The Motley Fool

2 stocks that seem absurdly cheap right now

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Arrowings ascending on a chalkboard
Image source: Getty Images.

The mining sector may have enjoyed a more prosperous period in recent months. However, many of its constituents continue to offer low valuations and the potential for improving share price performance.

Certainly, the risks from declining commodity prices remain. The global economy’s performance could come under pressure and lead to a general slowdown. But with wide margins of safety, these two mining companies appear to be worth a closer look right now.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

Improving performance

Reporting on Tuesday was zinc/gold miner Griffin Mining (LSE: GFM). The China-focused operator delivered a 91% increase in revenue, with its operating profit of $64m 319% higher than in the previous year. It delivered record production in 2017, while cash generated from operations of $77.4m enabled all bank loans to be repaid. It also allowed the company to invest $13.3m in further development of the Caijiaying mine, as well as in exploration and equipment purchases.

Looking ahead, Griffin Mining is expected to deliver a modest 3% rise in earnings in the current financial year. While there are mining stocks with higher forecast growth rates, the company’s price-to-earnings (P/E) ratio of around 9 suggests that it could offer good value for money. That’s especially the case since demand for gold miners could increase if global inflation expectations continue to rise.

Of course, the company is relatively small and seems to lack the diversity of some of its sector peers. Therefore it may mean a relatively risky investment opportunity. But with strong progress being made in its operational and financial performance, its low valuation suggests that it could deliver high rewards in the long run.

Turnaround potential

Also offering upside potential within the sector is gold miner Acacia (LSE: ACA). The company has experienced a hugely challenging period, with an export ban in Tanzania hurting its financial performance. For example, in the last financial year the company’s bottom line moved into the red despite a relatively strong year for the gold price.

Looking ahead, there could be further uncertainty for the business. The trading conditions it faces may remain tough and while it seems to have a solid strategy, it could experience significant volatility over the medium term.

However, investors may have factored in potential challenges for the business. Acacia trades on a forward P/E ratio of around 8. And with its bottom line due to return to the black in the current year, investor sentiment could improve – especially since earnings growth of 10% is forecast for the 2019 financial year.

With the gold price having the potential to rise due to a mix of uncertainty in the prospects for the global economy and the recent volatility in riskier assets such as shares, now could be the perfect time to buy gold miners. Acacia may be at the riskier end of the investment spectrum, but its potential rewards could be high.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

Peter Stephens has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.