Insiders are warming up here to Molycorp (MCP - Get Report), whose rare earth products include oxides, metals, alloys, and magnets for various inputs in existing and emerging applications comprising clean energy technologies, multiple high-tech uses, defense applications, and water treatment technology. Insiders are sniffing out some deep value here since this stock has dropped 29% in the last three months.
Molycorp has a market cap of $1.99 billion and an enterprise value of $1.51 billion. This stock trades at a reasonable valuation, with a trailing price-to-earnings of 16.98 and a forward price-to-earnings of 5.5. Its estimated growth rate for this year is -8.6%, and for next year it's pegged at 169.6%. This is a cash-rich company, since the total cash position on its balance sheet is $609.79 million and its total debt is $199.30 million. After you back out the debt, Molycorp has a total of $410.49 million in cash on its books.>>8 Stocks to Help Keep the Bear Market at Bay A director just bought 12,153 shares, or about $249,000 worth of stock, at $20.50 per share. From a technical perspective, MCP is currently trading below both its 50-day and 200-day moving averages, which is bearish. This stock has been destroyed by the bears during the last three months, with shares plunging from a high of $35.79 to a recent low of $19.11 a share. During that downtrend, shares of MCP have mostly made lower highs and lower lows, which is bearish technical price action. That said, shares of MCP could be forming a bottom here since buying interest has moved back into the stock at $19.11 to $19.49 a share. If you're bullish on MCP, then I would look for long-biased trades as long as its trending above that recent low of $19.11 a share with strong upside volume flows. I would consider any upside volume day that registers near or above its three-month average action of 3 million shares as bullish. One could also look to buy strength and get long once MCP breaks out above some near-term overhead resistance at $23.07, and then above its 50-day at $24.67 a share with high-volume. If we get that breakout soon, then look for MCP to re-test and possibly take out its next significant overhead resistance level at $25.92 a share. On the flipside, I would avoid MCP or look for short-biased trades if that breakout fails to trigger soon, and then it takes out some major near-term support levels at $19.49 to $19.11 a share with heavy volume. A high-volume move below those levels will setup MCP to trade into new 52-week-low territory, which is bearish technical price action.
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