Cleveland-Cliffs (NYSE:CLF) broke out in a big way and is a star performer in 2019. The stock topped $11.83 last week and could head even higher. Higher iron ore prices, favorable valuations and a strong earnings report could send the stock into the teens. CLF stock started 2019 at around the $7.50 range.
Quarterly Earnings Squeeze Bears
Cleveland-Cliffs earned $2.03 a share as revenue rose 36% to $696.3 million. These solid results may finally force short-sellers to back down on their bet against the company. For a few quarters, CEO Lourenco Goncalves expressed extreme disapproval against analysts and shorts for suppressing the stock price. The positive tailwinds are led by higher market prices for its high-grade iron ore.
The EBITDA of $766 million, a level not seen in four years, is 67% above last year’s results and three-fold levels reported two years ago. Cliffs shipped 6.5 million long tons of product, up 10% from 2017. The pellet price realization of $99 was hurt by unfavorable U.S. steel prices in the quarter.
Forecast
The company expects its 20 million long tons will be sold out. The catastrophe with Vale (NYSE:VALE) in Brazil will lead to higher spot prices and could lead to even higher revenue than management expects.
Investors who doubted management or are still short (at 16.4% float) may want to start a long position in CLF stock. A pull-back may happen but will not last.
Related Stories
