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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