Seeking Alpha

JP Morgan says Vale a buy, iron ore price weakness only temporary

Fears of a China slowdown have sent iron ore prices tumbling, and BHP Billiton (BHP) and Rio Tinto (RIO) are warning of lower prices through this year, but J.P. Morgan analysts maintain a Buy rating on Brazilian iron ore producer Vale (VALE -1.5%).

The firm thinks iron ore prices and could test Sept. 2012 lows of ~$87/ton, but prices below $110-$120 should be temporary as weaker prices should make high cost producers uneconomical and, together with a potential resumption in restocking at lower levels, should act as a buoyant force on prices.

Also, JPM says Vale shares already have priced in a very pessimistic scenario, and valuations are attractive even with iron ore prices at $100/ton.

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Comments (5)
  • Santyapril
    , contributor
    Comments (51) | Send Message
    JP Morgan says vale is a buy, Merrill Lynch says its a buy..But this stock keeps plummeting every month!
    11 Mar 2014, 03:56 PM Reply Like
  • CrownxX
    , contributor
    Comments (2) | Send Message
    I hate to say it, but I think the analysts are telling the truth on this one. Regardless if they have their own agenda (prop traders having a stake in VALE), they are correct. People should take a closer look at these miners. Commodities may drop but it doesn't shake the fact that these companies are undervalued in general. "it's always darkest just before the dawn" I think it applies here...the last THREE YEARS have been the "night" span...the sunlight might be as short as a couple quarters or as long as another year or two.


    It's easy to scream and panic when there is blood in the streets, but I think Buffett says that's the time to buy. Shrugs*
    11 Mar 2014, 11:26 PM Reply Like
  • Ajayyy
    , contributor
    Comments (332) | Send Message
    It's plummeting due to 2 negative relationships. It's a Brazilian stock AND it has strong ties to iron ore.


    Today was an opportunity to double down. I stepped up and tripled down. This company is going no where. I'm not concerned.
    11 Mar 2014, 04:04 PM Reply Like
  • Qniform
    , contributor
    Comments (3780) | Send Message
    I love the volatility. My $16 covered calls will likely expire unexercised, and my $12 puts if exercised will make my average cost below $11. This is a long term hold, but I love to trade around a position when it gets exciting.
    11 Mar 2014, 05:47 PM Reply Like
  • dancing duke
    , contributor
    Comments (124) | Send Message
    China is not going away nor is Brazil.
    The world will not end tomorrow.
    Good iron ore is needed everywhere on this planet
    and Brazil has some of the best.
    considering that the stock trades at a price/book of.91
    and has a dividend yield today of 6%+,I am in ,and, only need
    in all probability a lot of patience going forward
    11 Mar 2014, 07:09 PM Reply Like
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