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Eye on Equities

Consolidated Thompson shares a steal as iron ore prices firm? Add to ...

If you're looking to add some more muscle into your portfolio, one play that might be worth considering is the iron ore market and TSX-listed Consolidated Thompson Iron Mines Ltd.

Desjardins Securities analyst John Redstone issued a bullish report on that market today, suggesting supply tightness will persist through 2011 amid expanding steel production and strong demand from the rapidly growing economies of China and India. On the supply side, there are only so many projects worldwide that can economically be brought into production.

Mr. Redstone raised his 2011 iron ore price forecast to $120 (U.S.) per tonne from $80 and suggested suspected moves in India to limit exports could result in the market falling further into deficit.

India typically provides about 12 per cent of the total exported material, but there have been calls recently from within the country to restrict or eliminate iron ore shipments abroad because of demand from domestic steel mills. "Certainly, we have heard reports that stockpiles of iron ore in China have been drawn down in recent weeks as shipments from India have declined. Any sustained reduction in Indian exports would obviously result in intensified tightness in the overall market," he said.

Mr. Redstone's preferred iron ore play is Consolidated Thompson Iron Mines. Its main asset is the 75-per-cent owned Bloom Lake mine in Labrador, which is still being ramped up to full production.

Upside: Mr. Redstone raised his 2011 earnings per share estimate for Consolidated Thompson to $1.85 (U.S.) a share from $1.15, but maintained his $13.90 (Canadian) target price and "buy" rating.

Viterra Inc. is set to benefit from improving agriculture fundamentals into 2012 and from the extra earnings and marketing share that will result from its acquisition last year of ABB Grain Ltd. of Australia, said analyst Keith Carpenter of Canaccord Genuity Corp.

Upside: Mr. Carpenter hiked his target by $1.50 to $12 and reiterated his "buy" recommendation.

Canadian Tire Corp. Ltd. on Nov. 11 will report a 9.5-per-cent improvement in year-over-year third-quarter earnings per share, predicts TD Newcrest analyst Jessy Hayem. The retailer will benefit from positive sales growth in all divisions, as well as margin improvements, particularly at Canadian Tire Financial Services, thanks to continued progress in writeoff rates.

Upside: Mr. Hayem raised his target by $1 to $64 a share, and continues to rate the stock as a "hold." "Further earnings improvement hinges on the success of the productivity and in-store customer experience improvement initiatives being implemented," he said.

Spot prices for uranium have surged 8.3 per cent in the past month to $52 a pound, which should help energize Uranium One Inc. stock, said UBS Investment Research. Uranium Holding ARMZ, a unit of the Russian state nuclear company, is expected to close a deal to acquire a 51 per cent stake in Uranium One by Nov. 30.

Upside: UBS raised its 12-month price target on Uranium One to $4.75 from $4.05 and rates the stock as a "buy."

Agnico-Eagle Mines Ltd. has largely resolved problems that had been plaguing the Kittila mine in Finland, shifting investor focus on cost containment at all the company's operations, said CIBC World Markets Inc analyst Barry Cooper. The company is likely to see a 30 per cent increase over 2010 production levels in the next two years as ramp-up at new mines continues.

Upside: Mr. Cooper hiked his price target to $84 (U.S.) per share from $73.

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