By MarketBeat. Originally published at ValueWalk.
If you’re no stranger to stock news, you know the markets have experienced a rocky start in 2022. Dipping shares, rampant inflation, interest rate hikes and year-to-date shifts in the most prevalent stock market indexes.
However, certain stocks have been rocket-shipping into oblivion, such as agriculture stocks and oil stocks. In this piece, we’ll focus on mining stocks, another area that is firmly in the “boom” camp in a boom-and-bust cycle. (Check out PwC’s great information about mining trends.)
Q4 2021 hedge fund letters, conferences and more
Let’s go over why you might want to invest in mining stocks and three of the best mining stocks to put on your radar right this minute.
Why Invest in Mining Stocks?
Let’s get this out of the way: As a cyclical sector, mining stocks can add a burst of volatility if you have a buy-and-hold approach. However, if you’re looking for a more resilient stock option within our current higher interest rate environment, mining stocks could be the darling of the debutante ball.
But why? Gold mining stocks can hedge against disaster, weed out uncertainty and fear and bust the weak dollar. The bottom line is that mining stock prices don’t correlate directly to the broader market, which can definitely give you great opportunities.
Companies are looking for new uses for iron and copper and other elements to power technologies and contribute to growth potential. The key is also to find companies with the right financial position that have the ability to ride out ickier economic cycles.
3 Mining Stocks to Get Your Hands On
Here are some mining stocks you may want to consider. Consider Cleveland-Cliffs Inc., Alcoa Corporation and BHP Group Limited. Let’s dive into the details of each company so you make the best decisions about mining stocks possible.
Cleveland-Cliffs Inc. (NYSE:CLF)
Cleveland-Cliffs, headquartered in Cleveland, Ohio, is the largest flat-rolled steel company, and is also the largest iron ore pellet producer in North America. Iron making, steelmaking, rolling, finishing and hot and cold stamping steel parts and components.
In the full year 2021, consolidated revenues were $20.4 billion, compared to last year’s $5.3 billion. Net income was $3 billion, or $5.36 per diluted share, compared to a 2020 net loss of $81 million, or $0.32 per diluted share.
For the full year 2021, adjusted EBITDA was $5.3 billion, compared to $353 million in 2020.
In Q4 2021, consolidated revenue was $5.3 billion, Q4 consolidated revenues of $2.3 billion from the prior year. In Q4, the company also generated net income of $899 million, or $1.69 per diluted share. This included $47 million of charges, or $0.09 per diluted share. This compares to net income of $74 million, or $0.14 per diluted share in Q4 2020. Q4 2021 adjusted EBITDA was $1.5 billion compared to $286 million in Q4 of 2020.
Alcoa Corporation (NYSE:AA)
Alcoa Corporation, headquartered in Pittsburgh, Pennsylvania, produces bauxite, alumina and aluminum products through its bauxite, alumina and aluminum operations. The company engages in bauxite mining operations, processes bauxite into alumina and combines smelting and casting operations to produce primary aluminum. The smelting operations produce molten primary aluminum, including billet, rod, and slab.
In Q4 2021, Alcoa increased revenue to $3.3 billion, a 7% sequential increase and its highest quarterly result from the fourth quarter of 2018. The company generated $565 million in cash from operations and finished the quarter at $1.9 billion. The company recorded a quarterly net loss of $392 million and loss per share of $2.11. The company realized quarterly records for adjusted net income and adjusted EBITDA and returned capital to stockholders through $150 million in share repurchases and paid the company’s cash dividend of $19 million.
The company posted its highest annual net income of $429 million for the full year, with earnings per share of $2.26. The company generated revenue of $12.2 billion, an increase of 31% from 2020 and the highest since 2018. The company also realized a 140% annual increase in adjusted EBITDA.
BHP Group Limited (NYSE:BHP)
BHP Group Limited, headquartered in Melbourne, Australia, is a resources company in Australia, Europe, China, Japan, India, South Korea, Asia, North America and South America. The company has petroleum, copper, iron ore and coal segments to explore, develop and produce oil and gas properties and mines copper, silver, zinc, molybdenum, uranium, gold, iron ore and metallurgical and energy coal. The company mines, smelts and refines nickel and potash. The company also provides towing, freight, marketing and trading, marketing support, finance, administrative and other services.
Profit from operations was $14.8 billion, up 50%. Its underlying EBITDA of $18.5 billion at a margin of 64% for continuing operations. The company had an attributable profit of $9.4 billion and underlying attributable profit of $10.7 billion, up 77% from the prior period.
Net operating cash flow was $11.5 billion and free cash flow was $8.5 billion for continuing operations reflecting higher realized prices across our major commodities and reliable operational performance.
The company changed its net debt target to between $5 and $15 billion capital and exploration expenditure of $2.9 billion for continuing operations. The company has revised its net debt target range to between $5 and $15 billion.
The company had a record interim dividend of $1.50 per share and a record interim dividend of $1.50 per share, or $7.6 billion.
Get on Board with Mining Stocks
The reality is that all of this has been written about before, but how many times do you have to read something before it sticks? (Studies say, seven times, by the way.) So, if you’ve been reading a lot about mining stocks but haven’t jumped on the boat, what are you waiting for?
Consider whether mining stocks have a place in your portfolio. However, don’t forget to take an in-depth look at mining companies’ fundamentals before you get started.
Should you invest $1,000 in Cleveland-Cliffs right now?
Before you consider Cleveland-Cliffs, you’ll want to hear this.
MarketBeat keeps track of Wall Street’s top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on… and Cleveland-Cliffs wasn’t on the list.
While Cleveland-Cliffs currently has a “Buy” rating among analysts, top-rated analysts believe these five stocks are better buys.
Article by Melissa Brock, MarketBeat
Updated on
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