Expecting a Reversal
HISTORY:
Southern Copper Corporation ("SCCO/NYSE") is one of the largest integrated copper producers in the world. They produce copper, molybdenum, zinc and silver. All of their mining, smelting and refining facilities are located in Peru and Mexico and they conduct exploration activities in those countries and in Argentina, Chile and Ecuador. Their operations make them one of the largest mining companies in Peru and Mexico. They might have the largest copper reserves in the world. They were incorporated in Delaware in 1952 and have conducted copper mining operations since 1960.
TECHNICAL:
NOT ONLY we are approaching nice technical levels to look for short opportunities, i.e.
33.20 is 50% retracement and
35.25 a 61.8% of retracement level of the impulsive leg (from 42 to 25)
AND
price is testing declining trend-line.
FUNDAMENTAL:
It seems that the fundamentals are also in favor of this trade.
The slow down in China's growth and it's declining Copper import will support this idea. You could read more on this in (harrydent.com/unpublished/)
In addition to this,
i) Southern has the highest price-to-earnings (P/E) ratio among its peer. This is a classic measure of “value,” showing Southern is currently not a good one.
ii) Southern’s price-to-sales (P/S) and price-to cash (P/C) ratios — two other measures of valuation — are also one of the highest of all copper miners.
iii) Again, Southern’s price-to-book value (P/B) is higher than each of its peers. In fact, it’s about 270% higher than Freeport-McMoRan’s and 825% higher than Sterlite, an Indian miner!
iv) Southern’s debt-to-equity ratio, a measure of its debt load, is higher than any of its peers. It’s more than four-times worse than Freeport-McMoRan’s.
CONCLUSION:
This is a long term trade, and it is most likely that this stock test the lows of 2009 below $10.
P.S.
If you liked the idea, please show interest by pushing the Thumbs up bottom, on the top left of this page.
Southern Copper Corporation ("SCCO/NYSE") is one of the largest integrated copper producers in the world. They produce copper, molybdenum, zinc and silver. All of their mining, smelting and refining facilities are located in Peru and Mexico and they conduct exploration activities in those countries and in Argentina, Chile and Ecuador. Their operations make them one of the largest mining companies in Peru and Mexico. They might have the largest copper reserves in the world. They were incorporated in Delaware in 1952 and have conducted copper mining operations since 1960.
TECHNICAL:
NOT ONLY we are approaching nice technical levels to look for short opportunities, i.e.
33.20 is 50% retracement and
35.25 a 61.8% of retracement level of the impulsive leg (from 42 to 25)
AND
price is testing declining trend-line.
FUNDAMENTAL:
It seems that the fundamentals are also in favor of this trade.
The slow down in China's growth and it's declining Copper import will support this idea. You could read more on this in (harrydent.com/unpublished/)
In addition to this,
i) Southern has the highest price-to-earnings (P/E) ratio among its peer. This is a classic measure of “value,” showing Southern is currently not a good one.
ii) Southern’s price-to-sales (P/S) and price-to cash (P/C) ratios — two other measures of valuation — are also one of the highest of all copper miners.
iii) Again, Southern’s price-to-book value (P/B) is higher than each of its peers. In fact, it’s about 270% higher than Freeport-McMoRan’s and 825% higher than Sterlite, an Indian miner!
iv) Southern’s debt-to-equity ratio, a measure of its debt load, is higher than any of its peers. It’s more than four-times worse than Freeport-McMoRan’s.
CONCLUSION:
This is a long term trade, and it is most likely that this stock test the lows of 2009 below $10.
P.S.
If you liked the idea, please show interest by pushing the Thumbs up bottom, on the top left of this page.
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