IAMGOLD Corporation (USA) (IAG) & More: Shorts Are Piling Into These Stocks. Should You Be Worried?

Can this stock shine once again?
Chances are that if you own mining stocks, they are down across the board over the past month. That goes double for gold miners like IAMGOLD Corporation (USA) (NYSE:IAG) that operate in Africa and whose mining costs, because of labor disputes and difficult access, run much higher than the average in the sector. But can IAMGOLD Corporation (USA) (NYSE:IAG) shine once again?

I think the answer to this is yes, but it’s definitely going to need some help from gold spot prices, and it’ll need to formulate solidly structured contracts with its labor force in Africa. Last year, AngloGold Ashanti Limited (ADR) (NYSE:AU) was forced to come to a pay raise agreement with some 10,000 striking workers, after a strike that completely closed its TauTona and Mponeng mines for months. AngloGold Ashanti Limited (ADR) (NYSE:AU) understands that higher labor costs are never welcomed from a business perspective, but the alternative of mine closures is even worse.

As for IAMGOLD Corporation (USA) (NYSE:IAG), it announced a $100 million cost-reduction program in early March aimed at cutting administrative expenses and reducing its capital expenditure budget. The point here is that IAMGOLD Corporation (USA) (NYSE:IAG) should remain profitable barring a dip below $1,000 per ounce in spot gold prices and that its strong liquidity position should provide an ample downside buffer. Yet again, short-sellers are playing with fire.

Foolish roundup
This week it’s all about trend-setting. Diana and TJX have done a remarkable job setting the tone for their respective sectors, while IAMGOLD Corporation (USA) (NYSE:IAG) has overcome incredibly difficult mining costs to continuously turn a profit.

What’s your take on these three stocks? Do short-sellers have these stocks pegged, or are they blowing smoke? Share your thoughts in the comments section below.

The article Shorts Are Piling Into These Stocks. Should You Be Worried? originally appeared on Fool.com and is written by Sean Williams.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

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