A Blue-Chip Miner Geared Up to Ride the Electric Vehicle Boom

Mining Facility

Swiss-based FTSE100 giant Glencore (GLEN.L), formerly Glencore Xstrata plc, is one of the world’s largest global diversified natural resource companies and a major producer and marketer of more than 90 commodities. The Group’s operations comprise around 150 mining and metallurgical sites, oil production assets and agricultural facilities. With a strong footprint in both established and emerging regions for natural resources, Glencore’s industrial and marketing activities are supported by a global network of more than 90 offices located in over 50 countries. Glencore’s customers are industrial consumers, such as those in the automotive, steel, power generation, oil and food processing sectors. The Company also provides financing, logistics and other services to producers and consumers of commodities. Glencore’s companies employ around 155,000 people, including contractors.

On December 12th 2017, GLEN published an investor update, and said that the outlook for its “Tier 1” commodities — copper, cobalt, nickel, zinc & thermal coal were underpinned by persistent supply challenges and robust demand. GLEN added that it was the best placed large cap resources company for the Electric Vehicle revolution. CEO Ivan Glasenberg, said the Company expects 2018 illustrative EBITDA of c.$16.2bn at spot/forward prices, adding that GLEN “looks to the future, confident in our ability to continue to create superior returns for our shareholders.”

Looking into the Details on Glencore

Along with the other large cap resource giants listed on the FTSE100, GLEN has seen a resurgence in value since summer 2017. The mid-December dip in the stock flagged the opportunity and trend both across RV (Relative Value) and RT (Relative Timing) metrics. RV, an indicator of long-term price appreciation potential, logged at 1.55, which VectorVest considers excellent on a scale of 0.00 to 2.00. Added to this, the GRT (forecasted Earnings Growth Rate) for GLEN logs at 37.00%, which VectorVest considers to be excellent, and despite a fair RS (Relative Safety) rating of 0.93 (scale of 0.00 to 2.00), at 409p the stock trades a long way below the VectorVest valuation of 610p.

VectorVest chart of GLEN.L
Click or tap image to enlarge.

The chart of GLEN.L is shown above in my normal format. The blue line study in the window below the price shows Earnings per Share (EPS) growing strongly. The share is on a Buy recommendation on VectorVest and trending strongly upwards after breaking and subsequently testing a 52-week high.

Why Glencore Could Boost Your Returns

To some investors, mining companies represent a greater degree of investing risk. However, the sheer size and diversity of the Glencore business results in a relatively safe and stable investment proposition, while a resource-hungry world and the EV revolution provides a huge market opportunity and a compelling growth story to buy into.

 

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