Many investors ran for cover when Donald Trump first introduced his tariffs back in April. But those brave enough to buy certain FTSE 100 stocks will have reaped the rewards.
Rampant recovery
One example of this is copper titan Antofagasta (LSE: ANTO). As I type, someone investing at the 52-week low — hit not long after President Trump sent markets into a tizzy — would now be up an astonishing 70%.
For comparison, the FTSE 100 is up about 21% over the same period. Don’t get me wrong — that’s still a fine result for anyone buying a bog-standard index fund at the low. But here we have another example of where canny stock-picking would have delivered a far better return, albeit at higher risk.
To be fair, plenty of stocks have done well since April. What makes Antofagasta one of the standouts?
Strong earnings growth
Well, despite bearing the brunt of the sell-off, analysts were quick to note that mining stocks bounced back hard in recent recessions and that this might prove to be another buying opportunity. Buoyed by a weaker dollar — which helped to push up metals prices — it’s clear at least some investors agreed.
Recent updates have been encouraging too. In this month’s half-year results, for example, the Chile-based miner revealed a 60% jump in core earnings (to $2.2bn) thanks to higher production and sales.
While not a stock that income investors would normally gravitate towards, a big hike in the interim dividend was also indicative of confidence. This rocketed from 7.9 cents a share last year to 16.6 cents.
All priced in?
Having done so well in so little time, the question naturally arises as to whether the shares are still worth considering today.
Based purely on traditional metrics, I’m not so sure. As things stand, the stock changes hands for nearly 32 times forecast FY25 earnings. That’s expensive for a FTSE 100 company, given that the average is around the mid-teens.
Sure, there’s no rule to say that an ‘expensive’ stock can’t keep rising. But a high valuation means that any slight issue will likely upset the market. And even the most established miners face a lot of potential setbacks, irrespective of the wider political or economic picture.
Unlike some of its index peers, the £21bn cap is almost totally focused on producing the red metal. That’s fine if its price keeps rising. However, the lack of diversification is a risk.
Then again, signs that production is beating forecasts and/or costs are coming in lower than expected could attract more investors. Any positive developments relating to Antofagasta’s proposed Twin Metals mine in Minnesota could also really move the dial. The development of this project would not only help to avoid tariffs on imported copper, it will also add nickel and platinum group metals to the mix.
One to consider tucking away
No one truly knows where a company’s share price is going next. Even so, I’d be impressed if the current momentum seen in the share price is sustained for the rest of 2025.
But I also reckon the likely high demand for copper over the next couple of decades due to the green energy revolution still makes this company worthy of consideration as part of a long-term-focused portfolio.
