Can Antofagasta plc, Fresnillo Plc, GKN plc And Weir Group PLC Extend Last Week’s Gains?

Today I am looking at the investment prospects of four FTSE gainers.

Copper-bottomed qualms

Shares in Antofagasta (LSE: ANTO) have been swept higher in recent days as value hunters have piled into the mining and energy sectors. The copper digger itself ascended 11% last week alone, but I believe this represents nothing more than a flash in the pan — the copper market remains in a state of chronic imbalance, and Bank of America commented just today that “miners have not reacted fast enough to the challenging macro-economic backdrop.”

Indeed, the broker estimates that a further 500,000 tonnes worth of copper needs to be removed from the market in order to stop the metal price plunging — copper slumped back below $5,000 per tonne again last month. Not surprisingly the City expects Antofagasta to swallow a 48% earnings slide in 2015, a third consecutive dip if realised that would leave the miner on a ridiculously-high P/E ratio of 36.5. Given the firm’s muddy earnings picture I find this massive premium difficult to justify.

All that glistens is not gold

It could be argued that silver and gold producer Fresnillo (LSE: FRES) is in better shape than many of the world’s mining plays. Traditionally, precious metals have been popular safe-havens in times of macroeconomic and geopolitical uncertainty, making the diggers less susceptible to the cyclical problems washing over the rest of the sector. And a 13% share price bump at Fresnillo between Monday and Friday, transpiring as Russian military action in Syria intensified, lends support to such a theory.

However, the role of gold as an island of calm in choppy waters has seemingly evaporated over the past couple of years, not helped by a low inflationary environment and subdued Asian demand. And silver — by far Fresnillo’s biggest market — is being whacked by falling industrial demand, not to mention reduced investment activity. I reckon the Mexican operator is likely to come under fresh pressure once buoyant market enthusiasm dissipates.

Investor returns set to motor higher

Diversified engineering giant GKN (LSE: GKN) has endured a torrid time over the past year as fears over falling Chinese car demand — combined with concerns over slowing aircraft orders — has weighed on investor appetite. The Volkswagen emissions scandal also took a chunk out of the firm’s share price when news broke last month, causing the Redditch business to slump to its cheapest for two-and-a-half years.

However, the market has viewed this is a prime buying opportunity and GKN rose 5% alone last week. The possibility of further share price weakness cannot be ruled out as accusations of mass test-rigging across the car industry are likely to continue for some time yet. But for more patient investors I reckon increasing plane and auto sales across the globe should deliver rich rewards. GKN currently deals on a prospective P/E rating of just 11.1, a level which I believe provides an excellent entry point.

Pumps play under pressure

I am not so optimistic about the profits picture over at industrial pump manufacturer Weir Group (LSE: WEIR), however. The stock ascended 7% during Monday-Friday, but I reckon this represents just a short-term gain as the prospect of further price weakness across the oil and metals segments — and consequent impact on operating and capex budgets — hammers demand for Weir’s hi-tech goods.

The Scottish business saw revenues topple 13% during January-June, to £1bn, while an 18% drop in total orders suggests that things aren’t about to improve any time soon. Weir hiked R&D spend by almost 40% in the period to help its earnings outlook, but I believe the firm carries too much risk at the current time as its key end markets struggle. Weir is expected to endure a 41% bottom-line slide in 2015 — resulting in a P/E ratio of 16.9 times — and I reckon further pain should be anticipated.

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Royston Wild owns shares of GKN. The Motley Fool UK owns shares of GKN and has recommended Weir. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.