Facebook Inc (FB), Sprint Nextel Corporation (S), Molycorp Inc (MCP): Three Stocks to Put on Your Short List

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MCP Net Income Quarterly Chart

MCP Net Income Quarterly data by YCharts

The problem for Molycorp Inc (NYSE:MCP) is that rare earth mineral prices are inelastic. If prices quadruple, demand doesn’t change, and conversely, when Molycorp and Lynas brought mines online and increased the world’s supply, prices dropped like a rock. Long-term, this will continue to happen, and Molycorp now has fixed costs to contend with and falling revenue to pay for those costs. The mine Molycorp runs has already gone out of business once, and there’s a decent chance it will do so again given the market dynamics, so this is a great stock to be short.

The article 3 Stocks to Put on Your Short List originally appeared on Fool.com.

Fool contributor Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Facebook.

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