Thompson Creek Metals Company Inc. (NYSE:TC)

CAPS Rating: 4 out of 5

Thompson Creek Metals mines, mills, processes, and markets molybdenum products in Canada and the United States.


Player Avatar rknapton (< 20) Submitted: 6/29/2010 3:18:07 PM : Outperform Start Price: $9.06 TC Score: -159.82

TC is one of my top picks now that the stock has pulled back in price since April.

I’m long term bullish on moly producers due to its industrial applications along with the lack of massive inventories of it anywhere in the world (unlike other metals like gold). With molybdenum prices near $15, there is plenty of upside left in the underlying commodity as both more and more of it will be used in the future, along with eventually there will be an ETF that makes it easy to invest in, which will add to demand for it (like what the ETFs GLD has done for gold, PALL for palladium, and PPLT for platinum). Therefore TC being a low-cost producer of it, and a pure play within moly production, is positioned well.

Now that TC is trading at just above $9 again, the valuation is so delicious that I’m drooling (along with loading up on the stock again).

The margin of error on this is wide due to the stock trading at less than 5 times forward estimates of earnings, AND the company is sitting on over $500 million in cash, and is virtually debt free. Additionally on top of their existing Thompson Creek mine in Idaho and Endako mine in BC, they have development projects at the Mt. Emmons deposit in Colorado and Davidson deposit in BC which will provide them with future growth.

So there we have it, a cash rich company, trading at a very attractive valuation, and still has plenty of room for growth due to both an expansion of operations along with the underlying commodity may very well rise in price.


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