Insiders are warming up here to Molycorp (MCP), 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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