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June 1, 2009 Dear Friend, Some companies may exceed earnings estimates due to recent rallies in nickel, copper, lead, zinc and precious metals prices. FNX Mining, Teck Corp., FCX and virtually all precious metals shares should beat both consensus and our own estimaets. The strengthening A$, C$, rand and other resource currencies and $66 crude oil will drive up the costs of the various mining companies in particular. A small portion of the metals price rises are "cost push" in nature. Steel, aluminum, molybdenum, wood and paper companies are not participating in the earnings surge likely to benefit the second- and third-quarter results for nickel, copper, lead, zinc or precious metals companies. A clear demarkation between "haves" and "have nots" is emerging as the nickel, copper, lead, zinc and precious metals producers will feel like the recession has ended and the next rally cycle is in full force. We began to review our coverage for stocks as candidates for investment rating downgrades as share valuations grow more optimistic. Our prior Underweight ratings include Alcoa, Century Aluminum, U.S. Steel, Barrick Gold, Freeport-McMoRan Copper and Gold, Louisiana-Pacific and Weyerhaeuser. Eleven candidates for downgrades that we compare among one another include Nucor, Alumina Ltd., AngloGold Ashanti, Newmont Mining, Goldcorp, Agnico-Eagle, General Moly, BHP Billiton, Rio Tinto, Vale and Thompson Creek. Faithfully, John C. Tumazos |
Copyright © 2008 John Tumazos Very Independent Research,
LLC
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