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Vale Stock: Strong Cash Flow Trends Pointing To Higher Share Price

Oct. 04, 2021 5:26 PM ETVale S.A. (VALE)38 Comments
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  • Shares were not able to break above multi-year highs in June of this year.
  • Cash flow trends lead us to believe however that another onslaught is on the cards.
  • We await a weekly swing before entering.
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Gran corte de mineral de hierro mina abierta

BeyondImages/E+ via Getty Images

If we look at a long-term chart of Vale S.A. (NYSE:VALE), we can see that shares tested multi-year resistance of over $20 a share in June of this year. Unfortunately for Vale, bulls, which few saw coming, shares did


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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in VALE over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (38)

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Armor Labs LLC profile picture
I think the ore they dig is of higher quality and only found in 2 or 3 places on the planet. Therefore, the demand will be sustainable.
Individual Trader profile picture
@Armor Labs LLC When China comes back, they will want Brazilian ore and not Australian -correct?
Armor Labs LLC profile picture
@Individual Trader Yes. Also, I think that geo-political problems between China and Australia will persist or even get worse. This spat favors Vale.

I also think that number of factors contributed to the -40% stock drop.

1. Evergrande crisis. 2. February 2021 Vale dam disaster. 3. Falling ore prices around -8% for the past year. 4. Resurgence of COVID/Delta.

The same factors may contribute to Vale rising.

1. Chinese government wants Evergrande to finish projects. This may drive ore demand. 2. Vale addressed environmental and safety concerns. finance.yahoo.com/... They've realized that in order to do good business, they have to be (and should be) good citizens. 3 & 4. Back to "normal" will drive demand.

Vale stock should move up. If it does not, then nothing wrong with collecting a huge dividend while waiting.

Also, some of the smartest hedge funds have been increasing their Vale bets as of late.

Baillie Gifford & Co Ltd www.bailliegifford.com
Oaktree Capital Management LP www.oaktreecapital.com
Impala Asset Management LLC www.impalafunds.com
Telemark Asset Management LLC -

(source: www.edgr.io)

Thanks for the article!
Individual Trader profile picture
@Armor Labs LLC Thanks for your excellent insights man
Maybe they ought to use some of that cash stash to resolve some safety and environmental issues.
@LEE64 They have already spent several billions for that purpose and are still spending more. Read their quarterly and annual reports. They are also spending large amount of money on “greening” their operations.
BF pellets still at 180 USD, benchmark iron ore 62% stiil above 100 USD.
So, huge cash flow on iron ore.
Restoring io capacity have some delay, but will happen.
New product in iron ore, iron brickets. Good momentum.
Nickel and copper are running well, Onca Pumpa down since yesterday, not so big exposure.
Met coal business have a good momentum, maybe a spin off of coal Mozambique.
good progress on cash drains, like VNC. Samarco had a restart.
Debt is well under control.
Dividends are always generous. Buybacks are well established.
Still some issues on the damn disaster from 2019.

In sum, enough things to do for Vale. Cash flow is still good.
Iron ore will rise again, if China restore the steel production again.
More buybacks on lower share price.
I think, a good moment to buy.
Individual Trader profile picture
@michi1711 Great insights, Thank you
@michi1711 I have a limit order for 500 shares as a starter position, it missed executing by 1 cent last night, which is fine as I'm being opportunistic and a touch cheeky as well. I've lowered my buy price again as right now, it is looking weak, the copper fire likely had a small effect. I agree, it is cheap, but looks like it might be trying to retest late 2020 lows. IO is not looking good just now, it is still elevated and could have further to run lower. I will get them, it just depends on what I end up paying for them. I have some NG and midstream shares, they have been on fire recently figuratively speaking. I do like VALE it has some risks, buying lower derricks them more and more. Your comments are very salient.
@nyc3053 Australia Derisks them hate autocorrect.
got to be better than a bond
@Individual-Trader Your chart is wrong. NYSE multi-year high is about $44 and not $22. Checked with different chart tools ;-)

SleepyInSeattle profile picture
Went down ~ 8% after div ex-date, so when I get my dividends on 10/8/202, $1.5586, I will not be very much ahead. I may dollar-cost average and buy a bit more shares with the upcoming dividend.
@SleepyInSeattle did you receive your dividend? I am in Canada and I have not seen dividend in my broker account yet..
SleepyInSeattle profile picture
@fleetwoodjazz yes, I did.
Armor Labs LLC profile picture
Yahoo finance shows Vale yielding 19% dividend. How sustainable this dividend is?
@Armor Labs LLC It's a variable dividend. TD Ameritrade had it at 3.8% back in June.
Short answer: it isn't.

VALE Dividend History

09/23/2021 CASH $1.506 09/30/2021 09/24/2021 10/08/2021
06/24/2021 CASH $0.438 06/18/2021 06/25/2021 07/08/2021
03/05/2021 CASH $0.736 02/26/2021 03/08/2021 03/22/2021
09/22/2020 CASH $0.25 09/11/2020 09/23/2020 10/07/2020
12/27/2019 CASH $0.222 12/20/2019 12/30/2019 08/14/2020
08/03/2018 CASH $0.305 07/26/2018 08/06/2018 09/27/2018
03/07/2018 CASH $0.123 02/28/2018 03/08/2018 03/22/2018
Armor Labs LLC profile picture
@Resik Thank you!
@Armor Labs LLC
Who cares as anything over 9% is great to me and there should be capital appreciation this stock could double and be dirt cheap
kingRIG2.0 profile picture
The time to buy Vale will be around $7
fortbrepoels profile picture
@kingVRX a good dream , I like the dividend 10/8/2021 $1.5586 now
The big problem for me is the pay the dividend only 2 times per year l8ike quarterly myself
Sklyazo profile picture
UBS downgraded this stock to a sell because Ore prices are projected to drop below $90.

Also they have trouble with a mine in Puma that accounts for 7% of their products. This environmental police forced the company to shut down production because the local government wants bribes for hospitals and schools.

Sounds like the governor from MI that is shutting down oil pipelines because of environmental reasons she can’t prove exist.

I think at $13 you might be safe to own shares but don’t be disappointed when dividends decline hard.
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