Time to Bottom Fish with Vale SA?
Home  »  Community News  »  Time to Bottom Fish ...
Sep
23
Tim Lambert
Time to Bottom Fish with Vale SA?
Blog
0
, , , ,

Vale SA is a major natural resources company in the iron ore sector.

Like others such as BHP BIlliton (NYSE: BHP) and Rio Tinto (NYSE: RIO), it is suffering due to lower economic growth in China.  The recent news of the woes in the housing sector in China hurt all three.  As a result, Vale SA is down for the last week, month, quarter, six months, and year of market action (chart below).  For 2014, Vale SA has dropped by nearly 23 percent.

As with Rio Tinto and BHP Billiton, there are many appealing features to Vale SA.

It is definitely for long term investors.  There are several factors that make it appealing over the long term.  It is profitable, but not by much.  But it is not losing money.  In addition, it is carrying nowhere near the debt load of other firms

Avoiding companies with too much debt is always a wise move.

Vale SA also has a big dividend.  At present, the dividend yield is 6.82 percent.  That tops the dividend yield of Rio Tinto and BHP Billiton.  Income investors should not be too surprised if the dividend is cut for Vale SA.

It is certainly in oversold territory based on the relative strength index.

That is a measure of how the price relates to the strength of the company.  When the relative strength index is under 30, a company is considered to be oversold.  At present, the relative strength index for Vale SA is 19.82.

For those who are bullish on China, Vale SA is promising.  It has a strong presence in Latin America too as it is based in Brazil.  Earnings are expected to improve.  As previous articles have detailed, BHP Billiton is appealing for the long run due to its position in industrial commodities.  It is much the same story with Vale SA as demand from China and other emerging nations should return!

 

 

 

 



Share on StockTwits

Leave a reply

Your email address will not be published. Required fields are marked *