Copper was the darling of commodity traders. The price rallied from about $6,400 per ton to a record $10,190 in the past year, The Financial Times reports. Momentum was strong and it looked like there was no end in sight. But now, prices have dropped off a bit and miners are worried that the rally has hit a brick wall. The main concern is that what drove drove prices skyward -- China's demand -- may be slowing, according to the FT.
One indication of the slowdown is the amount of stocks held in exchange warehouses. At the LME Asia + Shanghai exchange warehouses, copper stocks have increased from below 150,000 to over 325,000 tons. That buildup has worried miners. The companies affected are Freeport MeMoRan (FCX), BHP Billiton (BHP), Xstrada (XSRAF), Anglo American and Brazil's Codelco, according to the Financial Times.
Continue reading Miners Hedge Copper Inventories as Demand from China Slows
Cliffs Natural Resources (CLF) is a leading mining and natural resources company in the U.S., and is also the largest producer of iron ore pellets in North America. It competes with other international mining and natural resources companies like Vale, BHP Billiton (BHP) and Rio Tinto (RTP).
Cliffs' North American Iron Ore division accounts for more than two-thirds of the company's total revenue, and around 60% of Cliffs' stock value, by our estimates. Long-term contracts with customers like ArcelorMittal (MT), Algoma and Severstal ensure substantial sales of the firm's mineral produce.
Continue reading ArcelorMittal Is a Crucial Customer for Cliffs
In the mining industry, iron ore is the biggest money maker. Profit reports from the world's largest miners indicate that iron ore brings in the most money, the Financial Times
- BHP Billiton (BHP), the world's number one miner, had earnings before interest and taxes of $14.82 billion. Of that amount, iron ore accounted for $5.8 billion, up 177%
- Number three miner, Rio Tinto (RTPPF), had earnings of $26.6 billion. Iron ore unit accounted for 60%, or $16.6 billion, up 133% for the year.
Continue reading Iron Ore Tops All Commodities
Chesapeake Energy (CHK) announced it has agreed to sell approximately 487,000 net acres of leasehold and producing natural gas properties in the Fayetteville Shale play to BHP Billiton (BHP) for $4.75 billion in cash before certain deductions and standard closing adjustments. Chesapeake Energy overall option implied volatility of 34 is near its 26-week average, according to Track Data, suggesting non-directional price movement.
CBOE Volatility Index (VIX) was up 27% to 20.94.
Options Update is by stock specialist Paul Foster of theflyonthewall.com.
U.S. stock futures are mixed this morning, as investors are awaiting economic data on retail sales and manufacturing activity in the New York area. Futures on the Dow Jones Industrial Average rose 3 points to 12,227.00 and S&P 500 futures fell 0.30 point to 1,327.40. Nasdaq 100 futures gained 1 point to 2,382.75.
European markets were mixed today. While STOXX Europe 600 Index has gained 0.12%, London's FTSE 100 Index moved down 0.06%.
Asian markets ended mixed, with Japan's Nikkei Stock Average gaining 0.20% and Australia's S&P/ASX 200 moving down 0.08%.
Continue reading Futures Mixed Ahead of Retail Sales Data
Companies on a shopping spree either feel their growth is confined or they are feeling flush. In the case of Caterpiller (CAT
), which reported that it is going to buy Bucyrus for $8.6 billion
, it is the latter. The company has had a terrific year in which it has seen a 76% increase in it's growth. This rapid increase in business has pushed the PEG ratio down to a low 0.86 with the stock trading near its 52- week high.
From what I can gather, the deal between CAT and Bucyrus has merit. Does that mean this is a good time to buy Caterpillar stock? I don't think so. More often than not, stocks trading near their highs will present better entry points with greater value to the more patient investor.
Continue reading Chasing Value: Caterpillar Is Not Dirt Cheap
Canadian fertilizer firm Potash Corp of Saskatchewan
) is in the middle of a rash of takeover-related news this morning. First, Britain's Sunday Telegraph
reports that Potash is working on a break-up plan in hopes of stopping BHP Billiton's (BHP
) takeover bid
. According to the report, Potash would sell its nitrogen and phosphorous assets, pay a $70 per share dividend, and increase its debt pile.
In addition to the weekend's news, The Globe and Mail
reported Friday that Chinese firm Sinochem has approached the National Mineral Development Corporation (NMDC) about a joint bid for Potash. Sinochem is making the pitch for a joint bid because it may believe that an individual bid would be shot down by Canada's political powers.
Continue reading Potash Mulling Break-Up
What's fertilizer company Potash Corp. Saskatchewan (POT
), the subject of takeover interest and first discussed here
on March 3, 2009, at a price of $80.81, worth?
Good question. One thing is certain: it's worth a lot more than $150 per share. Potash rose $3.33 to $153.00 on Monday at mid-day.
Potash's board unanimously prudently rejected BHP Billiton's (BHP
) woeful $130 per share offer. To be sure, BHP wasn't trying to insult POT's board, but a $130 per share bid came close to achieving that ignominious result.
Continue reading What's Potash Worth?
- TD Newcrest upgraded Agrium (AGU) to action list buy from hold based on a higher valuation supported by BHP's (BHP) bid for Potash (POT). The firm raised its price target for Agrium to $95 from $76.
- Wells Fargo upgraded Weingarten Realty (WRI) to outperform from market perform, citing valuation and stronger retail occupancy.
- Deutsche Bank upgraded Aegon (AEG) to buy from hold after the company won European Union approval for its recapitalization using state aid.
- HCP Inc. (HCP) was upgraded to buy from hold at Argus.
- MedAssets (MDAS) was upgraded to buy from accumulate at Madison Williams.
- BreitBurn Energy (BBEP) was upgraded to outperform from sector perform at RBC Capital.
Continue reading Analyst Calls: AEG, AGU, MSFT, NFLX, ORCL, PTV, SPMD, WRI ...
In the wake of the BHP Billiton's (BHP) failed $39 billion offer and its new hostile $40 billion takeover bid for Potash Corp. of Saskatchewan (POT), agricultural fertilizer companies, including CF Industries Holdings (CF), are starting to look pretty juicy to investors.
Fertilizer companies have been struggling during the past few years as cash-strapped farmers have been pulling back on their purchases, but the tide appears to be changing.
With rising prices for crops like wheat and corn, it is starting to look like it is going to be a really good year for U.S. farmers, which means they are going to have plenty of money to reinvest in new machinery and more fertilizer.
Continue reading CF Industries Growing as Fertilizers Heat Up
) has turned down a takeover offer
by BHP Billiton Limited (BHP
). According to the Canadian giant, the deal was rejected because BHP's bid was "grossly inadequate." POT's board unanimously rejected BHP's offer of $130 per share in cash -- noting that the offer does not accurately reflect the value of POT's position in the industry, the value of planned expansions, and the value of POT's investments. The $130-per-share offer is a 16% premium over POT's Monday close of $112.15.
It sure seems that BHP was trying to score a major takeover with a lowball offer. Unfortunately for BHP, POT noted that there is a turnaround taking place in the fertilizer sector and BHP was simply trying to take advantage of the company.
Continue reading Potash Turns Down BHP Billiton Takeover Offer
- BMO Capital upgraded Intercontinental Exchange (ICE) to Outperform from Market Perform based on valuation and the company's growth outlook. The firm has a price target of $125 on the stock.
- Morgan Keegan upgraded WESCO (WCC) to Outperform from Market Perform ahead of Thursday's earnings report based on valuation and expectations for stronger than expected sales.
- Keefe Bruyette upgraded Bank of Marin (BMRC) to Outperform from Market Perform with a $40 price target following the company's Q2 results.
- BHP Billiton (BHP) was upgraded to Overweight from Equal Weight at Barclays.
- PPG Industries (PPG) was upgraded to Overweight from Equal Weight at Morgan Stanley.
- Schnitzer Steel (SCHN) was upgraded to Buy from Neutral at UBS.
Continue reading Analyst Calls: ICE, BHP, PETS, GLW, TEL, SFLY
- ThinkEquity upgraded Yahoo! (YHOO) to Buy from Hold based on valuation, checks that indicate Q2 display/search improvement, search stabilization, improved cost structure, and share repurchases.
- Societe Generale upgraded Roche Holding (RHHBY) to Buy from Hold based on expectations Avastin will be approved in breast cancer, despite negative FDA briefing documents.
- FBR Capital upgraded Atheros (ATHR) to Outperform from Market Perform based on valuation and positive checks that indicate powerline networking chips are gaining traction in China. The firm has a $43 price target on the stock.
- Juniper (JNPR) was upgraded to Buy from Hold at Canaccord.
- Ultimate Software (ULTI) was upgraded to Buy from Hold at Roth Capital.
- Liberty Property Trust (LRY) was upgraded to Market Perform at Wells Fargo.
- Auriga downgraded ADC Telecomm (ADCT) to Hold from Buy following the company's merger announcement with Tyco Electronics (TEL).
- TD Newcrest expects Manulife's (MFC) Q2 loss to be worse than expected due to the impact from lower interest rates. The firm cut shares to Hold from Buy.
- Goldman downgraded Perrigo (PRGO) to Sell from Neutral and lowered its target to $50 from $61. The firm cites relative valuation for the downgrade. Target to $50 from $61.
- F5 Networks (FFIV) was downgraded to Hold from Buy at Canaccord.
- Anglo American (AAUKY) and BHP Billiton (BHP) were downgraded to Neutral from Outperform at Credit Suisse.
- QKL Stores (QKLS) was initiated with a Buy rating and $7 price target at Global Hunter.
- Rodman & Renshaw started Rick's Cabaret (RICK) with an Outperform rating.
Next Page »