Why Cliffs Natural Resources' Shares Dropped

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of miner Cliffs Natural Resources (NYSE: CLF  ) fell 12% today after announcing a reduction in planned output.

So what: The company said it will delay an expansion of an iron ore mine in Quebec and shut down some production in the U.S. because of low material prices. The announcement was actually made yesterday and the stock moved slightly higher, but upon further review, investors are seeing this as a sign of long-term weakness. Analysts at Goldman Sachs (NYSE: GS  ) downgraded the stock to sell and put a $25 price target on the stock.

Now what: This is one of the few mining stocks that has been able to maintain a profit, but the price pressure it too much to handle right now. Steelmaking has slowed because of a stagnant economy, and the resulting demand decrease is now hitting results. I think this stock is worth buying on the dip, because the long-term demand trends globally aren't working in its favor.

Interested in more info on Cliffs Natural? Add it to your watchlist by clicking here.


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Comments from our Foolish Readers

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  • Report this Comment On November 20, 2012, at 5:58 PM, tsugar wrote:

    I dont understand. Why would you buy the stock if trends are not working in its favor?

    " I think this stock is worth buying on the dip, because the long-term demand trends globally aren't working in its favor. "

    Please explain. Thank you.

  • Report this Comment On November 20, 2012, at 6:19 PM, eblastman01 wrote:

    This piece doesn't make sense. Why don't you proof the stuff you intend to publish. This is gibberish.

  • Report this Comment On November 21, 2012, at 12:29 AM, monstros1 wrote:

    agreed, this article is a waste of time to anyone reading it. Hope you don't get paid for this crap.

  • Report this Comment On November 21, 2012, at 12:58 AM, pksloope wrote:

    I have to agree with the other commentators. As a subscriber to MF services, this kind of thing is not reassuring to read.

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