The Motley Fool

The Glencore share price is climbing again. Here’s why I’d buy now

Image source: Getty Images.

I rate mining giant Glencore (LSE: GLEN) as an attractive FTSE 100 investment. But as I’ll explain, I think it’s definitely one for long-term investors only. The Glencore share price slumped when the Covid-19 pandemic hit, which isn’t surprising. When the world’s economies are on hold, demand for metals and minerals suffers.

But since the lowest point in the 2020 stock market crash, Glencore shares have come bouncing back ahead of the FTSE 100. The Glencore price has climbed by 57% since the March bottom, while the Footsie has regained 26%.

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...

The commodities business is notoriously cyclical, so we should expect ups and downs from the Glencore share price. But the coronavirus plunge has made cyclicality look a lot riskier this year. Looking back over the past five years, Glencore has been extremely volatile. And today, even after the partial recovery, we’re still looking at a five-year fall of around 30%.

Glencore share price erratic

But I think we need to look beyond five years to see the real value here. This is a stock that might appear to fall between two stools. Should we buy Glencore for share price growth? In terms of traditional growth stocks, it’s a no from me. Glencore is in a highly competitive market that’s largely saturated, and demand can really only ever grow gradually.

What about buying Glencore as an income stock? Well, dividends from miners can be erratic too, and Glencore hasn’t paid any for the past few years. Many dividend investors want to see a steady reliable income, and Glencore does not satisfy that requirement.

But when the dividends are flowing, they tend to provide decent yields. And if you buy when the price is depressed, you can lock in future dividends at an effectively higher yield. Current forecasts put the 2020 yield at 4.3%, rising to 5.8% in 2021.

That’s obviously somewhat speculative at this point, but I think now is a good time to be thinking about it. Glencore will release a half-year production report on 31 July, with first-half results due on 6 August. We have time to prepare our expectations.

Legal troubles

Saying all this, the company does face a number of other problems, including legal ones. And they could impact the share price in the medium term. My Motley Fool colleague Kirsteen Mackay has explained the issues, so I won’t repeat it all here. But, when doesn’t a miner face problems?

I certainly don’t want to downplay these issues, and investors really do need to take them into account. But I think we’ve just seen a time of maximum pessimism. A time, in the words of Warren Buffett, to be greedy when others are fearful. Right now, the Glencore share price makes me want to be greedy.

I’d buy, but for the very long term. Usually I’d recommend not buying a stock unless you plan to hold it for at least five years. I see Glencore as one to buy and forget for at least a decade.

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!

Alan Oscroft 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.

Where to invest £1,000 right now

Renowned stock-picker Mark Rogers and his select team of expert analysts at The Motley Fool UK have just revealed 6 "Best Buy" shares that they believe UK investors should consider buying NOW.

So if you’re looking for more top stock ideas to try and best position your portfolio in this market, then I have some good news for your today -- 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.