Companhia Vale Ads (NYSE:VALE)

CAPS Rating: 4 out of 5

A leading producer and exporter of iron ore and pellets, Vale has mining operations in 21 countries.


Player Avatar barrons2010 (45.55) Submitted: 1/16/2011 4:15:36 PM : Outperform Start Price: $29.77 VALE Score: -128.98

Scott Black. Vale is the world's dominant iron ore producer, which accounts for 76% of revenue. It also produces nickel, copper, alumina and fertilizer. It is a Brazilian company but trades in New York. The company likely had revenue of $43.3 billion in 2010. Iron ore prices could rise 25% this year, lifting revenues by 30%, which translates to $4.40 a share, or 7.9 times earnings. Net debt to equity is 0.2. The company has a huge expansion in the works. Iron-ore tonnage could rise from 311 million metric tons this year to 522 million in 2015. It is driven, to a large extent, by China. Vale generates 28% return on equity. It will spend $24 billion this year on capex, and do it all through internally generated cash flow. The company will generate $500 million to $1 billion in free cash.

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