Prudent Stock: 11/28/07

(MTL) Mechel , an open joint stock company, through its subsidiaries, operates as a mining and steel company. The company engages in the production and sale of coking and steam coal concentrate, steam coal, iron ore concentrate, and ferronickel that are used in the production of steel. It also produces semi-finished steel products; carbon and specialty long products; carbon and stainless flat products; value-added downstream metal products, including hardware, forgings, and stampings; and coke and coking products. As of January 1, 2007, the company had proven and probable reserves of approximately 281.8 million tones of coal; 61.4 million tones of iron; 13.0 million tones of nickel ore; and 23.9 million tones of limestone. It operates in Russia, other Common Wealth of Independent States, Europe, Asia, and the Middle East. The company is headquartered in Moscow, Russia.

MTL not to be confused with MT (Mittal Steel also a great steel stock) has shown a consistent and predictable history of financial performance. Its current EPS is $7.54, and has a forecasted earnings growth rate of 30.00%, and a current PE of 9.93.

Given the companies forecasted earnings per share, forecasted earnings growth, profitability, given current interest, and inflation rates it should be fairly valued at a range of $130-135 per share. If you look at the chart the stock as hung in real well during the sell-off. The chart has some real strength supported by excellent fundamentals and is undervalued.



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