|Written by GSCR Staff
|Wednesday, 09 March 2016 06:57
In Monday’s Goldman Guide we went with the political theme and discussed who would be better for stocks as President, Hillary or Donald? We mentioned there could be significant differences in both energy and healthcare based on what these candidates have opined about so far. Last night there was another set of primaries and the momentum continued for what appears to be the eventual nomination for both by the Democratic and Republican parties respectively. The question for us is where do we look for possible value with a bet on the winner?
One item we alluded to in the Guide was President Obama’s absolute hammering of the coal industry with executive orders and expansion of the power of the EPA in the name of global warming. Nothing will probably change if Ms. Clinton elected, but Mr. Trump has promised to reverse these policies and bring coal back.
Several coal companies have or are pending bankruptcies as part of the carnage that also has cost several thousands of jobs. A coal rebound could have a very positive impact as well on that front. Cliffs Natural Resources, Inc. (NYSE – CLF - $2.72) has been clobbered since the start of 2011 when it was about $100 and over the past five years as the chart below demonstrates.
Believe it or not the short, intermediate, and long term EMA are all indicating a bullish signal for CLF. The upside for the Company is that they have survived the downturn and could be poised for a huge run if current restrictions are reversed. Enterprise Value to EBITDA is also at a low 10. Finally, Cliffs operating margin is also at 8% versus the negative 18% industry average.
Ultimately, CLF is a play on who becomes president and is more of a ‘bet’ at this point. A careful strategy may be to play it with options or wait it out until the price drops further. If the Donald, or really any other GOP candidate for that matter, is elected in November the stock could skyrocket!
Have a great day!
Goldman Small Cap Research is not affiliated in any way with Goldman Sachs & Co.
It is important to note that while we may track performance separately, we utilize the same coverage criteria in determining coverage of all stocks in both research formats. Please view the company’s individual disclosures for each engagement, which can be found in each company-specific report. All information contained in this blog, newsletter and in our reports were provided by the Companies or generated from our own due diligence. Our analysts are responsible only to the public, and are paid in advance to eliminate pecuniary interests, retain editorial control, and ensure independence. Analysts are compensated on a per report basis and not on the basis of his/her recommendations.ÂÂ
The information used and statements of fact made have been obtained from sources considered reliable but we neither guarantee nor represent the completeness or accuracy. Goldman Small Cap Research did not make an independent investigation or inquiry as to the accuracy of any information provided by the Company, or other firms. Goldman Small Cap Research relied solely upon information provided by the Company through its filings, press releases, presentations, and through its own internal due diligence for accuracy and completeness. Such information and the opinions expressed are subject to change without notice. A Goldman Small Cap Research blog, report, note, or newsletter is not intended as an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed.
This blog does not take into account the investment objectives, financial situation, or particular needs of any particular person. This blog does not provide all information material to an investor’s decision about whether or not to make any investment. Any discussion of risks in this presentation is not a disclosure of all risks or a complete discussion of the risks mentioned. Neither Goldman Small Cap Research, nor its parent, is registered as a securities broker-dealer or an investment adviser with FINRA or with any state securities regulatory authority.
ALL INFORMATION IN THIS BLOG, REPORT OR NEWSLETTER IS PROVIDED “AS IS” WITHOUT WARRANTIES, EXPRESSED OR IMPLIED, OR REPRESENTATIONS OF ANY KIND. TO THE FULLEST EXTENT PERMISSIBLE UNDER APPLICABLE LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE FOR THE QUALITY, ACCURACY, COMPLETENESS, RELIABILITY OR TIMELINESS OF THISÂÂ ÂÂ INFORMATION, OR FOR ANY DIRECT, INDIRECT, CONSEQUENTIAL, INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES THAT MAY ARISE OUT OF THE USE OF THIS INFORMATION BY YOU OR ANYONE ELSE (INCLUDING, BUT NOT LIMITED TO, LOST PROFITS, LOSS OF OPPORTUNITIES, TRADING LOSSES, AND DAMAGES THAT MAY RESULT FROM ANY INACCURACY OR INCOMPLETENESS OF THIS INFORMATION). TO THE FULLEST EXTENT PERMITTED BY LAW, TWO TRIANGLE CONSULTING GROUP, LLC WILL NOT BE LIABLE TO YOU OR ANYONE ELSE UNDER ANY TORT, CONTRACT, NEGLIGENCE, STRICT LIABILITY, PRODUCTS LIABILITY, OR OTHER THEORY WITH RESPECT TO THIS PRESENTATION OF INFORMATION.
For more information, visit our Disclaimer: www.goldmanresearch.com