Commodity stocks have a history of being volatile, but the last 18 months have been off the scale. Last year’s crash knocked up to 75% off the value of some top FTSE 100 listed mining giants. This year, many of the biggest losers have rebounded almost as dramatically.

What’s even more astonishing is that the recovery continues apace, despite ongoing economic uncertainty, with some miners posting double-digit share price hikes in the last week (on top of what’s gone before). But is the sector now dangerously overpriced as a result?

Anglo of attack

Anglo American (LSE: AAL) is on a roll again, its share price up 9.42% in the last week alone. It’s hard to believe the stock fell to a low of just 221p on 20 January, given that it trades at a whopping 875p today, almost four times that lowly valuation. You could hardly make a better case for the attractions of investing in big companies when they’ve fallen out of favour. Despite that, most investors will have lost money on the stock, with the share price still 65% lower than it was five years ago. This hasn’t been an easy ride.

Like all the miners, Anglo American has been helped by dollar weakness as US rate hike expectations decline, and global central banker stimulus, which frankly is now the only thing keeping markets from crashing. The stock has also been given a boost by a positive note from Barclays, which praised its “strong valuation support and solid earnings momentum,” with a rally in coking coal boosting the balance sheet.

Anglo American has been cutting costs and making non-core disposals (again, like all the miners), and its core areas of diamonds, copper and platinum hold promise, while offering some diversification. Senior managers at rivals Glencore and Rio Tinto have also been talking more bullishly about China’s prospects, boosting sentiment across the industry. Anglo-American’s earnings per share (EPS) are forecast to grow 4% this year, which is an improvement after four years of sharp reversals, and with another 13% rise expected in 2017 the future is brighter. The valuation looks a little stretched at 17.4 times earnings, but I wouldn’t call it dangerously stretched.

Picking up the bill

BHP Billiton (LSE: BLT) has also had a good week, its share price up 6.65%, which leaves today share price of 1,041p almost double the 580p low it mined on 20 January. That strong recovery comes despite full-year profits on 30 June revealing an 81% slump in underlying basic EPS to 22.8p, alongside a statutory loss for the year of $6.2bn.

The future certainly looks a lot brighter, with EPS forecast to rise 123% over the 12 months to 30 June 2017, which should also reduce today’s towering valuation of 55 times earnings to a more manageable 23.5 times. Again, like Anglo American, BHP Billiton will benefit from more market-friendly global monetary easing, the Fed stepping back from further tightening leading to a weaker dollar, and a return to Chinese momentum. Will we get all three? I suspect we’re likely to get the first two, and that should empower the third.

Both stocks look far healthier than they were, although investors must accept they’re jumping on the recovery bandwagon rather late.

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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.