Mechel: Potential 3 Bagger?
Mechel OAO (MTL) has been trading in the $50-range about a year ago. But the stock started to plunge after the controversy between its MD Igor Zyuzin and Vladimir Putin. Adding to its injuries are the fall in coal prices and the recent market recession. The last time I checked it is trading at $8.21 with a market capitalisation of $3.05B. This compared to its 52-week high of 58.60 and low of 2.56.
However I believe this will be a potential 3 bagger in the mid term. Let me explain:
Firstly, it's ratios apart from quick and current ratios are all above the industry's average. It has a PE ratio of 1.2 at its latest price compared with industry's average of 7.20 and EPS growth rate of 48.93 compared with 19.42; Sales growth of 32.77 versus 30.64. It's a great momentum play.
Secondly using a very conservative approach, I calculated that it is worth about $21.46.
With the current general optimism that the recession has bottomed out, and with the expectations of coal, nickel, and iron ore prices rising, I expect Mechel to reach that price by early to mid 2010.
Any opinions by other users are absolutely welcomed. Thanks for your time reading this post.