Top-rated copper stocks
Glencore (GLEN-L) was the third-largest copper producer last year, after Codelco and Freeport-McMoRan (FCX). Last year, Glencore produced ~1.4 million metric tons of copper, which was about 5% lower than its 2015 production.
Remember, in 2015, several copper producers, including Glencore and Freeport, curtailed their production in response to falling copper prices in an effort to restore balance in copper markets.
Glencore has the highest percentage of “buy” or higher ratings among the select group of copper miners that we’re covering in this series. The stock has received a “strong buy” rating from five analysts, while 12 analysts have issued the stock a “buy” rating.
Overall, 65% of analysts have given GLEN-L a “buy” or higher rating. The stock has received a “sell” rating from only one analyst, while the remaining eight analysts polled by Thomson Reuters on October 6 have rated that stock a “hold” or some equivalent.
The stock has received a mean consensus price target of 3.86 British pounds, representing a 5.3% upside over its closing price on October 6, 2017.
Unlike Southern Copper (SCCO) and Turquoise Hill Resources (TRQ), which are pure-play copper producers (AAL-L), Glencore has diversified operations. Copper, coal, zinc, and agricultural products are the key commodities that Glencore sells. Along with production, Glencore is also involved in commodity trading. (You can read Glencore: An Investment Overview of a Mining Giant for Glencore’s business overview.)
Notably, Glencore was among the first mining companies to call a bottom in commodity prices by reinstating its dividend. Glencore’s leverage ratios have improved significantly over the past two years due to asset sales and organic cash flows. Comfortable leverage ratios allow Glencore to pursue inorganic growth.
In the next part, we’ll discuss how analysts are rating First Quantum Minerals (FM).