Inv Reporter refreshes buy of Sherritt Int'l
Inv Reporter refreshes its buy of Sherritt Int'l
2009-05-22
The Investment Reporter, in the May 8, 2009, issue, refreshes its buy recommendation for Sherritt International Corp., recently $4.79. The Reporter said buy three times between Aug. 29, 2003, and Dec. 12, 2008, at prices ranging from $3.44 to $10.75. An investment of $1,000 for each of the three buys would now be worth $2,840. In the first quarter of 2009, Sherritt earned $14.5-million, excluding a one-time loss, down from $89-million the prior year. Lower prices for nickel, cobalt, and oil and gas, were only partially offset by higher prices for thermal coal and electricity. Lower commodity prices may, however, help reduce production costs. Sherritt plans to increase cash flow from existing operations and to invest in new assets. It is still building the nickel Ambatovy project in Madagascar, and the political turmoil in Madagascar has not disrupted construction. The net-debt-to-cash flow ratio is high, but Sherritt has $790-million in consolidated cash, cash equivalents and short-term investments, and $1.6-billion in unused credit. With this and cash flow, Sherritt should be able to complete Ambatovy. Shares have risen, but they are still cheap, trading far below their book value.