Can 1st Quarter Winners Royal Dutch Shell Plc (+10%), Unilever plc (+8%) & KAZ Minerals PLC (+67%) Keep Climbing?

Today I am looking at the share price prospects of three recent surgers.

Copper charger

Dedicated copper producer Kaz Minerals (LSE: KAZ) has sprinted higher during the past three months, pushed higher by improving metal values.

Copper values have marched strongly from January’s multi-year troughs, the resource moving back above the critical $5,000-per-tonne landmark for the first time since the autumn. Investor confidence has been helped by vows of fresh monetary easing by the People’s Bank of China, boosting hopes of robust demand improvements from the world’s largest copper consumer.

However, a steady stream of disappointing data from the country leads me to doubt whether copper prices can keep on climbing. Indeed, metals consultancy CRU Group has recently estimated that Chinese off-take is likely to grow by just 0.6% in 2016, down from 3.8% last year.

With metal prices widely anticipated to fall once again, Kaz Minerals is expected to record another year of losses in 2016, this time to the tune of 4.9 US cents per share. And I do not expect the digger to leap into the black any time soon as demand indicators look set to keep on dragging.

Brand brilliance

I am far more bullish over the share price prospects of Unilever (LSE: ULVR), however. The household goods giant has terrific defensive qualities thanks to the splendid pricing power of its wide range of labels, making it a popular pick with investors concerned over the health of the global economy.

From Dove soap and Flora margarine through to Lipton tea, Unilever’s brands command unrivalled customer loyalty  across the globe, enabling the manufacturer to lift prices regardless of the wider economic climate. As a consequence, the number crunchers expect Unilever to enjoy a 6% earnings rise in 2016 alone, resulting in a P/E rating of 21.8 times.

Sure, this reading may be slightly-heady on paper.  But I believe Unilever’s ability to keep grinding out earnings growth regardless of falling consumer spending power — combined with the long-term opportunities created by its vast emerging-market exposure — fully merits such a premium.

Producer in peril?

It comes as little surprise that the share price of  fossil fuel giant Shell (LSE: RDSB) has tracked oil prices closely in recent months.

The Brent index going back above $40 per barrel has powered Shell’s stock price by double-digit percentages during the last quarter, with the business hitting four-month peaks in March. But I, for one, am not convinced that Shell can keep this strong momentum going.

The solid rebound in oil prices comes despite an absence of encouraging industry data, suggesting that the Brent price — and consequently the fortunes of recent risers like Shell — are built on shaky foundations. Latest IEA data showed  US oil stockpiles rise for a seventh successive time last week, a 2.3m barrel build creating a fresh record of 534.8m barrels.

Rather, crude’s gains have been chiefly down to a deterioration in the US dollar since the start of 2016, a backcloth of worsening global economic indicators quelling expectations of extra Federal Reserve rate hikes during the year.

But this view is somewhat short-sighted, in my opinion. Indeed, US non-farm payrolls data on Friday smashed forecasts, with 215,000 new jobs added in March, continuing the recent trend of strong data from the world’s largest economy.

It is therefore more than likely that Fed chair Janet Yellen will raise rates sooner rather than later, in my opinion, a potentially-catastrophic scenario for the commodities sector.

The City expects Shell to swallow another a 35% earnings dip in 2016, resulting in a huge P/E rating of 22.5 times. And until the chroninc supply/demand imbalance crushing the oil segment begins to improve, I believe the business remains a risk too far for shrewd investors.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Royal Dutch Shell B. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.