MTL Quick Win: 58% Increase in 14 Days

Mechel OAO (MTL) is an international mining and steel company that employs over 70,000 people. Its products are marketed in Europe, Asia, North and South America, and Africa. Mechel unites producers of coal, iron ore concentrate, steel, rolled products, ferroalloys, heat and electric power. All of its enterprises work in a single production chain, from raw materials to high value-added products. On December 17th, 2014, I Know First’s algorithm listed Mechel as one of the ten best small cap stocks in the Stock Screener Based On A Predictive Algorithm forecast.

mtl quick win

In this forecast, Mechel had a signal strength of 2967.50, which is incredibly high, and a predictability indicator of -0.06. In accordance with the algorithm’s prediction, the stock price increased 59.05% over the next 14 days.

The stock price fell as low as $0.49 per share on December 16th after Russia’s economy minister said bankruptcy was a probable scenario for the metals producer. The coking coal miner and steel manufacturer is in financial trouble because it took on heavy debt in order to fund major projects just as the price of coking coal, a crucial ingredient to make steel, dropped as supply rose.

This forecast was made the next day, and had an exceptionally strong signal strength for the 14-day time horizon. The stock increased because investors viewed it as a low risk, interesting chance to make a profit. The stock has decent short-term momentum, with the stock price improving after signing a contract to revise the payment schedule for its 2.1 billion-ruble loan.

This short-term momentum comes as the company is seeing positive movement on the earnings estimate revision front as well. The steel-producer has had its predicted loss estimates narrowed for the current fiscal year by about 27%, but this had not yet been reflected in the stock price when the forecast was made. Investors are now starting to take notice, as the stock price has increased like the algorithm correctly predicted it would.