Iron ore miners provide a significant contribution to the Australian economy. With companies such as BHP Billiton Limited (ASX:BHP), Rio Tinto Limited (ASX:RIO) and Fortescue Metals Group Limited (ASX:FMG) playing a material role in many investors' portfolios. Even if you are not an active investor, you are still likely to be affected by these stocks through your superannuation funds.

It is therefore not surprising that the recent drop in the iron ore spot price to below $USD100 per tonne has caused much panic within the market. However for the following five reasons I believe the panic has been over done and longer term prospects for these miners remain strong.

1)     Profit margins remain healthy above $USD80 per tonne

Australian iron ore producers are some of the most cost effective producers in the world. With cost of production (including shipping) well below the current  spot price these iron ore miners remain profitable at these levels. Many industrial and retail based companies could only dream of the margins available to the major miners.

2)     China is still growing

With such panic you could be mistaken for thinking China is no longer growing. However not only is the economy growing, the IMF has forecast growth of 7.7% and 7.3% for 2014 and 2015 respectively.

3)     Healthy balance sheets

Take Atlas Iron Limited (ASX:AGO) for example, which has seen its share price fall a dramatic 35% this year. With a market capitalisation of only $677 million, low debt and cash at bank of $372 million, investors should think twice before hitting the panic button.

4)     Increase in production capacity

Many fear that the investment made by miners in expanding production capacities will result in further oversupply. This is true to an extent, but will be largely offset by the lower cost of production.

5)     Mr Market has already factored in much of the downside risk

The sharemarket generally anticipates events before they take place. Therefore the current slump in the iron ore spot price has already been factored into the share price. History has taught us that the best time to buy a stock is generally at the bottom of a cycle when all the bad news is on the table.

Further upside could exist with any consolidation that could take place within the sector. Take Atlas Iron for example, with a price to book ratio of only 0.42 and substantial cash at bank it could be a takeover target.

The post 5 reasons not to overreact to the falls in the iron ore spot price appeared first on The Motley Fool Australia.

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Timing is often the forgotten variable when buying or selling a stock. Not only do you need to buy a company with the right growth prospects you must also buy it at a point in time when it offers you appropriate value for the risk you are undertaking.

Below are three volatile stocks where picking the right time to buy, hold or sell could provide your portfolio with significant returns or protect your portfolio from considerable losses.

Buy: Paladin Energy Ltd (ASX: PDN)

Uranium remains the only environmentally and commercially viable energy alternative to coal. However nuclear disasters such as Chernobyl and Fukushima have many concerned around the safety of using uranium.  However the current use of uranium as a major energy source is often underestimated, uranium is used as a major energy source in many countries including America, France, Russia and China.

The uranium spot price remains below US$40/pound which is a level that simply can't support the longer term exploration and mining of uranium. The uranium spot price has a volatile history and with a number of nuclear reactors coming on-line and being approved for commissioning, I expect the uranium price to be back to US$80/pound within the next 12 – 24 months, as supply begins to fail meeting demand.

Paladin has somewhat concerning debt levels, however if the uranium price does climb back to US$80/pound and above, then Paladin is in a prime position to benefit. You may need to be patient and have a medium to long-term view but if the supply of uranium does dry up as expected then Paladin should see its share price climb back above $1.

Hold: Ten Network Holdings Limited (ASX: TEN)

Back in October 2013 I wrote an article supporting a speculative buy of Ten. I expected the continued move into sport with the rights to the domestic T20 cricket series and the Winter Olympics to result in significant upswing in the network's dwindling ratings. As a result, I saw value in the stock particularly considering the company had recently locked in a $200 million debt facility thanks to the support of key shareholders including Lachlan Murdoch.

My assumptions proved to be somewhat correct. The Winter Olympics and domestic T20 cricket series proved popular with the viewers, however Ten did not fully capitalise on these ratings. The share price spiked from approximately $0.27 to a high of $0.37, representing a 37% rise to anyone lucky enough to exit at the top of this price range.

If Ten can continue securing the rights to these key sporting events and continue to work on their struggling news programs I believe the ratings can only go up and the upside remains considerable, however for now, I would recommend placing Ten on your watchlist.

Sell: Vocation Ltd (ASX: VET)

Vocation operates in the Australian education and training market providing amongst other things certificate and diploma based training. Since listing the share price has performed strongly and remains at the top of its trading range. Recent results also indicated strong student enrolment numbers and results at the top end of prospectus guidance.

However, with a market capitalisation of $484 million I see little upside and considerable downside to Vocation. The industry is highly regulated and has a recent history of unexpected fundamental changes that have already resulted in the closure of a number of training organisations. With significant reliance on key government contracts I would consider taking any profits made for those who invested through the IPO.

Foolish takeaway

The volatile nature of the above stocks provides an opportunity for significant gains and losses. Consider adding the above stocks to your watchlist and when the time is right you may choose to add these to your portfolio.

The post Paladin Energy Ltd, Ten Network Holdings Limited and Vocation Ltd: Buy, hold or sell? appeared first on The Motley Fool Australia.

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For investors looking to take on greater risk in their portfolio, these three mining stocks could provide the reward you are looking for. All three companies mine a different commodity and the poor recent company and share price performance is a direct result of the soft underlying commodity price they depend upon. Therefore the success of any investment in these companies will be determined by the timing of that investment.

Mincor Resources NL (ASX: MCR)

Despite the company's share price falling from $5.19 a share in 2007 to $0.65 cents today, I believe this is one of better managed small-caps. The fall in the share price has been a direct result of the fall in the nickel price, which is the primary commodity the business mines.

So why do I believe this is one of the best managed small-cap miners?

• Market capitalisation of $120 million.
• Regular and long term dividend payer despite tough operating conditions
• Total dividends paid to date of $128 million
• Once-only equity raising of $5 million
• No debt and cash of $57 million
• Total profit to date of $212 million

The above set of figures confirms that management cares for and looks after shareholders like boards should but rarely do. The missing ingredient to date has been an upswing in the depressed price of nickel. The good news is that nickel is showing signs of recovery, if this recent uptrend continues this would be a stock to have in your portfolio.

Cockatoo Coal Limited  (ASX: COK)

Investors in the company have had a tough time since 2011 when a major shareholder's (SK Networks) deal to fund the business fell through. This left the business on the brink of collapse despite having a significant coal resource.

The coal price remains at historically low levels and the outlook for the commodity is mixed amongst brokers. Coal is not the environmentally preferred energy option, but it is one of the few cost effective energy solutions that exist to power the growing population. If no alternative energy options eventuate than the coal price will go up.

The company's flagship Baralaba coal mine appears to be undervalued by investors when compared to competitors' mines. The company is in the process of expanding production from 0.75 million tonnes per annum to 3.5 million tonnes per annum. This significant increase in production will lower the overall cost of production and any upswing in coal prices could result in significant appreciation in the company's dwindling share price.

Paladin Energy Ltd (ASX: PDN)

I remain a believer in the merits of uranium energy. Whether the industry can overcome the fear and misunderstandings of the general public remains a key challenge to the world taking up this cost effective and environmentally friendly energy alternative.

The Paladin share price has shown some recent signs of a rally, however any real appreciation in share price will only occur if the uranium spot price finally begins to rise to viable levels for uranium explorers and producers.

The Japan and China outlook is positive with a number of reactors coming back on-line and more new reactors planned than ever before. The fears of the Fukushima disaster are finally starting to disappear which was the catalyst for the uranium spot price falling so low. At current levels no uranium mines would be able to sustain operations, therefore I expect the spot price to steadily climb for the next few years.

If the uranium spot price does climb higher, Paladin shareholders would be in the best position to benefit.

Foolish takeaway

Many investors stay away from mining stocks due to the volatility in the underlying commodity prices. However volatility is what provides investors with an opportunity to make strong returns over and above what can be achieved through most other investments. The above three stocks are not without further risks, however much of the likely downside has taken place and for that reason this Foolish investor has them all on his watchlist.

The post 3 cheap mining stocks with significant upside appeared first on The Motley Fool Australia.

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The stock market is stuck between 5,000 and 5,500 points looking for a reason to break out on either side of this trading range. Many investors may rightly question why our market remains a long way off its all-time high of 6,873 points when many other markets around the world are reaching new all time highs.

All we can do as investors is use the information we have available to make informed decisions as to which stocks to buy, hold or sell. Below are my personal recommendations. [Please note: As always, the opinions expressed on Fool.com.au are the writers' own and do not necessarily represent the opinion of Motley Fool Australia.]

Buy: Atlas Iron (ASX: AGO)

This is a favourite stock and sector of mine and one that I remain bullish on. Iron ore spot prices recently jumped to U.S. $116.90 a tonne. This price movement takes it back to the levels it was sitting at prior to the March 'flash crash'.

Atlas is my pick in the sector because it trails the performance of its rivals and to date I believe this is unjustified. Atlas has continued to meet and exceed guidance, has a debt-to-equity ratio of under 20% and is generating strong cash flows that can be used to pay off the remaining debt, grow the production capacity of the business or return funds to shareholders.

Trading at a price-to-earnings ratio of less than 9 and a price-to-book ratio of only just above 0.5, I think this stock appears a screaming buy. I expect the stock to trade back to $1.30 a share in the near to medium term and over $1.50 per share in the longer term depending on stability of the iron ore spot price.

Hold: QBE (ASX:QBE)

The great Warren Buffett loves insurance companies; he sees them as a huge pool of cash. I generally agree, but unfortunately for QBE shareholders the management team — once seen as a key strength of the business — has repeatedly disappointed the market. However it is looking increasingly likely that the new management team has taken a highly conservative view and swept out all the bad news in recent times.

Insurance margins have been consistently falling and the low interest rates in America have been to blame for the poor returns made on cash held by QBE in recent years. However this previous market darling could be on the road to recovery, and if so, the share price could quickly recover lost ground.

If the next reporting period indicates an improvement in insurance margins and financial performance, I will be carefully reconsidering my view on QBE.

Sell: Coca-Cola Amatil (ASX: CCL)

Many are viewing the recent price weakness in Coca-Cola Amatil's share price as a buying opportunity. I don't share this view. Coca-Cola Amatil has an exclusive license to the famous Coke syrup, which should almost be a license to print money. However the business has been reporting poor financial results and the guidance provided is not overly encouraging.

My main concern with Coca-Cola Amatil is that it is carrying significant debt. With a debt-to-equity ratio above 150%, it is one of the more highly debt-leveraged businesses operating on the ASX. Further, a pet peeve of mine is companies returning dividends to shareholders when they have significant debt balances. In my opinion, it is in the shareholders' interest to protect the long term viability of the business by maintaining a healthy balance sheet prior to the payment of dividends.

Cocal-Cola Amatil has a clear path to growth, which includes taking a larger market share of the alcoholic beverages market by utilising its extensive distribution network. Another growth option is the expanding presence in the wider Asia Pacific region. Until Coca-Cola Amatil cleans up the balance sheet and provides evidence it is able to best utilise its valuable assets, I feel it's a sell.

Foolish takeaway

The key ingredient when picking winning stocks is to stay away from dangerously high debt and buy into stocks that have a clear path to growth. Don't be fooled by dividend yields or strong brand names; look at the financial health of a business before parting with your hard-earned cash.

The post Atlas Iron, QBE and Coca-Cola Amatil: Buy, hold or sell? appeared first on The Motley Fool Australia.

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A share portfolio for a serious investor should be well planned and thought out. For example an older investor nearing retirement age should switch to a defensive portfolio that invests in established, low-risk, dividend-paying companies.

Below are seven stocks that are on my radar or in my portfolio — combined, they provide coverage of a number of industries. They may be worth consideration to an investor looking to take on more risk within their existing portfolio.

1. Newsat Limited (ASX:NWT)

Newsat is an emerging player in the telecommunications market. The company is about to go through a major transformational event, the launch of its first satellite. This should create a significant step change in earnings and margins.

2. Atlas Iron (ASX:AGO)

To be fair, I should admit that I am an iron ore bull. I have been for a while and I am yet to be convinced that the strong times are nearing an imminent end. Atlas has performed poorly against its peers, but from my research there is little justification for this underperformance, thus creating a buying opportunity. As production grows, the cost of production will fall and the margins will grow. I expect strong cash flows from this emerging powerhouse.

3. Mermaid Marine (ASX:MRM)

The recent sell-off following a major acquisition has created a buying opportunity. Mermaid is operating in a difficult sector but with the oil and gas prices remaining strong, I have faith that the share price will slowly climb back to above $3.50.

4. Applabs Tech Limited (ASX:ALA)

A unique business in a growing market. Applabs builds and funds new smart phone applications. This is a high-risk stock pick but if it can stumble across the next "Angry Birds" application, then the upside could be substantial.

5. Bentham IMF Limtied (ASX:IMF)

Listed ASX companies operating in the legal sector have been performing exceptionally well. IMF has underperformed versus the industry, however much of this may be due to a misunderstanding of its business model. If it can maintain its current settlement/win record than expect the share price to be re-rated in the coming year.

6. Starpharma Holdings Limtied  (ASX:SPL)

A biotech company that has products in the market and more not far away is hard to find. Starpharma recently announced a commercial deal with a major Japan condom maker. It appears undervalued and has strong growth potential.

7. ISHS CHINA ETF (ASX:IZZ)

iShares FTSE China 25 provides shareholders with instant diversification with the fund attempting to follow the performance of a number of large listed Chinese companies. I generally believe I can match or beat the performance of a fund manager, however the red tape involved in investing overseas generally makes such investments too onerous for everyday investors. This is a great way to purchase a diverse set of stocks in an economy predicted to grow at a rate in excess of 7% per year.

Foolish takeaway

The above portfolio is a real mixed bag, and geared for growth but not without taking on considerable risk. I may be foolish to name stocks out of favour or those that don't receive the same coverage as others, however each stock listed here can bring something different to an investor's portfolio. Look to add these stocks to your watchlist and when you become more comfortable with their business, you may look to add these to your own portfolio.

The post Your instant 7-share high-growth portfolio appeared first on The Motley Fool Australia.

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The key reasons Mermaid Marine was able to outperform others in the industry included:

• A strong oil price which remains above U.S. $100 a barrel
• Key long-term contracts with some of the largest oil and gas producers in the world
• A management team that has a proven track record on improving earnings
• Debt to equity levels under 35%

So what caused the eventual share price fall to $2.28? In the recent weeks, two key events have taken place — the release of half-yearly results and the announcement that Mermaid Marine will acquire Jaya (a large Singapore-based competitor).

The half-year results were not terrible, but they did confirm that margins were being squeezed and as a result, despite a solid rise in revenue of $26 million (14.2%) profit before tax fell $5.9 million (29.3%). However much of the performance can be attributable to the delay in the commencement of key contracts, indicating that it is largely a timing issue and these revenues should flow through in the coming period.

One key highlight was the securing of major contracts that are likely to result in stronger financial performances in the coming years. Other highlights included gearing of only 32.2% and an increase in cash to $64.2 million. Management confirmed second half performance was likely to be stronger and noted the impending number of large Australian LNG projects to be constructed in the coming years. Net tangible assets per share as of 31 December 2013 rose to $1.72 or up 17.8%.

The second key event in recent weeks was the announcment that Mermaid Marine would acquire Jaya at a cost of $550 million. The acquision provides Mermaid Marine with immediate scale in the Asia Pacific region. The business comprises of 27 vessels in operation across southeast Asia, the Middle East, West Africa and more recently East Africa as well as six high specification vessels under construction and scheduled for delivery into the fleet in 2014-2016. The Jaya companies generated revenue of $121 million and EBITDA of $57 million for the 12 months ended 31 December 2013.

All things considered, I think the financial results were solid. Margins were always going to reduced, but to increase revenue provides comfort that Mermaid Marine will benefit when the industry picks up and margins return to longer term averages. That said, Mermaid Marine is still profitable and achieving reasonable returns on its many assets.

I am also a supporter of the acquisition of Jaya, I believe the scale it provides will assist Mermain Marine in becoming more cost-effective in running its operations. Significant synergies should be achieved, and it will be better placed to service the large customers it has on its books.

Foolish takeaway

Mining services companies have understandably been out of favour. But Mermaid Marine is operating in an idustry where its key commodity, oil and gas, has remained at historically strong levels. In a market offering little value, the recent pull back in the Mermaid Marine share price to prices not seen since 2009 offers a strong buying opportunity.

The post Mermaid Marine Australia Limited: A buying opportunity for long-term investors appeared first on The Motley Fool Australia.

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Atlas Iron (ASX: AGO) released what I thought to be impressive results on Tuesday. However, the market reacted by pushing the share price down from recent highs of $1.18 earlier this month to a closing price of $1.01 today. Admittedly there are macro environmental factors affecting all stocks, including Atlas Iron, such as the much speculated future iron ore price.

Atlas Iron's half-year results included:

• Record revenue of $588 million (up 104%)
• Underlying EBITDA $200 million (up 912%)
• Statutory profit $74 million (compared to FY13 loss)
• Record 5.1 million tonnes shipped iron ore (up 53%)
• Cash on hand of $389 million (after spending $201 million on investing activities)
• A 3% reduction in cash costs per tonne of iron ore mined
• Forecast production increase with the Mt Webber expansion approved

Considering Atlas Iron is one of the largest iron ore miners not to have rail access, its costs of production and shipping are competitive and these are forecast to continue to decrease as production increases. Further, a deal providing rail access to move iron ore (versus using road trains) would significantly improve its all-in cash costs and would surely be welcomed by the market.

The financial results, production results and forecasts alone make Atlas Iron a compelling investment, however when compared to its peers the value gap appears significant:

As mentioned above, there are a number of factors affecting listed stocks, many of them outside the control of management. Further, no two companies are ever equal, however the above comparison does illustrate what appears to be a a significant discreprancy between Atlas Iron versus its peers.

Therefore the question is whether Atlas Iron represents significant value or is it a value trap? If I knew this answer without a shadow of a doubt, I wouldn't be writing this article. However for what its worth I believe it just may represent value and I expect the share price to rally back to a price closer to its current net tangible asset (NTA) per share of $1.67.

One further point to consider is the possibility that one of the bigger players will make an play for Atlas Iron, which currently has a market capitalisation of $970 million. If this was to happen, I would assume a take over price of $1.50-$2.00 would be required for the board to recommend any such approach to its shareholders.

Foolish takeaway

So how do I explain the recent poor performance of Atlas Iron's share price? I can't. I will therefore be putting it down to Mr. Market, who, as stated in Benjamin Graham's 1949 best seller The Intelligent Investor, is often irrational. This approach has made Warren Buffett one of the richest people alive. Yes, the iron ore price may fall as has been predicted for many months (but has yet to materialise) but with competitive costs of production, Atlas Iron should be able to weather any falls until the smaller players leave the market.

The post Atlas Iron: A good buy or a value trap? appeared first on The Motley Fool Australia.

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Qube Holdings (ASX: QUB) is a leading provider of logistics solutions operating across multiple industries, focusing on export and import supply chain activities. The business is effectively made up of two divsions, logistics and ports & bulk.

Qube Holdings has had a relatively short existence — the company was originally listed as a trust in 2007. From 2007 to 2009, the share price fell to a low of $0.44 as a result of the economically challenging times, particularly for any business holding significant debt balances.

Since 2009 the share price has steadily climbed and has recently been trading over $2 a share. The steady price rise and impressive 12-month share price chart has caught the attention of many technical traders who have started to follow this company.

A number of analysts have neutral recommendations on Qube Holdings, citing a high price-to-earnings ratio and debt levels. However, the high quality assets held by Qube Holdings are entering a period where they will be generating significant free cash flows which will likely be used to pay down debt and eventually increase the dividend yield.

Qube Holdings has generally beaten analyst forecasts and I believe this trend will continue. Both divisions require a continued increase in actitivies across Australian ports; therefore the business is linked to general business and consumer confidence which remains high.

Another advantage to buying Qube Holdings is diversification is that this one stock can bring instant diversification to your portfolio. Revenue from the logistics division is evenly spread across a number of industries including retail (26%) and agriculture (23%), while revenue from the ports and bulk division includes iron ore (16%), vehicles (11%), coal (11%) and concentrates (11%). So while Qube Holdings has its hands in some booming industries including iron ore it is not overly reliant on any one particular area.

Qube Holdings has proven to have resilient earnings despite a soft economy and is emerging as the preferred investment amongst its peers. Making it a more attractive proposition to many is its links to iron ore, particularly in the Pilbara region where all iron ore passes through its ports.

Qube Holdings is often identified as a mining servies provider, which is not accurate. Further, the portion of its revenues from the mining industry are more resilient than any mining services provider as it profits from production but is not affected by cut backs in capital expenditure or the reduction in exploration budgets.

The less-risk-tolerant investor could wait on the sidelines and watch to be sure the expected cash flows do eventuate and are used to pay down debt and/or increase the dividend yield, which currently sits at 2.2%. If the debt-to-equity ratio falls under 30%, then the risk of this investment would be greatly reduced, making it an extremely appealing buy.

However, at this stage the share price is likely to be trading well above the current levels. The price-to-earnings ratio of 22 appears expensive, however, based on historical performance and management's ability to meet and exceed analysts expectations, I believe these multiples appear warranted.

Foolish takeaway

Timing is everything with an investment in Qube Holdings. With low interest rates, low unemployment, a growing population and improving business confidence, the level of imports and exports should continue to increase. With the benefit of adding instant diversification to your portfolio, there would be many more foolish things to do then to include Qube Holdings on your watchlist.

The post Why you should buy Qube Holdings appeared first on The Motley Fool Australia.

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In 2007, the uranium spot price reached a high of US$140/pound, today prices have fallen to US$35/pound. It is accepted that new projects require a spot price of US$80/pound to proceed from exploration to production.

The price spike resulted in an influx of small explorers and a growth in production plans for existing producers. This temporary change in supply, coupled with the fear created by the Fukushima incident, resulted in a oversupply in uranium. This oversupply is expected to reverse in 2014 with demand being driven by a record number of nuclear reactors being commissioned, particularly in China, which sees no other viable option but to increase its reliance on uranium to meet growing energy requirements.

Uranium is a highly efficient, clean and economically viable energy alternative to coal. For example, coal produces 1,000 grams of carbon dioxide per kilowatt-hour of electricity, versus uranium which produces no more than 21 grams for the equivalent amount of electricity. With 40% of the worlds carbon emmissions being produced through the generation of energy, the demand for uranium should increase as the climate change battle evolves.

There are a number of ways to gain exposure to the potential rally in uranium prices through listed Australian explorers and developers.

The major players are BHP Billiton (ASX: BHP), Paladin Energy (ASX: PDN) and Energy Resources Australia (ASX: ERA). For a pure play on uranium I would look at Paladin Energy. Paldin has extensive uranium resources and reserves and when the uranium price moves above US$80/pound, it will be receiving substantial operating cash flows, which can then be used to pay down debt and provide robust returns to shareholders.

There are a number of smaller players, which include Toro Energy (ASX: TOE), Energy and Minerals Australia (ASX: EMA) and Wild Horse Energy (ASX: WHE), to name a few. All these smaller players are expected to rally strongly upon a recovery in the uranium price, however only those likely to proceed to production will be worthwhile longer term investments. For this reason I would look at either Toro Energy for the fact that it's well advanced with gaining necessary approvals to mine their tenements or Energy and Minerals Australia for its impressive management team for a small-cap explorer.

Do be prepared to go through multiple capital raisings to keep these companies afloat until cash flow can be generated through production as the uranium price goes higher. The less risk-tolerant investor should watch on the sidelines and look to invest when the uranium spot prices provide solid evidence that demand for uranium has once again exceeded its supply.

Foolish takeaway

Australia is estimated to have 31% of the world's total uranium resources, making it the world's largest producer. If the Australian government supports the domestic uranium industry and the price does recover as expected, then Australia is best placed to ride what could be a very long and strong uranium bull market.

The post The impending uranium boom appeared first on The Motley Fool Australia.

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With the ASX All Ordinaries (ASX: XAO) reaching 12-month highs it is becoming increasingly difficult to find value investments. Most sectors have price-to-earnings ratios at or close to historical highs and while there are some great yielding stocks, there are few with compelling growth opportunities.

However, the ASX Small Ordinaries (ASX: XSO) has underperformed against the S&P/ASX 200 (ASX: XJO) and could represent the value many investors are looking for.

Here are my top three suggestions in the small-cap space:

1. Newsat Limited (ASX: NWT)

Newsat is Australia's largest pure-play satellite communications company. Newsat is about to complete a long journey from a satellite solutions provider & teleport operator to global satellite operator. Most importantly for investors, the margins achievable through these stages increase significantly from 10% as a solutions provider, to 75% as a satellite operator upon the launch of Jabiru-1 expected in 2015.

Newsat has the financing required and has already signed $618 million in prelaunch contracts. While the share price has rallied recently from $0.33 to a high of $0.56, the potential upside of this investment is significant.

2. Mincor Resources (ASX: MCR)

Mincor owns and operates a number of nickel mines in Western Australia. There has been little joy for any miner operating in the nickel sector, with the commodity price remaining at five-year lows.  The Warren Buffett school of investing would suggest that with all the buyers running far away from nickel sector, this could be a time to buy and wait patiently for a recovery.

Mincor management has a history of looking after its shareholders, it pays out dividends at any viable opportunity and is reluctant to issue new capital. Mincor has a healthy balance sheet with no debt but plenty of cash. This is reflected in the company's 2013 financial accounts, which highlighted a net tangible asset per share of $0.61 cents. An investment in Mincor is a gamble on the nickel price, but if the nickel price does trend upwards there would be not better place to be.

3. Shine Corporate (ASX: SHJ)

Shine is the third largest plantiff litigation firm. Since its recent listing its share price has moved in the range of $1.50-$1.80 on low volumes. Yesterday the board confirmed the profit guidenace for the 2013/2014 financial year of $21.3 million after tax, a 21.5% increase on the corresponding period.

I take comfort from the performance of another listed legal provider, Slater & Gordon (ASX: SGH). Since listing, Slater & Gordon shares have moved from $1.60 to a recent high of $4. Shine Corporate is trading with a price to earnings ratio of 13 versus Slater & Gordons price to earning ratio of 16.

While management has had little opportunity to prove itself to date, it has been able to meet guidance provided upon listing, something many recent listings cannot claim. People will always need lawyers, and Shine Corporate should continue its impressive growth rate through organic growth and continued acquistions.

Foolish takeaway

Small-cap stocks are inherently higher risk than investing in a larger established company. However, they can be a great way to add diversification and growth into your portfolio when value cannot be found elsewhere. Remember BHP Billiton (ASX: BHP) was once a small cap.

The post 3 small caps with a bright future appeared first on The Motley Fool Australia.

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However, the balance sheet is arguably in better shape with net debt being paid down from $235 million to a manageable $28 million. Ten has over $250 million of vitally important cash and receivables that can be used to chase top television talent, new programs and rights to live sport to lift its dwindling share of the advertising market, which has fallen below 20%.

The headline loss figure of $281 million is enough to have investors walk out the door and never look back. But looking a little deeper, that loss is primarily the result of a $292 million impairment charge for its television licence. With new CEO Hamish McLennan taking control earlier in the year, it wouldn't be the first time a new CEO has wanted to clear the decks and take any impending hits in one swift swoop.

Ten's market capitalisation has fallen to $700 million; in contrast Nine Entertainment is expected to re-list on the ASX with a market capitalisation of approximately $2.5 billion. Even with its advertising market share falling below 20% Ten looks appealing on a like-for-like basis.

Giving significantly more confidence to an all or nothing investment like Ten Network is the fact that Ten secured a $200 million debt facility with no restrictive banking covenants attached. This was only possible thanks to significant shareholders Bruce Gordon, Lachlan Murdoch and James Packer guaranteeing this loan.

Ten operates through channel 10, 11 and 1 HD and is now leading the online push from free-to-air television providers with its online platform TENplay. While 2013 has seen some rating successes, it will need to continue to invest wisely in new programs. Ten has started to demonstrate this through the revamp of its news programs (EYE Witness News) and live sport. It has secured rights to the domestic T20 cricket series, upcoming Commonwealth Games and the Winter Olympics.

The fall in the share price will be hard to reverse in the short to medium term with large fund managers looking for consistent performers who are paying a dividend. Clearly this is not Ten, however there appears to be hope that Ten can reclaim the ground it has lost. If Ten is able to win back market share through new programs and live sporting options for viewers then the share price could quickly jump as fund managers flock back to this fallen star.

Foolish takeaway

The question that needs to be asked by any risk tolerant investor is, does free-to-air television have a future? While digital advertising is growing rapidly, it is doing so from a low base while the established $3.5 billion free-to-air television advertising market is still growing, albeit at a slow rate. I may be a fool, but I am not adverse to following in the footsteps of the Murdochs and Packers.

If you're looking for a solid investment idea, click here now to get The Motley Fool's special FREE report, "3 Stocks For the Great Dividend Boom". The report lists the names, stock symbols, and full research for our three favourite income ideas, all completely free!

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Motley Fool contributor Tim Roberts owns shares in Ten Network.

The post Channel Ten: Still the biggest loser? appeared first on The Motley Fool Australia.

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Iron ore is not an excessively difficult resource to find — in fact it is estimated that 5% of the earth's crust is made up of it. However, it is a highly capital intensive operation to successfully retrieve and transport it.

Atlas Iron (ASX: AGO) shares have been oversold following a weakening in iron ore prices from US$180/tonne to US$120/tonne. The current prices still remain at historical highs and as often happens, analysts have spooked the market by predicting more severe price drops than what actually eventuated. While it appears a short-term oversupply could occur, it would be short-lived and would not see the iron ore price drop below US$80/tonne before rebounding to the current levels.

Leading Austalian producers BHP Billiton (ASX: BHP), Fortescue Metals Group (ASX: FMG) and Rio Tinto (ASX: RIO) are producing in the US$35-65/tonne range. Therefore any temporary falls in the iron ore spot price would only weed out the uncompetitive producers and if anything, support the longer term iron ore price at or above the current levels.

Atlas Iron is producing at US$50/tonne FOB (ready to be shipped) and US$75/tonne delivered to China. Therefore, even under the conservative view that China's growth continues to slow dramatically, the iron ore prices are unlikely to fall below the cost of production.

Atlas Iron has seen its share price deteriorate close to 35% in the past 12 months, while rivals such as Rio Tinto, Fortescue and BC Iron (ASX:BCI) have seen their share prices rally 14%, 33% and 59% respectively. As with any listed company, performance is generally linked to growth opportunities and with Atlas Iron currently producing 10 million tonnes per annum  and planning on producing over 30 million tonnes by 2017 there is plenty of growth left in this story.

A key risk for Atlas Iron is to secure adequate capacity to transport its growing production to Port Headland where it will be shipped out directly to customers at the prevailing spot prices. Rail access is critical, but I am confident management will find a solution and I see this as an opportunity as much as a risk as this will ultimately bring down the cost of production.

Atlas was originally listed through an IPO in 2004 with a market capitalisation of $9 million, which now has exploded to $900 million. With five operating mines, a 3% dividend, finance in place for the next phase being Horizon II, growing reserves of 507 million tonnes and more cash than debt, Atlas Iron is in an enviable position.

Management previously mentioned the company was in danger of being taken over and this was back when the share price was around the $2 level. With the strength of the balance sheet and weakness in the company's current share price a takeover from a larger player would make financial and strategic sense.

Foolish takeaway

As always, time will tell if the bearish iron ore forecasts are overly pessimistic, but with a commodity that will always be in demand and prices that can weather a short-term fall it appears Atlas Iron warrants a place on your watchlist if not your portfolio.

Not sold on Atlas's prospects? Click here now to get The Motley Fool's special FREE report, "3 Stocks for the Great Dividend Boom". The report lists the names, stock symbols, and full research for our three favourite income ideas, all completely free!

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Motley Fool contributor Tim Roberts owns shares in Atlas Iron.

The post Should you buy Atlas Iron? appeared first on The Motley Fool Australia.

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