Glencore (LSE: GLEN) shares are finally springing into life after a tough few years. The FTSE 100 commodities and trading group has jumped 36% from its 7 April low of 230p to 312.45p today. That’s a strong recovery, but still leaves the share price down 34% over 12 months.
I bought the stock in July 2023 and again that September. I’ve picked up a trickle of dividends, but a few weeks ago I was down a nightmare 45%. Of my 20 stock holdings Aston Martin has done worse, but that was just a daft flutter. I’ve trimmed my losses on Glencore but there’s still a long way to go.
I’ve been tempted to sell a few times. But investing is a long game, and cycles like this are part of it. Especially in the natural resources sector.
Turning tide in mining
The latest spike isn’t just about Glencore. On 10 July, the FTSE 100 hit a new record, with mining stocks doing much of the heavy lifting. Copper prices surged on reports Donald Trump might impose a 50% tariff on imports. Investors have bet that he’ll backtrack, but if he doesn’t, this rally could unravel.
That’s not the only uncertainty. Global growth is slowing, and recession risks haven’t gone away. Plus China no longer gobbles up metals and minerals like it once did, and I can’t see it recapturing former glories.
Last year’s results were patchy with adjusted EBITDA plunging 16% to $14.36bn as energy coal prices dropped, while debt more than doubled from $4.9bn to $11.2bn. But Glencore said its debt pile was manageable, with a net debt-to-EBITDA of 0.78. The group also still delivered $1.9bn in shareholder returns, from both dividends and share buybacks.
Its Q1 update on 30 April showed copper output down, but stronger production from cobalt and steelmaking coal, helped by acquisitions. No real excitement there.
Rebuild under way
Longer term, growth could come from its $7bn acquisition of Elk Valley Resources last July. This deepens its carbon steel exposure, by tapping into China’s clean energy push.
Copper is still a priority. Glencore produced 951,600 tonnes in 2024 and is targeting one million by 2028, with ambitions to double that later. Demand should hold up, given copper’s role in energy and construction.
The dividend yield is 2.4%, forecast to rise to 3.4% this year. That’s a little better, but dividend cover is thin at 1.4. Return on capital employed is just 1.4%.
Still a gamble
Analysts are bullish. Astonishingly so, in my view. Fifteen of 20 call it a Strong Buy, with no sellers. I’d like some of what they’re on. The median one-year share price target is 373.7p. That’s 20% above today. I’d take that in a heartbeat, even if I’d still be nursing a loss.
This may be the start of something better. I haven’t bought into the turnaround, and I’m not considering buying any more Glencore shares today. About the most upbeat thing I can say is that I will continue to hold. My nightmare isn’t over yet.
