Your Best Choices for Profit in Nickel

Article Excerpt

INCO LTD. $61 (Toronto symbol N; SI Rating: Average) is the world’s second-largest producer of nickel after Russia’s Norlisk. Nickel is a key ingredient in stainless steel, which is more resistant to rust and corrosion than untreated steel. Inco is also a major producer of cobalt and copper. In October 2005, Inco agreed to acquire rival FALCONBRIDGE LTD. $43 (Toronto symbol FAL.LV; SI Rating: Average) for $10.8 billion in cash and stock (all amounts except share price in U.S. dollars). The merger will make Inco the world’s largest nickel company, and greatly expand its production of copper and other minerals. The company feels the merger will let it save $350 million a year by the end of 2007. This is a huge purchase for Inco, whose profits before unusual items grew from $0.35 a share (total $93.0 million) in 2001 to $4.15 a share ($839.2 million) in 2004. Rising energy and other costs cut profits in 2005 to $3.64 a share ($811…

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