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MRC Global Upgraded to Buy on Sound Growth Strategies - Analyst Blog

Zacks Equity Research

On May 6, 2015, Zacks Investment Research upgraded MRC Global Inc. MRC to a Zacks Rank #2 (Buy) from a Zacks Rank #3 (Hold), primarily on the strength of its tactical business strategies.

Why the Upgrade?

MRC Global is successfully increasing its sales by enhancing the competency as well as uniqueness of its products through advanced technologies. Favorable demand conditions are, in turn, expected to drive greater revenues for the company in the upcoming quarter.

After lowering its debt burden by $105 million and generating $116 million of cash from operations in first-quarter 2015, MRC Global aims to achieve higher liquidity as well as lower liability in the near future. These goals will likely be supported by the company’s competent strategies for market share enhancement as well as cost reduction.

Further, the company continues to boost its trade on the back of lucrative organic and inorganic deals. For instance, contracts from McJunkin Red Man Corporation and acquisition of MSD and Hypteck supported growth in the company’s first-quarter international sales.

MRC Global’s revenues and margins in each market are highly sensitive to certain headwind-related issues. In order to counter the negative impact of such uncertainties, the company has introduced a new hub and spoke replenishment model within its operations. Under this plan, the company can flexibly relocate, open, close or consolidate branches according to the marketing conditions of each region, without disturbing its original distribution system.

MRC Global’s optimistic measures induced an upward trend in the Zacks Consensus Estimate over the last 30 days. The same surged 16.7% to 70 cents for 2015 and by 23.9% to 83 cents for 2016.

Other Stocks to Consider

Some other stocks worth considering in the industry include Golden Minerals Co. AUMN, AuRico Gold Inc. AUQ and Alderon Iron Ore Corp. AXX. All three stocks hold a Zacks Rank #2, similar to MRC Global.

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