Monday, July 8, 2013

Seeking Alpha: HudBay Minerals Almost Washed Out ... And Looking Like A Bargain

The list of mining stocks doing well over the past year is quite short, and HudBay Minerals (HBM) isn't on it. Thumped by a large-scale move of investor funds out of mining and declines in commodity metal prices, HudBay has further worried investors with its upcoming capital needs, the possibility of a dividend cut, and more general product/cost issues.

On the other hand, tough times don't last but tough companies do. Very few mining companies are looking at the sort of production growth potential that HudBay has over the next three to five years. What's more, while I don't think investors can sleep on the risk that the bottomless pit that once was China's appetite for basic materials has, in fact, found a bottom (meaning that the "super-cycle" is over), no analyst is currently projecting a long-term copper price whereat HudBay can't make money.

The valuation process for mining companies is slippery and inexact. That said, even using relatively low multiples on EBITDA, low price inputs into a NAV calculation, and the company's tangible book value suggest that these shares are undervalued. Unless you believe HudBay will actively destroy value by staying in business, these shares look at least 30% undervalued and may in fact be worth 70% to 100% more than today's price.

Please follow this link to continue:
HudBay Minerals Almost Washed Out ... And Looking Like A Bargain

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