The most significant advantage the company has over buy-to-let property, in my opinion, is its global diversification in a growing market.

As the world economy continues to expand overall (despite trade wars) and many consumers become more affluent, insurers like Beazley are seeing their sales rising with more and more customers turning to the group to insure their assets against disaster. 

Growing earnings

Over the past six years, Beazley’s sales have grown at a compound annual rate of 5.3%. That might not seem like much, but because the market is only growing, over the long term, this steady revenue growth adds up. Over the past 30 years, the company has gone from having almost no income at all to sales of $2.6bn. 

I think this trend can continue, which is why I reckon the stock can help you make a million. Over the past decade, shares in Beazley have returned 20.7% per annum, including dividends, as the company has benefited from global growth and expansion in the US and Asia. 

I don’t think it is realistic to expect this 20%+ per annum return trend to continue, of course, but I believe there is a good chance the company can post annual earnings growth in the 5% to 10% range, which would an annual return in the region of 10% over the long term. This rate of return is enough to turn a £100,000 investment into £1m in just 24 years. 

Shares in Beazley are currently dealing at a PEG ratio of 0.5 for 2019, implying the stock offers growth at a reasonable price. On top of this discount valuation, there’s also a dividend yield of 2.1%. 

Copper champion

Alongside Beazley, I think copper miner Kaz Minerals (LSE: KAZ) could be a millionaire-maker stock. Kaz is one of the world’s largest pureplay copper miners.

Demand for this metal is only expected to rise as renewable energy becomes more widespread, and the world becomes more connected. Indeed, the copper market expanded at a compound annual rate of 4.2% in the decade to 2019, and analysts are expecting a similar rate for the next decade.

I expect Kaz to benefit significantly from this growth. The company is targeting 300,000 tonnes of copper production in 2019 and has a handful of big expansion projects in the works. These include its first mine outside of Kazakhstan, the Baimskaya copper project that it acquired earlier this year and is expected to cost $5.5bn to develop. 

Most mining companies would baulk at such a large commitment, but Kaz has a history of successfully developing large mining projects. I think the probability of the company repeating past success here is high.

At this point, it is difficult to tell how much value the Baimskaya copper project will create, but even without this, shares in Kaz look cheap. The stock is currently dealing at a forward P/E of 6.4 and supports a dividend yield of 1.5%.

I think the shares are worth double considering Kaz’s long-term potential, that’s without taking into account the $5.5bn Baimskaya mine, which could increase the group’s value by as much as 200%.

If the company manages to pull this development off, investors could see a four-to-fivefold return on their money, according to my calculations. 

The post Forget buy-to-let! Here’s how I think these 2 FTSE 250 bargains can help you make a million appeared first on The Motley Fool UK.

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Rupert Hargreaves owns no share 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.

During the same six months, the share price of copper miner KAZ Minerals (LSE: KAZ) has declined by around 50%. The company has been relatively unpopular since it announced an acquisition and uncertainty surrounding the world economy may be weighing on its valuation.

As a result, could now be the right time to buy it? Or could another FTSE 250 share which released positive results on Thursday generate improving stock price performance in the long run?

Improving performance

The stock in question is beverages company Britvic (LSE: BVIC). It released full-year results which showed a rise in revenue of 5.1% to £1,503.6m, with organic revenue increasing by 2.7%. Its adjusted operating profit increased by 5.4%, with organic adjusted operating profit rising by 4% to £206m.

The company recorded positive volume and price/mix which enabled it to deliver balanced revenue growth. It has also been able to successfully navigate the soft drinks levy, with its low- or no-sugar portfolio showing strength. Its Stills revenue in the UK delivered growth, while Pepsi continued to gain market share, driven by Pepsi Max.

Looking ahead, Britvic is expected to post a rise in earnings of 6% in the current financial year. Since the stock trades on a price-to-earnings (P/E) ratio of around 14, it seems to offer fair value for money at the present time. Therefore, it may offer investment potential for the long run, in my opinion.

Turnaround potential?

As mentioned, the KAZ Minerals share price has endured a challenging six-month period even when compared to the wider FTSE 250. Investors seem to be cautious about a recently-announced acquisition in Russia. There are also concerns about the prospects for the world economy, with the chance of further tariffs and a higher US interest having the potential to reduce demand for a range of commodities.

But the company could have a stronger growth opportunity than the market is currently anticipating. It continues to ramp-up production, with its recent production update highlighting that this has been a relatively smooth process. Alongside this, demand for copper could exceed supply over the medium term, and this may create a positive trading environment for operators in the industry.

With KAZ Minerals trading on a P/E ratio of around 6, it seems to offer a wide margin of safety at the present time. Certainly, volatility is likely to be high, and further share price falls cannot be ruled out. However, for investors with a long-term view and who are less risk-averse, the stock could offer investment appeal as well as recovery potential in my opinion. In the long run, it could even outperform the FTSE 250.

The post Is the KAZ Minerals share price a bargain FTSE 250 turnaround stock? appeared first on The Motley Fool UK.

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Peter Stephens has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Britvic. 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.

Up until 2016, I would have agreed with the rest of the market that Kaz deserved a wide berth. It was a speculative bet spending billions of dollars building new copper mines, which is always a risky endeavour. However, these bets started to pay off in 2016 when the group swung to a profit after several years of losses. Since then, earnings have exploded as Kaz’s new mines have come on stream and the business has reaped the rewards of its lengthy, and costly, capital spending programme.

For 2018, City analysts believe the company will report a net profit of $494m, rising to $537m next year. Based on these numbers, the shares are trading at a forward P/E of just 6 for 2018, falling to 5.8 for 2019.

Overstretched? 

So what’s gone wrong? It seems investors are once again concerned about the company’s expansion plans. A few months ago, Kaz announced that it had acquired a new copper mine in the Baimskaya region of Russia from Roman Abramovich for $900m. It’s not the initial price tag that seems to be worrying investors, but the capital spending required to get this mine up and running. Figures suggest Kaz will need to fork out $5.5bn to develop the Baimskaya prospect — a colossal sum for a business with a market-cap of only $3bn at the time of writing.

Nevertheless, considering the company’s record of developing mines, I think the chances that Kaz could pull this off are high, and that’s why I think now could be a good time to buy the stock. 

Kaz’s current valuation seems to suggest investors don’t think the company has a future. But if it does manage to develop Bimskaya successfully, then the upside could be tremendous. I’m highly attracted to the risk/reward here.

Rubbish investment 

If Kaz isn’t your cup of tea, then I also like the prospects for slow and steady Biffa (LSE: BIFF). 

For 2018, analysts are expecting this rubbish (waste management) company to report earnings per share growth with 33%, and it looks as if the business is on track to meet this forecast. In its half-year report published today, CEO Michael Topham declared management growth “expectations for the full year remain unchanged.“

As a result, I think the market is currently undervaluing Biffa and its prospects. The shares are changing hands right now for 11.2 times forward earnings, which would be appropriate for a low-growth business. But in my opinion, with earnings growing at a double-digit rate, a multiple in the mid-teens might be more attractive.

On top of the attractive valuation, investors can also look forward to a dividend yield of 2.9%. As the distribution is covered twice by earnings per share, the payout has room to grow substantially in the years ahead, and I can’t see any reason why it won’t.

So overall, if you’re looking for an undervalued income and growth stock, I reckon Biffa certainly deserves your research time.

The post This is the cheapest growth stock in the FTSE 250. But is it worth buying? appeared first on The Motley Fool UK.

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Rupert Hargreaves owns no share 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.

Shares such as KAZ Minerals (LSE: KAZ) and Warpaint London (LSE: W7L), though, are down much more than most stocks. Following a hugely challenging period, could they now offer wide margins of safety and strong recovery potential?

Challenging outlook

Supplier of colour cosmetics, Warpaint London, recorded a 40%+ share price fall on Monday following the release of a profit warning. Although trading in the US and the EU has remained robust, its performance in the UK has been disappointing. Retailers are reducing stock levels and Christmas orders, which is a significant problem for the business since the UK accounts for 44% of its total revenue.

The company now expects revenue for the 2018 financial year to be between £48m and £52m. Profit before tax is due to be between £8.5m and £10m, although these figures are clearly highly dependent upon the near-term performance of the company’s UK operations. Given that consumer confidence is expected to weaken over the short run, the prospects for the stock could be highly uncertain.

With Warpaint London now trading on a price-to-earnings (P/E) ratio of around 12.3 using last year’s earnings figure, I think it could offer good value for money. However, with the prospects for the UK retail sector being highly dependent upon the outcome of Brexit negotiations, I feel it may be worth waiting for further updates before buying the stock.

Low valuation

The performance of the KAZ Minerals share price in the last year has been hugely disappointing. It has declined by around 40%, with investors becoming increasingly concerned about the global growth outlook in recent months. With the prospect of further tariffs being placed on imports and the potential for a higher US interest rate, the resources sector has been hit relatively hard.

Despite this, the medium-term outlook for the copper and gold markets appears to me to be relatively sound. Demand growth is set to remain robust, while a lack of supply in the copper industry could lead to a buoyant price. This could be beneficial to KAZ Minerals, and may mean that its ramp-up in production helps it to deliver on its optimistic growth targets.

With the company now trading on a price-to-earnings growth (PEG) ratio of 0.5 following its share price fall, it could offer a margin of safety. Clearly, it is a relatively volatile stock that could experience further paper losses over the near term. But with what seems to be an improving financial position, as well as a 2.6% dividend yield that is due to be covered more than 10 times by profit in the current year, I think its long-term growth potential could be high.

The post Are the KAZ Minerals and Warpaint London share prices now bargains after 40%+ falls? appeared first on The Motley Fool UK.

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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.

With 13% more gold produced than in the previous quarter, reaching 45.1 koz from Q2’s 39.9 koz, full year output is now “expected to be at top end of 160-175 koz guidance range.“

On top of that, copper production rose by 7% to 77.2 kt (from 72.3kt in Q2), and the company says it’s on track for meeting full-year guidance of 270-300 kt.

The KAZ share price had been in a bit of a tailspin, having lost more than 50% of its value since its 2018 peak in June. But a month ago, fellow Fool writer Peter Stephens rated the turnaround potential for a recovery as high, and this latest update will surely strengthen that sentiment.

Price recovering?

The share price rise on the day, while welcome, does need to be taken in context — it has actually only just returned to the level it stood at a week ago, before dropping in the days before the current update.

Analysts are predicting modest earnings rises for this year and next, but those would be sufficient to drop the stock’s forward P/E to only 5.6 this year, and as low as 4.8 in 2019. And with the share price so low, dividend forecasts suggest yields of 2% and better, even though the cash would be covered nine times by earnings.

What are the downsides? Net debt of $2bn at the halfway stage at 30 June looks scary, but that’s only approximately 1.5 times annualised EBITDA, which is a multiple that’s generally considered manageable.

We’re looking at an impressively low PEG ratio for 2019 of 0.6 too, which is often a good growth indicator.

KAZ is risky, certainly, but I’m also feeling positive about the recovery potential here.

More glitter

Gold miners tend not to excite me too much, but I can’t help but notice a recent share price spike at SolGold (LSE: SOLG). After a big slump in 2017, the price has soared by nearly 90% in less than two months.

Part of the boost comes from confidence in the firm shown by BHP Billiton which, this month, subscribed for 100 million new shares in SolGold at 45p apiece, to raise £45m for the company.

There are a number of conditions attached to protect BHP’s interest, including the right to appoint a director to the SolGold board. To me, it all adds up to a step forward in governance and a lowering of the risk for private investors.

Some risk

My colleague Peter again appears cautiously optimistic, suggesting that “while potentially volatile in the near term, the stock could have investment appeal.” That was before the BHP involvement was announced, and I think the latest news reinforces Peter’s thoughts.

I’m always wary of the fact that gold has little actual use other than as artificially desirable shiny stuff. But it’s in a reasonably buoyant phase at the moment, and with world political and economic uncertainty likely to continue for some time, this could be a good time to get into gold stocks.

I rarely go for risky growth stocks these days, but a younger me could have been tempted by both of these.

The post Could KAZ Minerals beat the SOLG share price in 2019? appeared first on The Motley Fool UK.

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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.

This could mean that the stock now offers a wider margin of safety. It could even outperform the FTSE 100 as a result of its low valuation. However, it’s not the only stock that could be worth a closer look at the present time. Reporting on Thursday was a FTSE 100 stock which appears to offer a favourable risk/reward ratio.

Improving prospects

The stock in question is tourism company TUI (LSE: TUI). It released a pre-close trading update which confirmed that it is performing in line with expectations. It is set to post its fourth consecutive year of double-digit growth in underlying EBITA (earnings before interest, tax and amortisation). It has been able to expand its hotel and cruise offer, with occupancies and yields remaining high. It has seen growth in the number of customers purchasing holidays across all of its major markets, even though hot weather in Northern Europe has caused a slowdown in the wider industry.

Looking ahead, TUI is forecast to post a rise in its bottom line of 8% in the current year, followed by further growth of 14% next year. Despite this, the company trades on a price-to-earnings growth (PEG) ratio of just 0.9, which suggests that it could offer a wide margin of safety. As such, and while the wider travel industry faces an uncertain outlook, the company’s share price performance could be ahead of the FTSE 100 over the medium term.

Recovery potential

The turnaround potential of KAZ Minerals seems to be high. Although further share price falls cannot be ruled out due to investor sentiment being weak, the financial outlook of the business seems to be improving. For example, over the next two years it is expected to report a rise in earnings of 13% and 11%. This has the potential to catalyse investor sentiment – especially when the stock trades on a PEG ratio of just 0.5.

With there being the potential for a supply deficit in copper over the medium term, the prospects for the business seem to be improving. Certainly, there is risk in undertaking the recently-announced acquisition, but in an industry which could still offer high returns in the long run, it could prove to be a sound move.

The KAZ Minerals share price has a history of volatility. Changes in foreign exchange rates and in the outlook for the world economy can, among other factors, cause uncertainty. While this situation could continue, ultimately the company appears to be delivering improved operational performance and trades at a low valuation. As such, now could be the right time to buy it for the long term.

The post Why the KAZ Minerals share price could outperform the FTSE 100 appeared first on The Motley Fool UK.

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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.

However, I’ve stumbled across three stocks which I believe have the potential to generate tremendous returns for investors. They might not double in value, but I think these are some of the market’s best growth stocks.

Beating the market

One of the qualities I look for when assessing the future potential of any business is how it has performed in the past.

Since the end of the first quarter of 2016, shares in Harwood Wealth Management (LSE: HW) have returned 82% excluding dividends, compared to just 23% for the FTSE 250.

The last time I covered the company, it had just reported its numbers for the six months to the end of April, which showed an increase in assets under management (AUM) of around of a third. Following this update, analysts have reiterated their full-year growth forecasts. The City is expecting EPS growth of 463% for 2018 (giving a full-year P/E of 23.9) and 27% for 2019 (forward P/E of 18.8). If AUM continue to expand, I believe Harwood could surpass City growth targets for 2019. 

With approximately 24p per share in cash on the balance sheet, the stock is trading at a cash-adjusted 2019 P/E of just 16. In my opinion, this is far too cheap for for the wealth management group.

One of a kind 

My next stock with multi-bagger potential is Breedon (LSE: BREE). What I like about this business is that it already has a strong track record of creating value for investors. Over the past five years, through a combination of acquisitions and operational improvements, net profit has grown at a compound annual rate of 61%. This expansion has helped the company’s shares add 170% since mid-2013.

Breedon owns and operates over 300 quarries and concrete plants throughout the UK and Ireland. These assets have high barriers to entry — it’s not easy to start a new quarry in the UK. Breedon, therefore, has a virtual monopoly in some areas of the market.

With monopoly control of some parts of the UK aggregate market, Breedon should be able to continue to grow at a rapid pace for many years to come. With this being the case, I believe it is worth paying the current multiple of 15.8 times forward earnings for the shares.

Rising output 

My final potential blockbuster is Kaz Minerals (LSE: KAZ). Last week, after several years of restructuring the business, it declared its first dividend since 2012. This announcement has helped restore confidence among investors who have been questioning the group’s decision to pay $900m to acquire a Russian copper project from Roman Abramovich. 

Despite shareholder opposition, management believes this deal has legs and is a vital part of the group’s long term growth strategy. I’m inclined to side with management on this one. Over the past five years, executives have proven they know how to handle the business. After investing $3.5bn in two major copper mines, Bozshakol and Aktogay in Kazakhstan, production in 2016 leapt 73% to 140,000 tonnes and is projected to hit 300,000 tonnes for 2018. 

For the full year, analysts have pencilled in EPS of $1.40 giving a P/E of 5. In my opinion, the stock is worth significantly more. 

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Rupert Hargreaves owns no share 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.

Why am I bullish? Simply because analysts are forecasting a supply deficit in the red metal over the next few years. This, combined with an increase in demand for new technologies including electric vehicles, could put a rocket under the stock prices of well-managed, quality copper miners in time.

It’s for this reason that I was drawn to today’s numbers from Kaz Minerals (LSE: KAZ).

Big acquisition

The share price of the FTSE 250 mining giant has been in freefall recently, partly due to investor jitters over its decision to buy the undeveloped but significant Baimskaya copper project in Russia for a little under £690m. While management regards the deal — completing in H1 2019 — as a demonstration of Kaz’s ambition, there is concern that operating in a different political environment to Kazakhstan will prove problematic for the company. 

Thanks to a solid set of interim numbers, it would appear that at least some of this nervousness has been forgotten today.

Group revenues rose 31% to £1.1bn in the six months to the end of June with gross earnings before interest tax, depreciation and amortisation (EBITDA) climbing 37% to $690m. Pre-tax profit soared almost 48% to $355m at the same time as net debt fell to $2.05bn from $2.44bn. All looks rather good to me.

Positively, Kaz also maintained its guidance on production and costs for the full year (with the former at 270-300 kt), adding that planned expansion of its Aktogay mine was “progressing well“.

Given that the stock was trading on a bargain 5 times forecast earnings before today, it’s no wonder that some investors have taken advantage. The question is, do you have the risk tolerance to sit with the shares until they fully recover? At this price, I’m sorely tempted.

Monster dividends

Of course, Kaz isn’t the only option out there. Mid-cap Central Asia Metals (LSE: CAML) is a stock that’s been on my watchlist for some time.

Fortunately, I haven’t pulled the trigger yet. Had I done so in March, before all this trade rhetoric began, I’d be sitting on a loss of almost 40%.

So, what can Central Asia Metals offer that Kaz doesn’t? That’s easy — a decent dividend. 

Actually, that’s something of an understatement. The stock is forecast to yield a stunning 7.5% in 2018, with the payout covered over twice by expected profits. That looks very reasonable compensation in return for a bit of patience. Contrast this return with today’s announcement from Kaz of its first dividend since 2012 (6 US cents per share) following the “successful delivery ” of its Bozshakol and Aktogat projects. An encouraging development, no doubt, but not in the same league as that offered by its peer. A cynic might even view it as a way of appeasing shareholders over Baimskaya as much as being an indication of management’s confidence in the company’s future. 

Like Kaz, Central Asia Metals trades on a low valuation — just 6 times forecast earnings. While no one knows where the copper price will bottom, surely we must be entering oversold territory?

The post These bargain copper stocks could help you achieve financial independence appeared first on The Motley Fool UK.

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Paul Summers 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.

Autotrader (LSE: AUTO), which is famous for its eponymous (but now closed) magazine and its website, has achieved the highest rate of earnings growth of any company in the FTSE 250 over the past three years. Its earnings per share have expanded at a compound annual growth rate of 121% since 2015 according to my figures.

The only other company in the FTSE 250 that even comes close to this record is Virgin Money, which has been able to chalk up a growth rate of 97%. 

Today the firm reported another leap in earnings for the year ended 31 March 2018. Basic earnings per share, which have been boosted by £96m of share buybacks, jumped 15% as pre-profit ticked 10% higher. 

Cash cow 

As Autotrader, which closed its magazine business in 2013, is primarily an online marketplace for vehicles, the group is highly profitable. It does not need to spend heavily on stock or buildings as it just takes a fee from customers for its services. 

This business model is highly cash generative. For the year to the end of March, on revenues of £330m, the firm generated £226m of cash, converting 107% of pre-tax profit to cash. 

The cash generation is, in my opinion, the group’s best quality. A business that throws off so much cash is almost certain to produce impressive returns as cash is channelled back to shareholders. Indeed, management returned £148m to shareholders last year through buybacks (as mentioned above) and dividends. Meanwhile, net external debt was reduced to £339m from £335m, and the remainder was reinvested in the business, funding the development of Autotrader’s new Dealer Finance and InSearch products. 

As it continues to return the majority of cash generated from operations to investors, and invest in its product offering, I believe that the company’s explosive growth should continue. And with this being the case, the stock’s valuation of 18 times forward earnings, seems to undervalue its prospects. 

Investment paying off 

Another growth stock I’m excited about is Kaz Minerals (LSE: KAZ). This company might not be in the same league as Autotrader when it comes to historic growth, but City analysts are expecting big things going forward. 

The company has spent the last five years building itself for the future, and these efforts are now really starting to pay off. After investing $3.5bn in two major copper mines, Bozshakol and Aktogay in Kazakhstan, production in 2016 leapt 73% to 140,000 tonnes and nearly doubled in 2017 to 260,000 tonnes. For 2018, management believes the firm can produce as much as 300,000 tonnes. As production has ramped up, Kaz has also benefitted from a tailwind of rising copper prices (up around 50% in the past three years).

The combination of higher output and higher selling prices has helped the firm’s net profit rise from virtually zero in 2015 to an estimated $668m for 2018. Analysts are predicting earnings per share of $1.50 (up 43%) for the year, indicating a forward P/E of 9.6 and a PEG ratio of 0.2, which implies the shares are undervalued compared to the growth Kaz is expected to report. 

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Auto Trader. 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.

But that’s the situation with miner and steel producer Evraz (LSE: EVR), which has come storming back from a few tough years and looks set to deliver an impressive performance this year — along with a forecast 10.6% dividend yield.

I was bullish in January when the dividend looked set to yield a more modest 6.8%. And the firm’s first-quarter update doesn’t really shake me from that position, despite falls in output caused, in part, by bad weather.

Severe weather conditions in the first two months of the year apparently had an impact on the availability of iron ore. That led to an 8.6% drop in pig iron production from the firm’s plants in Russia and Ukraine, from 2.8m tonnes to 2.6m.

And as a knock-on effect, crude steel production fell by 6.9%, from 3.1m tonnes to 2.9m leading, in turn, to a 5.7% fall in total steel product sales. But all of this seems to be a one-off and I don’t expect any long-term effect.

I am, however, a little concerned about the firm’s level of debt, which stood at £3.97bn at the end of 2017. But that was 17% down on the previous year and I expect it to continue to drop.

Evraz shares have trebled in value in the past two years, but with a low forward P/E multiple of only 5.3, I could see more to come.

A five-bagger

If you want to see an even more impressive share price gain, look no further than KAZ Minerals (LSE: KAZ). Its shares have five-bagged in the same two years and a couple of months ago, I said that they might be running out of steam and set for a fall.

So far, that hasn’t happened — in fact, we’ve seen a further 8% rise. But I’d still be twitchy if I held KAZ shares.

Again, we’re looking at an impressive recovery after a tough spell during the commodities downturn. And after a terrific performance in 2017, further EPS growth penciled in for the current year would give us a P/E multiple of a very undemanding 8.9. Unlike Evraz, though, KAZ isn’t going to make you rich from dividends any time soon — yields look set to deliver less than 1% this year and only 1.5% next.

Thursday’s first-quarter production report, taken on its own, might have persuaded me that the company is a buy, as it’s apparently “on track to achieve 2018 production guidance for all metals.“

Copper production is up 3% overall, based on higher output at the company’s Bozshakol and Aktogay facilities, with Bozshakol the clear leader after delivering a 20% rise in copper production, coupled with 29% more gold.

But net debt stood at $2,206m at 31 March, which is around twice the previous year’s EBITDA. That’s a bit concerning on its own, but I’m further disturbed to learn that it’s up 7% since 31 December.

The tougher quarter won’t have helped, but I do wonder if KAZ is perhaps operating too close to the edge of not being able to get its debt down and whether a future downturn could cause havoc. It’s not for me.

The post Should you pile in to FTSE 100 10% yielder Evraz? appeared first on The Motley Fool UK.

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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.