We originally recommended Cemex (NYSE: CX) on December 15, 2008 (IWB #2824) at $8.16. The stock cosed Friday at $10.61. (All figures in U.S. dollars.)
Since I recommended this stock in December 2008 a lot has happened including a near-death experience when Cemex almost went bankrupt because of a heavy debt load related to an ill-timed acquisition.
When I updated the stock last June it was trading at $9.32. Last fall it nearly reached $15 but since late January it has traded in a narrow range between $9 and $11, closing on Friday at $10.61.
The question is where does it go from here?
My main concern is that there's a tremendous short interest in the stock, which reached nearly 40% this week. If there were some significant good news that provoked a short squeeze that could propel the stock upward.
But I'm starting to get a bad feeling about this situation. As a result, I advise walking away at this point with a profit of 30% and wait to see if we get an opportunity to buy back in more cheaply near the end of the summer.
The company is still carrying a great deal of debt but despite this I like its prospects over the longer term I think we could see the price fall to the $8 range before we see $15 again. But keep an eye on this one because as the economy continues to improve the need for cement will grow also and this will become a buy again.
Action now: Sell.
Disclosure: No position