3 top mining stocks in a post-Brexit world: BHP Billiton plc, Rio Tinto plc and Centamin plc

Buying these three miners right now could prove to be a shrewd move: BHP Billiton plc (LON: BLT), Rio Tinto plc (LON: RIO) and Centamin plc (LON: CEY).

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Since the EU referendum, shares in gold producer Centamin (LSE: CEY) have soared by 47%. The key reason for this is a flight to safety among nervous investors, with gold seen as a store of wealth during an uncertain period.

Looking ahead, the likelihood of further volatility in stock markets means that the gold price should keep rising. That’s especially the case since US interest rate increases have been slower than expected. This means that gold has less competition from income-producing assets and so is more appealing on a relative basis.

The rise in the gold price will benefit Centamin and its gold-producing peers. This is evident from the forecast rise in its bottom line of 55% in the current year, which puts it on a price-to-earnings growth (PEG) ratio of just 0.3. This indicates that while it has risen significantly in recent weeks, Centamin’s share price could move much higher over the short-to-medium term.

Furthermore, today’s update from Centamin shows that it has increased production by 30% in Q2 versus the same period last year. This is 12% higher than the previous quarter and shows that the company is on track to meet its long-term production targets. And with productivity being high and the optimisation of the processing operation continuing, Centamin also seems to be on track to record excellent returns in future.

Well-positioned for growth?

Despite challenges in the iron ore price in recent months, Rio Tinto (LSE: RIO) remains a top-notch mining play for the long haul. That’s at least partly because of the strength of its asset base as well as its exceptionally low cost curve. This means that Rio Tinto is well-equipped to survive and prosper from any further downturns in the iron ore industry and could grab market share so as to record improved profitability in the long run.

Although Rio Tinto’s share price gains of 27% in the last six months are impressive, there could be much more to come. It trades on a price-to-book (P/B) ratio of less than 1, which indicates that upward rerating potential is high. Certainly, uncertainty is considerable given the fact that Rio Tinto is undergoing a period of management change that could see a refreshed strategy, but it seems to have the required ingredients to deliver further rises in its share price.

Dealing with change

Meanwhile, BHP Billiton (LSE: BLT) continues to offer upbeat long-term growth prospects. It’s currently enduring a period of major change that has included asset spin-offs and cost-cutting. While this process has been challenging for its investors, it should create a more efficient and leaner business that can better withstand further falls in commodity prices over the medium-to-long term.

In fact, as soon as next year BHP Billiton is expected to begin to improve on its disappointing performance of recent years. It’s forecast to deliver a rise in earnings of 162% and although this is highly dependent on the prevailing commodity prices, BHP Billiton offers a sufficiently wide margin of safety to merit purchase at the present time. For example, it has a PEG ratio of only 0.2 and given its financial strength and sound strategy, this is a relatively appealing price to pay.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Peter Stephens owns shares of BHP Billiton, Centamin, and Rio Tinto. The Motley Fool UK has recommended Rio Tinto. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Businessman use electronic pen writing rising colorful graph from 2023 to 2024 year of business planning and stock investment growth concept.
Investing Articles

Could the FTSE 100 be set to soar in 2024?

The FTSE 100 keeps threatening to go off on a growth spree. And weak sentiment keeps holding it back. But…

Read more »

Investing Articles

Is this FTSE 100 stalwart the perfect buy for my Stocks and Shares ISA?

As Shell considers leaving London for a New York listing. Stephen Wright wonders whether there’s an undervalued opportunity for his…

Read more »

Mature Caucasian woman sat at a table with coffee and laptop while making notes on paper
Investing Articles

3 things I’d do now to start buying shares

Christopher Ruane explains three steps he'd take to start buying shares for the very first time, if he'd never invested…

Read more »

Investing Articles

Investing £300 a month in FTSE shares could bag me £1,046 monthly passive income

Sumayya Mansoor explains how she’s looking to create an additional income stream through dividend-paying FTSE stocks to build wealth.

Read more »

Investing Articles

£10K to invest? Here’s how I’d turn that into £4,404 annual passive income

This Fool explains how using a £10K lump sum can turn into a passive income stream worth thousands for her…

Read more »

Investing Articles

1 magnificent FTSE 100 stock investors should consider buying

This Fool explains why this FTSE 100 stock is one for investors to seriously consider with its amazing brand power…

Read more »

Rainbow foil balloon of the number two on pink background
Investing For Beginners

2 under-the-radar FTSE 100 stocks under £2

Jon Smith identifies two FTSE 100 stocks that he believes are getting a lack of attention from some investors but…

Read more »

Investing Articles

£8,000 in savings? I’d use it as a start to aim for £30k a year in passive income

Here's how regular investing in the UK stock market, over the long term, could help us build up some nice…

Read more »