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View Taylor Jordan's Comments
Cliffs Natural Resources Now Trading Near Tangible Book Value
I think that's a valid point and something investors should be aware of when evaluating risk. I tried to emphasize how important the macro picture is to this company because improvement there is what will keep it from becoming a value trap. The big difference between CLF and say RIMM (probably the most well-known value trap out there) is CLF isn't a products company with declining sales growth, it's a natural resources company. The price of iron ore is the price of iron ore and it doesn't go in and out of style the demand just fluctuates. Great point about CLF trading lower with the market (2.42 beta) because the market has held up surprisingly well and a downturn would hit the stock hard (justified or not). Long-term however the company is well positioned and reaching tangible book value is a nice catalyst to begin researching any stock. No one can predict the macroeconomic future so the best way to begin a long position in CLF may be to employ a pyramid strategy.
Jul 29, 2012. 05:53 PM
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Copa Holdings: The One Airline To Get Long
Among the airlines, I like Westjet a lot. In fact the story is similar to Copa; very low debt (0.3 debt to capital), young fleet (6 y/o), low labor costs, strong growth outlook (0.4 Projected 5 year PEG) etc. Additionally the market cap is much lower which means it could be a part of consolidation in the industry. However, I don't like the space so I would never recommend owning two airlines and I picked Copa because of the growth. Westjet's forward earnings projections are far more aggressive than what history indicates they're capable of. Additionally, Westjet's profit margins are much lower than Copa (4.8 vs. 17%). Copa has shown the growth and maintained the margins. With the Olympics coming to Brazil in 2016 I think the company will increase in value up through that date. That's my time frame for owning the stock if it comes down a little from here. Westjet is a solid company though and a much better play than the mainline U.S. airlines who will continue to gut each other's margins.
Jul 25, 2012. 05:57 PM
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