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10 metal stocks likely to outperform in a rally Add to ...

Analysts polled by Bloomberg estimate the company will report earnings of 30 cents a share for 2010 and 91 cents a share for 2011, a significant turnaround from a loss of 73 cents a share in 2009.

The stock has surged 63 per cent after testing lows on Aug. 24. Of the six analysts covering the stock, three recommend buying it, two advise holding it and one recommends selling it.

Alumina Ltd. , an Australia-based company, is engaged in investing in bauxite mining, alumina refining, and select aluminum smelting operations through a 40 per cent ownership in Alcoa World Alumina & Chemicals.

Year to date, Alumina surged around 27.8 per cent, ahead of a 21.1 per cent gain in Kaiser Aluminum. Over the same period, Alcoa, Aluminum Corp of China, and Century Aluminum declined 12.3 per cent, 15.9 per cent, and 8.1 per cent, respectively.

Of the 16 analysts covering the stock, seven recommend buying it, eight advise holding it and one rates it a sell.

Mechel is an integrated mining, steel, ferroalloys, and power utility based in Russia. The company unites producers of coal, iron ore concentrate, nickel, steel, ferrochrome, ferrosilicon, rolled products, hardware, heat and electric power.

The stock led the pack of major steel producers with a year-to-date gain of 42.5 per cent, ahead of Worthington's 33.5 per cent, Schnitzer Steel's 26.0 per cent, and Ternium's 6.3 per cent gains.

Mechel recently signed an agreement with South Korea-based Posco for collaborating on a mutually beneficial strategic partnership for promoting the products produced by Mechel's affiliates and Posco.

Analysts polled by Bloomberg expect Mechel's earnings to reach $2.23 a share for 2010 and $4.03 a share for 2011, a remarkable increase from the 18 cents a share reported for 2009. Of the eight analysts covering the stock, six recommend buying it and two recommend selling it.

Teck Resources, a stock cherished by analysts, is an integrated natural resources company engaged in mining, smelting and refining. The company mines copper, zinc, molybdenum, gold, and metallurgical coal in the U.S., Canada, Peru and Chile.

Teck Resources plans to increase copper production by 40 per cent from 2009 to 2013 and triple production over the next decade or so. While long-term projects likely will be expensive and complicated, CEO Don Lindsay said Teck could self-fund the projects and meet other cash commitments even while discounting current commodities prices, according to a JPMorgan report. In addition, exposure to high-growth emerging markets through copper, coal and zinc exports likely will benefit Teck in the long run.

Over the past month, the stock has jumped 14.4 per cent on rising copper and metallurgical coal prices. An increase of $10 per tonne in Teck's realized price will increase the company's earnings per share by 25 cents, according to analysts at Desjardins Securities. Of the 18 analysts covering the stock, 15 recommend buying it, three rate it a hold and one advises selling it.

The stock surged 69 per cent during the past year, in comparison with Freeport-McMoRan Copper & Gold's gain of 38.6 per cent and Southern Copper's increase of 39.3 per cent. During the same period, mining giants Rio Tinto, BHP Billiton and Vale gained 35.4 per cent, 19.4 per cent and 19.9 per cent, respectively.

Cliffs Natural Resources, a stock selling at a deep discount and listed among the top 10 mining stocks with upside, is the largest producer of iron ore pellets in North America.

Going forward, Cliffs will likely benefit from higher iron ore prices and its long-term contracts with major steel producers such as ArcelorMittal. For the 2010 third quarter, Cliffs reported earnings of $2.18 per share, up from 45 cents a share in the year-ago period. Cliffs' earnings are estimated at $6.92 a share for 2010 and $9.24 a share for 2011, a remarkable improvement from the $1.63 a share reported for 2009.

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