Market Overview

Freeport-McMoRan and Other Mining Picks from Deutsche Bank (CDE, FCX, VALE)

The U.S. dollar has strengthened, global inflation remains mild and growth in China has slowed.

Despite the beating that commodities have taken recently because of all this, analysts at Deutsche Bank (NYSE: DB) have recommended some metals and mining stocks that investors can buy into now.

Below we take a glance at how Deutsche Bank picks Coeur Mining (NYSE: CDE), Freeport-McMoRan Copper & Gold (NYSE: FCX) and Vale (NYSE: VALE) have fared and what analysts expect from them.

Note that the recent Deutsche Bank report also recommend small cap Thompson Creek Metals (NYSE: TC), primarily a producer of molybdenum that the analysts see as attractively priced.

Coeur Mining

This Idaho-based gold and silver miner, formerly known as Coeur d'Alene Mines, sports a market capitalization of more than $1 billion. But it does not offer a dividend. Note that its price-to-earnings (P/E) ratio is higher than the industry average, and the return on equity is less than three percent.

The short interest in Coeur Mining was less than four percent of the float as of the June 15 settlement date, which was the second highest number of shares sold short so far this year. The peak was 3.9 million shares short in mid-April. The days to cover in the middle of June was a little more than two.

Eight analysts were surveyed by Thomson/First Call, and half of them recommend buying shares. Their mean price target, or where the analysts think the share price will go, indicates almost 36 percent potential upside, relative to the current share price. But that is well less than the 52-week high.

The share price is down more than 28 percent since the beginning of the year and recently hit a multiyear low. Over the past six months, the stock has underperformed competitors Newmont Mining (NYSE: NEM) and Pan American Silver (NASDAQ: PAAS), as well as the broader markets.

See also: Short Interest in Agnico-Eagle and Harmony Gold Rises

Freeport-McMoRan Copper & Gold

This miner of various mineral resources has a market cap near $27 billion and a dividend yield of about 4.5 percent. The P/E ratio is a bit lower than the industry average, and the long-term earnings per share (EPS) growth forecast is more than 17 percent. And the operating margin is greater than the industry average.

The short interest in this Phoenix, Arizona-based company was about three percent of the total float at mid-June. That was the lowest number of shares sold short since January, after dropping about 19 percent from the previous period. The days to cover slipped to about 1.5.

Fourteen of the 20 analysts surveyed recommend buying shares, and just one recommends selling. And the analysts think shares have some room to run, as their mean price target is more than 22 percent higher than the current share price. The Deutsche Bank price target indicates more than 29 percent potential upside.

The share price is down more than 21 percent year-to-date, and it also recently sank to a multiyear low. Over the past six months, the stock has underperformed the broader markets but outperformed competitors Newmont Mining and Southern Copper (NYSE: SCCO).

Vale

This industrial metals company is headquartered in Rio de Janeiro, and it has a market cap of more than $68 billion. Its dividend yield is near 5.7 percent. The long-term EPS growth forecast is almost 13 percent, but the return on equity is only about six percent. The operating margin is higher than the industry average.

The number of shares sold short as of the most recent settlement date represented more than three percent of the total float, and that was the highest level of short interest in the past year. Short interest has risen in every period since the end of January. The days to cover was more than five.

Of the 24 analysts polled, 13 recommend buying Vale shares, with five of them rating shares at Strong Buy. The mean price target indicates that the analysts see more than 36 percent upside potential. The Deutsche Bank price target is more than 39 percent higher than the current share price.

The share price is almost 39 percent less than at the beginning of the year, and shares are trading near the multiyear low. Over the past six months, the stock has underperformed the likes of BHP Billiton (NYSE: BHP) and Rio Tinto (NYSE: RIO), as well as the broader markets.

Posted-In: BHP Billiton coeur d'alene mines Coeur Mining Deutsche Bank Freeport-McMoRan Copper & GoldLong Ideas Short Ideas Trading Ideas Best of Benzinga

 

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