Metals prices have declined recently from their sky-high levels. China’s slower economic growth over the past few months and decrease in demand for steel, among other factors, is partly responsible for the price decline…
Nevertheless, an increasing demand for precious metals as a haven amid growing uncertainties surrounding the global economic recovery and an increasing need for other metals for construction and infrastructure activities should benefit many metals and mining companies. In addition, the $1 trillion infrastructure bill passed by the Senate on August 10 is expected to boost the demand for metals and mining products.
So, Wall Street analysts expect metal and mining stocks Rio Tinto Group (RIO – Get Rating), Vale S.A. (VALE – Get Rating), and Teck Resources Limited (TECK – Get Rating) to rally by more than 30% in the near term.
Rio Tinto Group (RIO – Get Rating)
London-based RIO explores formines, and processes mineral resources. It owns and operates open pits, underground mines, mills, refineries, smelters, power stations, and research and service facilities. Its key offerings include aluminum, copper, diamonds, gold, borates, and iron ore.
On April 20, 2021, RIO signed a power purchasing agreement for a new renewable energy plant to power the operations of its QMM ilmenite mine in Fort Dauphin, Southern Madagascar. QMM’s President, Ny Fanja Rakotomalala, said, “This project is a strong example of our commitment with the Government of Madagascar to the sustainable development of the region.”
RIO’s consolidated sales increased 71% year-over-year to $33.08 billion for the half-year ended June 30, 2021. Its net earnings grew 271% year-over-year to $12.31 billion, while its underlying EBITDA increased 118% year-over-year to $21.04 billion. Its underlying EPS increased 156% year-over-year to 751.90 cents.
In terms of forward non-GAAP P/E, RIO’s 4.41x is 68% lower than the 13.79x industry average. In terms of forward EV/EBIT, the stock’s 3.24x is 71.2% lower than the 11.25x industry average.
Analysts expect RIO’s EPS and revenue to increase 113.6% and 50.7%, respectively, year-over-year to $16.44 and $67.25 in its fiscal year 2021. The stock has gained 18.6% over the past year to close yesterday’s trading session at $73. Wall Street analysts expect the stock to hit $103.56 in the near term, which indicates a potential 41.9% upside .
Vale S.A. (VALE – Get Rating)
Based in Rio de Janeiro, Brazil, VALE produces and sells iron ore and iron ore pellets for raw materials in steelmaking internationally. The company operates through three segments: Ferrous Minerals; Base Metals; and Coal.
On June 29, VALE announced a CAD150 million ($119.08 million) investment to extend its current mining activities in Thompson, Manitoba, by 10 years. Mark Travers, Executive Vice-President for Base Metals, said, “The global movement to electric vehicles, renewable energies, and carbon reduction has shone a welcome spotlight on nickel–positioning the metal we mine as a key contributor to a greener future and boosting world demand.”
The company’s net operating revenue increased…
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