Cleveland-Cliffs Inc. (NYSE: CLF) is the largest producer of iron ore pellets in North America, and is also a major supplier of metallurgical coal to the global steelmaking industry.
Analysts like CLF's solid fundamentals, pricing power, and high customer retention rate.
Analysts also like CLF's prospects for increased business: growth in China is driving pellet demand, with domestic iron ore accounting for only 45% of supply. Production capacity of competitors is increasing, but it's not fast enough to keep up with demand growth. The Reuters FY 2008/FY 2009 EPS consensus estimates for CLF are $5.12/$10.31.
The risks? Analysts are keeping an eye on CLF's Empire Mine, and the company's ability to de-bottleneck other facilities to compensate for depleting production at Empire, expected to be fully depleted in mid-2009
The First Call mean rating for CLF is: Buy [4 firms]. Mean 2008 target: $97 [high: $140, low: $48].
Stock Analysis: Cleveland-Cliffs is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from CLF's shares. Sell/Stop Loss if you were to purchase shares in this company: $68.
Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.
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