The Glencore (LSE: GLEN) share price has cast a heavy shadow over my Self-Invested Personal Pension (SIPP) in 2024. Stock analysts are predicting a much brighter 2025, but as I’ve learned, predictions can’t be relied upon. Especially mine.
I bought shares in the FTSE 100 mining giant in July and September last year, thinking I was bagging a bargain.
On 24 July 2023, I boldly proclaimed: “I’m taking my once-in-a-decade chance to buy dirt cheap Glencore shares before they rally.”
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That hasn’t aged well. My average entry price was 361.7p. The Glencore share price has slumped by 21% to around 363p over the last 12 months, and I’m down by roughly the same percentage. Although my dividends have trimmed that to around 16%.
So what was I thinking in the summer of 2023? Shares in the Anglo-Swiss mining company had fallen 17% when I bought them. As the commodity sector’s famously cyclical, I thought this looked like an unmissable opportunity.
I wrote: “Glencore isn’t just cheap. It’s dirt cheap, trading at just 4.3 times earnings. If interest rates peak and markets rally, I could face a long wait for another opportunity like this.”
That view hasn’t aged well either. Interest rates may have peaked, but they haven’t fallen much. And they aren’t expected to fall much in 2025 either, as inflation proves sticky. But the big issue here is China.
The world’s second biggest economy – and biggest consumer of commodities by far – was slowing when I bought Glencore shares. Its plight has only got worse. Stimulus packages have disappointed, and investors are now pinning their hopes on the Bank of China cutting rates in 2025.
Glencore shares still look cheap, as measured by a price-to-earnings ratio of 10.48. They were cheaper when I bought them though, and that didn’t help. The trailing yield is a modest 2.79%, albeit forecast to hit 3.7% next year.
Here’s what the experts say
The board has also dangled the prospect of “potential top-up shareholder returns, above our base cash distribution, in February 2025”. Fingers crossed.
I’m also crossing my fingers and hoping interest rates slide in 2025, and China shrugs off its malaise. The so-called ‘Trump bump’ has done precisely nothing for my Glencore shares, so I’m not putting my hopes on a US surge.
The 15 analysts offering one-year share price forecasts for Glencore have produced a median target of 501.4p. If correct, that’s a bumper potential increase of more than 38% from today. I hope they’re right.
Personally, I’m not so optimistic. 2025 looks a bit sticky to me. And I don’t think China growth story will run to a sequel.
Impressively, 11 out of 17 analysts rate Glencore shares a Strong Buy. Three more say Buy, three say Hold and not a single one suggests selling. Personally, I’m in the Hold camp. Once bitten twice shy, and all that.
But I agree with them on one thing. There’s no way I’m selling my Glencore shares. This is a cyclical sector, remember. At some point, they’ll be back. I’m not going to forecast when that will be though. I’ve learned my lesson.
