NEW YORK (TheStreet) -- Metals & mining stocks are trading higher on the Fed's quantitative easing decision. In addition to an anticipated decline in the dollar index, narrowing inventory levels are supporting higher metal prices. Copper inventory on the London Metal Exchange (LME) has hit 52-week lows.These fundamentals may support metal stocks to outperform broader markets in November. During October, the S&P 500 Index gained 3.7%, while the SPDR S&P Metals and Mining ETF ( XME) surged 4.7%, outperforming the broader markets. The following 10 stocks will likely surge on an expected upside in the metals and mining space. Among others, although Metalico ( MEA) and Platinum Group Metals ( PLG) have 100% buy ratings, we did not include these stocks in this list, as only four analysts cover these stocks. Analysts prefer these 10 stocks because of their competitive positioning and stable cash flow generation abilities, coupled with a favorable outlook for base metals. In addition, these stocks are expected to gain in the range of 8%-27% over the next 12 months with a mean upside value of around 20%. The stocks are ordered on percentage of buy ratings, from great to greatest.
GGB) and Companhia Siderurgica Nacional ( SID). During the past 12 months, the return-on-equity has been 13.2%, highest among major steel producers. In comparison, U.S. Steel ( X), AK Steel ( AKS), Nucor ( NUE), ArcelorMittal ( MT), and Worthington Industries ( WOR) have RoEs of -29.3%, -8.1%, -3.8%, 0.2%, and 6.4%, respectively. The stock has the lowest EV to EBITDA among the major steel producers listed in the U.S. Of the 12 analysts covering the stock, 9 recommend buying and 3 rated holding.
MOS) for $1.03 billion. During August, Vale announced a dividend of $4.0 billion for 2010, above the consensus estimate of $2.8 billion. In addition, the management has approved a share buyback plan worth $2.0 billion over the next six months, the first share buyback since October 2008. This underscores the management's confidence in the cash flow generation abilities of the company and that the shares are undervalued. For the third quarter, strong iron ore prices and volumes boosted Vale's EBITDA to $8.8 billion, 6.2% above the consensus estimate. For the full year and 2011, the company is set to report earnings of BRL4.40 and BRL5.60, respectively, up from BRL1.97 reported for 2009. The company is trading at price-to-earnings of 7.54 times its estimated 2011 earnings. In comparison, Rio Tinto ( RIO), BHP Billiton ( BHP), and AngloGold Ashanti ( AU) are trading at 7.95, 16.18, and 13.68, respectively. Of the 25 analysts covering the stock, 20 recommend buying, 5 rated holding.
SCHN) offer dividend yields of 0.7%, 1.4%, and 0.15%, respectively. Of the 11 analysts covering the stock, 9 recommend buying, 2 rated holding.