This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Molycorp: Ripe For The Picking?

Molycorp: Ripe for the Picking?

The markets have been abuzz with rumors that Molycorp's (NYSE: MCP ) recent fall below its net asset value is turning the high-potential firm into a prime takeover target.

Earlier this year, the company, which boasts the largest rare earth element (REE) deposit in the western world, increased its proven and probable reserves of rare earth minerals at its Mountain Pass, California facility by 36 percent. The updated estimate expands Molycorp's reserves to 18.4 million short tons of rare earth ore. An independent verification estimates that the proven and probable component of Mountain Pass' ore body contains approximately 1.3 million metric tons of contained rare earth oxide equivalent.

However, the company had its fair share of trouble in 2012, including slumping prices, exorbitant costs at its flagship mine and a regulatory probe; it also recorded its lowest ever share price. Those factors ensured that Molycorp's investors experienced a torrid time in the markets, with circumstances eventually snowballing to the point that the company's CEO, Mark Smith, resigned in what the board of directors described as “a natural inflection point" as the firm transitions its focus from development to ongoing operations.

Even after rebounding from a record low in November, Molycorp shares are still trading at a 19-percent discount to their book value, according to data compiled by Bloomberg. With the company currently trading well off its one-year high of $35.79 per share, many are of the impression that its currently depressed valuation could jumpstart interest from potential takeover candidates.

Potential candidates

While Molycorp has so far declined to comment on whether there is any truth to the rumors, most investors will be looking to historical market sentiment for guidance.

The company's current valuation could very well result in manufacturers, such as Nissan (TSE:7201) putting in a bid, according to a Bloomberg article that cites information from Byron Capital Markets. On a different note, Robert W. Baird & Company's recent analysis outlines that after expanding its refining and processing operations with the purchase of Neo Material Technologies, Molycorp may even appeal to private-equity firms.

1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,213.32 -75.31 -0.41%
S&P 500 2,107.84 -9.55 -0.45%
NASDAQ 4,983.7760 -24.32 -0.49%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs