The Motley Fool

Are FTSE mining stocks still a good buy?

Image source: Getty Images.

Though the mining of precious metals is vital for producing jewellery, the mining sector is not an especially glamorous one. Us investors shouldn’t care too much though – as long as we’re making money. When searching for bargain stocks, investors often overlook FTSE mining stocks. Here’s why you might want to consider buying mining stocks:

They allow you to hedge your portfolio against inflation and uncertainty

You may already have a diversified portfolio of well-picked stocks, but if there’s market uncertainty, those shares might lose a lot of value. Gold has – for a long time – been the top pick for inflation hedgers. But I think the miners themselves are likely to benefit even more.

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...

They can pay healthy dividends

If you’re looking for a source of income, dividend-paying shares can provide an alternative to the pitiful returns of government bonds. Always research the company first though, to be sure the dividend stream won’t dry up.

You can benefit from central bank money printing

The Bank of England, alongside many other central banks, is printing massive quantities of money to keep the economy going. Where is all this new money going? Assets. And when there’s more cash but the same amount of metal, that metal is going to be worth more. Good news for the FTSE mining stocks – and it could be good news for you too.

Which FTSE mining stocks are looking good?

Centamin is trading at 149p. Its price has fallen since the US released rosy-looking jobs data – suggesting more people were back in work than had been let go. But that doesn’t change the fundamentals. In fact, at this lower price, the dividend yield is even more appetising. Even better, Centamin announced last month that operations in the Egyptian Sukari mine were unaffected by coronavirus. We’ve already seen the shares go past 190p, so there’s great upside potential.

Other great FTSE mining stocks include Anglo American, which produces platinum and other metals and minerals needed for industry. It is currently selling around 8.5 times earnings, with a current ratio just under 2. EBITDA has increased consistently since 2015. The company has trimmed the total number of mines it operates and cut costs – yet still managed to increase revenues. These improvements in cost control and productivity, along with better prices have raised profits and cash generation. Debt’s down too, from $12.9bn in 2015 to $4.4bn today. The stock has risen by 36% in the last month though, so it’s not as good a bargain as it was!

Copper company KAZ Minerals focuses on large scale, low cost, open pit mining in Kazakhstan, Russia, and Kyrgyzstan. Like Anglo American, KAZ Minerals restructured – and has performed impressively since 2014. Unlike other mining companies, Kaz Minerals focuses primarily on copper mining. Diversification within the mining sector would be beneficial to your portfolio, and this stock could help with its strong focus on a vital industrial metal like copper. Like Centamin, the group’s operations have been largely unaffected by Covid-19. Management are leaving production targets for the full year unchanged. 

I think all these FTSE mining stocks have potential to keep going up if the economic recovery holds. So have a look, do some digging, and mine yourself some nice profits.

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...

It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

But you need to get in before the crowd catches onto this ‘sleeping giant’.

Click here to learn more.

Toby Aston has no positions 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

The renowned 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 enter your email address below to discover how you can take advantage of this.

I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.