Can Molycorp Outperform With a New CEO?

With shares of Molycorp, Inc. (NYSE:MCP) trading around $10.05, is MCP an OUTPERFORM, a WAIT AND SEE, or a STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

C = Catalysts for the Stock’s Movement: A New CEO

Shares of Molycorp closed down 3 percent on December 12 after announcing that its CEO, Mark Smith, suddenly left the company. Smith stepped down (resigned “by mutual consent”) in the midst of an investigation by the Securities and Exchange Commission regarding the company’s financial disclosures, and a lawsuit related to engineering deficiencies at its mine.

Catalysts are critical to discovering winning stocks. Check out our newest CHEAT SHEET stock picks now.

Shares hit 52-week lows in November after the probe was announced in conjunction with the company’s third-quarter financial results.

Constantine Karayannopoulos, the CEO of Neo Material, which Molycorp bought in March, will step in as an interim replacement. Karayannopoulos, who, unlike Smith, has a background in rare earth process and manufacturing, seems to be favored by analysts as a strong leader for the company.

T = Technicals on the Stock Chart are Weak

The stock price was recently 34.15 percent above its 20-day simple moving average, or SMA; 15.32 percent above its 50-day SMA; and 39.94 percent below its 200-day SMA.

Since the beginning of 2012 the stock price has been in a fairly pronounced downward trend, falling 52.75 percent this year-to-date and 60.80 percent year-over-year.

As a benchmark, the S&P 500 has risen 13.59 percent year-to-date, and 15.53 percent year-over-year.