FTSE 100 investing: a cheap UK share I’d buy in my ISA in March

This FTSE 100 share is soaring in value right now. But on paper it still looks mighty cheap. Is now the time to buy this UK share in an ISA?

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I continue to believe that the FTSE 100 is packed with opportunity for value investors like me. There are even plenty of UK shares that have recently rocketed in price and still offer enough bang for my buck.

Take Antofagasta (LSE: ANTO) for example. This blue-chip’s share price continues to soar as investors pile into copper. The red metal miner struck record peaks in February and has moved back to within a whisker of those highs in recent hours. Yet despite this strength, this is a UK share that still looks pretty cheap to me on paper. Its sub-1 price-to-earnings growth (PEG) ratio of 0.4 sits firmly in bargain-basement territory.

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Copper prices are charging again

Copper values recently spiked to nine-year highs above $9,500 per tonne. The recent supply crunch that pushed London Metal Exchange copper inventories to 15-year lows has driven prices skywards. So have hopes of a strong rebound in the global economy and massive infrastructure spending in the next few years. Finally, copper prices have climbed because commodities like this are seen as a way for investors to protect themselves against the growing threat of rampant inflation.

The rise in copper prices isn’t expected to be a flash in the pan either. Take the boffins at Goldman Sachs. They reckon the red metal will trade at $10,500 a tonne in the next 12 months. This would take out copper’s all-time high of $10,190.

Image of person checking their shares portfolio on mobile phone and computer

Meanwhile, analysts at ING Bank say that “we think there are still more upside risks to copper prices in the near term as policymakers seem to be allowing the economy to run hotter.” It’s no wonder then that City analysts are bullish over Antofagasta’s bottom line in the short-to-medium term. They reckon earnings at the UK share will rise 76% year on year in 2021.

A top UK value share

It might not be all plain sailing for UK mining shares like Antofagasta going forwards, though. China sucks up around half of total copper supply for its industries. So latest factory data showing output rose at its slowest pace for nine months in February is a reason for concern. This is especially worrying given that China’s State Reserve Bureau was stockpiling massive amounts of metal at low prices last year. These two issues could cause copper shipments into the country to slow considerably.

That said, I think a PEG ratio below 1 times suggests that a UK share is being undervalued by the market. There are threats to the company’s profits in the longer term as a stream of new mines and extensions to existing projects come on line. But on the other hand, demand for copper could take off and mop up this excess supply as sectors like consumer electronics, construction and green energy boom.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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 considered, so you should consider taking independent financial advice.

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