that some analysts like to project will not be sustained given mines that would shut down and cyclical activity would be a main factor in it dropping to that point. Good luck with whatever you decide.
At this point I don't know when it will get to that price target. China has always maintained a higher level of activity than the analysts have projected and recently the ore prices have been relatively stable while ore inventories in the past couple of weeks have continued to decline. Last quarter showed that Vale will remain profitable while generating cash in this environment so you would hope if there is price improvement that the stock price would move also. But with our hedge fund friends out there shorting and analysts continuing to inaccurately forecast it is difficult to know when sentiment will change and the companies stock actually move to a realistic valuation. If you annualized last quarters low earnings of $.38/share you would have a PE of 1.52 and with a fair and better than many US companies PE of 14 the share price could be 21.28. At that price the current dividend yield would be 3.8%. Given all of that, why not $20.00 per share right now?
Some of us don't like paying short term gains rates and also invest just for dividends.
You seem to be arguing in circles. CLF has lost money in two straight quarters and Vale has made money in the last two quarters so how could you argue that CLF should be worth more per share?
The company makes $ .40/ share last quarter. I say at this price they don't need a turn around because that would be enough to justify a higher share price. But how will it grow? Volume, some higher price in ore since his $80/ton if it were to happen would be only short term, nickel, etc. etc.. Don't let boneheads like this give you advice and do your own work.
Long term is what is important to look at and not some measure to the past. Since you are quoting the street then you will also notice they state that return on equity is poor. If they reviewed why this is so they would take into account the equity that is idle while the new resources that are being developed start producing which skews that measurement and makes it invalid. Buy the future reality instead of some point in time financial measurement. There is a reason these experts write articles for a living and it is not because they are great investors.
I agree that this will keep prices down from where they have been for the last couple of years but since Vale and others are going down the road of more volume at a lower cost per ton the bottom line and cash generation should be fine. In their credit report it was stated that they have reserves that will last for 60 years which is excellent since most investors/analysts these days appear to think 1 to 2 years is long term.
If all is correct I believe one interested party is Marubeni. If you search Rio Colorado Potash on Yahoo you will see an article published 6/2.
I wouldn't buy this company at any price. They were inept in Guinea which got some of their rights revoked and then they try to lie, swindle and sue their way out. It is only now that they have pretended to move forward and if they don't they will probably have their remaining rights revoked. Additionally, their reserves elsewhere appear to be of a lower quality than their competitors as the continue to dump a high volume of less than 62% content. But good luck to you. Maybe if you buy enough shares you can impact the quality of your management.
The reason I am not on board with the perpetual desire for growth is that in many companies it leads to wasteful actions that reduce profitability thus the chasing of growth may actually reduce earnings if not controlled.
I think that differs for everyone. If the earnings are at an acceptable level and you are well diversified I think stable earnings are fine. If they are low for any reason then you would what there to be some percentage of growth and that of course would vary by each situation. The problem with much of the market/analysts/economists is that they seem to think growth should be unlimited and that stability is not desirable.
We should be getting news sometime soon on the sale or joint venture on the potash project soon. On June 2nd there was an article that I read that indicated that a Chinese company was dealing with Vale on a deal. If it is a sale it should bring some nice cash flow and if a merger it should put an excellent project back in motion. In my opinion either way is now a win for Vale.
No exact date but most likely the last days of July or early to mid August. Last year I think it may have been August 8.
The dividend has nothing to do with how far down they drive the stock price. It has to do with how much cash they generate. Don't know what UBS is basing there estimate on but I would think maybe if you take the U out of the name you would be very close.