Up 40% in 5 days, have you missed the potential of this ugly duckling?

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“A bargain”

“Possibly the best value stock on the market”

“A sure bet to riches”

“Fundamentally a brilliant company”

None of the phrases above have been used recently for this month’s top performing stock. That top performer, which has handily beaten the 1.4% rise of the ALL ORDINARIES (Index: ^AXAO) (ASX: XAO) over the last week, is iron ore minnow BC Iron Limited (ASX: BCI).

A return to good fortune?

The company’s shares popped another 12% yesterday, taking the five-day rise to an incredible 40%!

Unfortunately, it’s not all sunshine for the long-suffering shareholders of one of Australia’s struggling iron-ore exporters. A quick look at the most recent iron ore cost-curve produced by analysts at UBS points to BC Iron having a break-even production cost of US$62, well above the current benchmark price of around US$55.

What happened?

There was no news released to the market on Monday to compensate for the share price rise. However there is speculation that a bulk iron ore transport system will be developed on land owned by BC Iron, and that the company could charge some kind of tariff for its use.

Aside from that, BC Iron released a market update last week that appears quite promising, but investors need to remember that it’s at the expensive end of the iron ore market and movements in the iron ore price will have a large impact on the group’s (potential) profits.

How 1 Man Turned $10K Into Over $8 Million

You can bet your bottom dollar that it wasn't by investing in BC Iron. Discover how one man turned a modest $10,600 investment into an $8,016,867 fortune. Learn more about this man and how you can start down the path toward financial independence. Simply click here to learn more.

Motley Fool contributor Andrew Mudie has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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