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

Despite a 60.2 per cent gain, after the recent lows tested on July 6, the stock is trading at an attractive forward price-to-earnings multiple of 7.4. Over the past year, the stock has surged 76 per cent, while peers have returned only 31 per cent. Of the 12 analysts covering the stock, nine have buy ratings and three have hold ratings.

Allegheny Technologies is one of the largest and most diversified specialty metals producers serving major markets such as aerospace, defense, and the chemical process and oil and gas industries. The company has a diversified product mix comprising of titanium and titanium alloys, nickel-based alloys and super alloys, stainless and specialty steels, zirconium, hafnium, and niobium, advanced powder metals, tungsten materials, grain-oriented electrical steel, and forgings and castings.

For the third quarter, the company reported a 52 per cent year-over-year surge in sales to $1.06-billion. Sales during the first nine months were just $45-million below the total sales for full year 2009. "We continue to see 2010 as the transition year to the resumption of strong secular growth in our key global markets," said L. Patrick Hassey, chairman and CEO.

The company's recent acquisition of Ladish likely will boost earnings for 2011 on expanding end-market potential and cost synergies. Analysts polled by Bloomberg estimate earnings of $2.73 a share for 2011, up from 32 cents a share reported for 2009 and an estimated 91 cents a share for 2010.

Over the past year, Allegheny has surged around 54.2 per cent, while its peers have gained only 30.1 per cent. Of the 11 analysts covering the stock, seven have buy recommendations, two have hold recommendations and two have sell recommendations.

Stillwater Mining is engaged in the development, extraction, processing, refining and marketing of platinum group metals (PGMs).

The stock likely will see upside on the growing deficit for PGMs. The company has been investing in new projects such the Graham Creek Project at its East Boulder mine and the Blitz project at its Stillwater mine to leverage the anticipated uptrend in palladium and platinum prices.

Year to date, the stock has zoomed 101 per cent, in comparison with a 73.7 per cent jump in North American Palladium PAL and a 0.5 per cent gain in Platinum Group Metals.

Analysts foresee the company reporting earnings of 61 cents a share for 2010 and $1.78 a share for 2011, a turnaround from a loss of 10 cents a share for 2009. Of the nine analysts covering the stock, eight have buy recommendations on it and one rates it a hold.

Metalico, a stock with potential upside, is a ferrous and nonferrous scrap metal processor and the largest fabricator of lead-based products.

During the third-quarter earnings release, President and CEO Carlos E. Agueero said: "Although our average scrap metal selling prices fell for most categories other than non-ferrous products, our operations produced quarterly and year-to-date EBITDA margins of 10.1 per cent, meeting our internal target of 10 per cent. We remain focused on margin generation and expanding the business while meeting or exceeding performance goals. From a macro perspective, we remain bullish on commodity markets for both base metal and precious metal prices in the fourth quarter and into 2011."

Earnings are estimated to increase to 36 cents a share in 2010 and 46 cents a share in 2011, a turnaround from the loss of 8 cents a share reported for 2009, according to analysts polled by Bloomberg.

Despite a 14.8 per cent gain over the past month, the stock is trading at an attractive forward price-to-earnings ratio of 10.5. Of the four analysts covering the stock, three rate it a buy and one rates it a sell.

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