For a miner, a 15 pe is more reasonable which will put CLF at $47. But if CLF would come out with some PR about future guidance, we could get a big pop now and then when earnings is released.
"The U.S. shale gas revolution is attracting a wave of investment in the steel industry, with plants under consideration or being built that would use gas instead of coal to purify iron ore, the main ingredient in steel."
Yes, the boom is attracting other pellet manufacturers to the US market such as VALE, but CLF holds the home field advantage due to the special handling of these pellets in transportation.
Had the exact same conversation with my tile installer from NC who is also my CPA (he had the same problem not playing well with others in the office). All of these people you have never heard of have PR firms working for them that place them on CNBC. This way they seem like experts when in fact all they are doing is pushing their own positions. The same applies to all those on Fast Money, just a platform to promote their positions.
I developed a product in the pet industry and I had two choices, run ads in magazines or hire a PR firm that used a media vet to pump our product on shows like the Today Show. Hands down, we got more sales off the "expert" presentation on TV. Totally bogus!
On the correction, I don't see one any time soon. It is my belief that as go housing, so goes the US economy. Housing is by far the largest industry in the US and you find it in every corner of the country, big and small. We just hit 1.1 million housing unit starts and we have room to go to get to the 1.5 historical average and 1.9 is where you should start to worry about a bubble. Having built homes for over 25 years, I have never been caught with specs in a downturn, missed some end of rallies, but that is ok.
What I am tired of is baseless projections on the short side. Every one of them make their projections that are totally void of anything tangible. Tooting my horn, maybe a little, not happening that much over the last few weeks which my wife reminds me every day. But I want to see an end to the 10% correction and the word "tapering" in the media.
Off to building cabinets now, missed the move in prior to Christmas, which again my wife reminds me every day. Have a good day and I enjoy your postings!
Now that is part of the game you play when shorts have a heavy position in a stock. You have a choice, go long with a company like CLF or go long with a company like TSLA. I see more of a chance of an upside with a company that went through a 20% correction. Especially when the reasons for the correction are not true and the result of people using the media to push their positions.
Look at all the mining stocks, they are not up that big. Look at all the stocks and most of them are up between 1 and 2 percent. You are going to see a rotation into the miners develop before the end of the year. But we didn't see the big 10% correction after the taper, did we.
As many in the media and on this board have projected that a tapering would cause a 10% correction in the market. I have posted many times over the last month that tapering would not have that effect on the market looking at the numbers. But the fear of the unknown was taken over by the media and people with short interest to drive the market down. Now that the taper has happen and the market seems to be OK with it, the shorts will need to find some other crisis to hang their hat on or start to cover. I just don't think there is many more hooks to hang that hat on. We are going to see the market shift to where good news is going to be good news. If there is any fear out in CLF's stock, it should be from the shorts and they should fear Q4 earnings!
Yeah, I figured as much after I posted the reply. But I have a minor in statistics which I got into because many of the classes were based around gaming. Now that I am in Nevada, you will not see me around the roulette wheel or dice table, but you will see me placing my bets long on CLF. The reason is the odds are much better with CLF. The same applies to building spec homes, never entered into a project unless the odds where high that I could walk away with at least a 3% profit.
Same with gold, now there is some short covering happening right now. Shorts do not operate in a straight line unless the company is going out of business. But CLF is here to stay based on current earnings. Basically, if you are earning money, you are not going bankrupt. So given the current conditions, the shorts will have no further advantage to stay with CLF and will move onto another target to beat them up in the media.
Look at their past earnings, the average price CLF sold iron ore is $112. It is because they have contracts that lock the price, so if iron ore goes down to $120 will not effect CLF other than it puts pressure on future contract prices. Where CLF makes up the difference between their lower contract price and spot is that they get an extra margin on shipping ore to the mills. Because of this advantage, they can keep foreign supplies out of the N. American market.
Plus, any move in iron ore prices one way or the other will not effect Q4's earnings, they are pretty much in the books, it now comes down to how much CLF wants to report or carry over to next year. My guess is that they will choose to just beat expectations and carry over the balance to 2014.
The big three are raising production because many of the small players have either gone under or have sold assets to one of the big three.
You have to ask yourself what has changed in construction over the last 10 years. It isn't faucets, drywall, roofing, carpet or light fixtures. It is 100 percent structural! Just pull out the code book and it takes you through excavation, foundation, framing, rough plumbing, rough electrical and rough heating. And throughout all the structural advancements it is all about adding more steel. More nails, hangers, connectors, hold downs, shear panels, steel i-beams and rebar. Where I as putting 2 bars of # 4 rebar in the footings, I now put in 3 in the footings, 3 in a standard foundation, uprights 16 inch on center, 5/8" by 8" bolts 2 feet on center. The last house I framed, I installed over 2 tons of steel i-beams. This where the industry has changed and will continue to increase the demand for steel in construction.
I left the corporate world 25 years ago because I don't play well with others. I am building in Nevada on a semi retired basis. I take on one project a year, manage it and require my client to be the superintendent and pay the bills. For this I charge them $15 a square foot and get them into a house for an average of $150 a square foot vs the $250 that builders are charging for high end homes.