Is Polymetal a bargain compared to its competitors or are there better options out there? Let’s explore.

Will FTSE 100 mining stocks go higher?

Three Footsie mining stocks on my watchlist have made flying starts to 2022.

The Anglo American (LSE: AAL) share price climbed 34% following a $12bn increase in operating profit and a $1.7bn net debt reduction. Over a third of the miner’s 2021 EBITDA came from platinum group metals. Looking ahead, the company should prove resilient to geopolitical uncertainty. Anglo American, which is up 33% in a year, operates on six continents and has no Russian presence, unlike Polymetal.

Antofagasta (LSE: ANTO) is also racing ahead of the Polymetal share price, rising 22% this year (but down 10% over 12 months). As copper mining is the lifeblood of this Chilean multi-national’s business, shareholders will be encouraged by Goldman Sachs‘ 12-month copper price target of $13,000 per tonne. Antofagasta can build on a robust financial position after earnings per share rocketed by $87.80 last year.

Rio Tinto (LSE: RIO) stock completes the trio — it’s up 25% in 2022, but only up 4% in a year. Iron ore production accounts for almost 78% of its underlying earnings. In 2021, Rio Tinto generated +60% net cash and ordinary dividends per share rose 71%. Moreover, China’s iron ore imports remain stable in 2022, despite its economic slowdown. This is good news for the Rio Tinto share price.

With global interest rates rising, metal prices and mining stocks may fall so all of these shares come with risks. However, I believe the metals bull market could just be beginning as production seems unlikely to meet demand. For me, the outlook remains positive while supply side issues persist.

Will the Polymetal share price go lower?

Polymetal’s focus is precious metals, particularly gold and silver. It has operations in Russia and Kazakhstan. Although it consistently increased production over five years, the share price has been hurt by liquidity troubles caused by sanctions on Russian banks.

In further worrying signs, Polymetal postponed its decision on its 2021 final dividend payment. And Deloitte recently resigned as its auditor, threatening its London Stock Exchange listing.

Arguably, the stock’s substantial decline and a dirt cheap price-to-cash-flow ratio of 1.4 mean the risks it faces are priced in. Nascent plans to separate its Kazakh assets from the rest of the business lifted the Polymetal share price somewhat in recent days.

Nonetheless, I’m pessimistic about Polymetal shares. Headquartered in Cyprus, it avoided direct sanctions like those levied on Roman Abramovich’s Evraz. In a rapidly evolving situation, this could change.

The mining shares I’d buy now

Exposure to metals plays an important role in my diversified portfolio. I’m impressed by all three FTSE 100 stocks on my watchlist. They have strong balance sheets and are collectively spread across different geographies and commodities. I’d divide any spare cash between them.

By contrast, I see potential for further declines in the Polymetal share price. It’s simply too risky for me to buy at present, so I’m looking elsewhere for a solid gold miner.

The post Will FTSE 100 miners outshine the Polymetal share price in 2022? appeared first on The Motley Fool UK.

More reading

• £5,000 invested in Nvidia stock 6 months ago is now worth…
• I hold Lloyds. Is it madness to buy Barclays shares too?
• It’s time we all took a long, cold look at the Lloyds share price
• Warren Buffett didn’t retire early. But could his investing wisdom help you do so?
• 5 compelling investment ideas for a Stocks and Shares ISA in 2026

Charlie Carman 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.

What caused this impressive growth? And should I be adding this company to my portfolio?

The rising Anglo American share price

With many mining sites being temporarily shut down in the early days of the pandemic, a subsequent shortage of metals began. This is what appears to have triggered the start of the rising commodity prices. As manufacturing businesses slowly reopened their factories, demand built up. However, it quickly started accelerating as many countries worldwide initiated new infrastructure projects, especially within the energy sector.

The limited supply combined with the rising demand naturally led to resource prices going up. This is fantastic news for Anglo American, which is a leading producer of copper, iron and platinum. And so it was able to achieve some pretty impressive results, in my opinion. And that was despite the fact the firm suffered a severe plant outage in its platinum production division.

Looking at the full-year results for 2020, total revenue increased by $1bn, and underlying profits remained relatively flat. These are hardly groundbreaking results. But considering the reduced mining and production volumes, they’re not bad. At least, I think so. Since then, the business has begun executing plans to demerge from its South African coal operations and acquired Sirius Minerals to further diversify its portfolio.

With operations now returning to pre-pandemic levels and metal demand on the rise, I believe the Anglo American and its share price can continue to thrive over the long term. And it seems the management team agrees as they recently increased the shareholder dividends.

Risks to consider

Rising commodity prices have undoubtedly been beneficial to the Anglo American share price. However, the value of metals can be volatile, as shown by the firm’s fluctuating level of profitability. Currently, the demand for metals like Iron and copper far exceeds the available supply. But this will not always be the case. With more mining companies returning to full operational capacity and additional mining sites being established, the market may eventually become saturated.

As a consequence, metal prices could very quickly start falling again. And since the costs of mining remain relatively fixed, the level of Anglo American’s profitability could be significantly impacted.

The bottom line

With the world shifting towards electric vehicles and renewable energy, I believe the need for metals like platinum and copper isn’t going to disappear any time soon. Combining this with Anglo American’s diverse portfolio of materials makes me think the share price can continue to climb higher.

Therefore, while there are some substantial risks, I would consider adding the business to my portfolio.

The post Will the Anglo American share price keep rising in 2021? appeared first on The Motley Fool UK.

More reading

• The best time to buy stocks? It might be right now

Zaven Boyrazian does not own shares in Anglo American. 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.

Needless to say, that’s a fairly extraordinary level of growth, especially since the stock was suspended from being publicly traded for nearly six months. What happened? And should I be considering this stock for my portfolio? 

The rise of the EUA share price

EUA is a mining company that focuses on extracting various metals, including palladium, platinum and iridium. While it has multiple sites in its portfolio, the company is still very much in its infancy. And so the total revenue generation is quite limited. For example, in 2019, it only generated £1.13m in revenue. And that was before the pandemic began disrupting the industry.

So why has the share price started surging? Following a request for more information regarding its relationship with the Chinese investment bank CITIC, the shares of EUA were suspended at 7.2p. After a few months, this relationship was clarified. And in July, the shares began trading again at a price of 12.8p that continued to climb throughout the rest of 2020.

It turns out the company is looking to sell itself. And CITIC and UBS are helping to make that a reality. Since the total value of the resources at its existing mining operations is estimated to be around £1.5bn, the prospect of a sale sent the EUA share price flying.

Taking a step back

The idea of receiving a £1.5bn payday certainly sounds enticing, especially since the current market capitalisation is around £760m. However, there is limited information currently available surrounding this deal. What’s more, it may never happen.

In January 2021, the management team provided an update on the progress (or lack thereof) being made regarding the potential sale of the business’s assets. Despite being approached by “a wide range of parties”, no binding deals have been signed. And given the industry is still in the process of recovering from the disruptions of the pandemic, it could be some time before any formal offer is made.

The bottom line

To me, it looks like the EUA share price is being propped up by the prospect of a future sale, the value of which remains unknown. Should this fail to materialise, the share price could begin to decline rapidly over the short term.

However, the company’s lead asset — the West Kytlim platinum mine — is now fully operational. In addition, its new flagship project — Monchetundra — is set to become a world-class open-pit palladium mine. In my eyes, it looks like the underlying business is performing well. Combining this excellent progress with the rising demand for these metals for use in electric vehicles and renewable energy infrastructure, EUA does sound like a promising mining company.

However, the valuation of the stock is simply too high for my tastes. And so, the firm is staying on my watch list for now.

The post The EUA share price increased 600% in 2020. Should I buy now? appeared first on The Motley Fool UK.

More reading

• £5,000 invested in Nvidia stock 6 months ago is now worth…
• I hold Lloyds. Is it madness to buy Barclays shares too?
• It’s time we all took a long, cold look at the Lloyds share price
• Warren Buffett didn’t retire early. But could his investing wisdom help you do so?
• 5 compelling investment ideas for a Stocks and Shares ISA in 2026

Zaven Boyrazian does not own shares in Eurasia Mining. 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.

Platinum bomb

Precious metals digger Lonmin (LSE: LMI) saw its shares surge again last week, with bubbly market appetite coming despite another plunge in platinum prices.

The dual-role metal — it’s used both as an investment metal as well as a key component in various industries and the jewellery market — slipped back towards the critical $1,000 per ounce marker as the US dollar strengthened.

Recent Federal Reserve comments suggesting that interest rates could be back on the agenda has propelled the greenback higher, and I believe additional strength may materialise in the months ahead, applying fresh pressure to the metal. And of course fears over the health of the Chinese economy may cause further problems for platinum values.

Lonmin rose last week after announcing strong progress in its cost-cutting mission, a programme that helped it record a $21m pre-tax loss during October-March. This marked a vast improvement from the $118m loss clocked up in the same period last year.

However, the number crunchers expect Lonmin to remain in the red in 2016, with losses of 9 US cents per share currently pencilled in.

And with the digger still facing a murky revenues outlook, I reckon investors hoping for a bottom-line bounceback may end sorely disappointed. I believe Lonmin’s surging share price provides a terrific selling opportunity.

Building beauty

I am far more optimistic concerning the profits prospects of Bovis Homes (LSE: BVS), however.

The housebuilder has gained significant traction since its AGM earlier this month, its share price taking in four-and-a-half-month peaks just shy of £10 in the process. And this comes as little surprise, at least in my opinion. Bovis announced at the meeting that

“housing market conditions remain positive with strong demand from home buyers who are benefitting from good access to mortgage finance.”

With construction activity still failing to meet this brilliant demand, the City expects Bovis to keep chalking up stellar earnings rises — indeed, a 16% earnings rise is projected for this year alone, resulting in a mega-low P/E rating of 8.9 times.

And with the business boasting a market-mashing yield of 4.6% for 2016, I reckon there is plenty of room for Bovis’s stock value to keep sprinting.

Coffee colossus

Bed and beverage play Whitbread (LSE: WTB) also touched levels not seen since the start of 2016 last week, keeping its spritely performance in May going.

Investors are becoming bullish sales continue to surge across the group. Whitbread saw revenues canter 12% higher in the 12 months to February 2016, with sales at its Costa coffee chain rising 15.9% and takings at Premier Inn increasing 12.9%. And I expect revenues to keep rising as Whitbread expands these brands across the globe.

This view is shared by the abacus bashers, and an earnings expansion of 4% is pencilled in for 2017 alone. A consequent P/E rating of 17.3 times for may be slightly toppy on paper, but I believe this represents fair value when you factor in the electric growth potential thrown up by Whitbread’s ambitious expansion programme.

The post Should you buy last week’s winners Lonmin plc (+15%), Bovis Homes Group plc (+12%) and Whitbread plc (+9%)? appeared first on The Motley Fool UK.

More reading

• Are 76% off Vistry shares a once-in-a-decade opportunity?
• Down 43% in a month, what on earth’s going on with the Vistry share price?
• Down 67% with a P/E of 7.8. Is this a once-in-a-decade chance to buy this downtrodden FTSE 250 stock?

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

A cast-iron sell

Metals and energy colossus BHP Billiton (LSE: BLT) continues to stride higher thanks to recovering commodities prices.

In particular, the London business was helped by a fresh upleg in iron ore values in April, the material supported by signs of a recovery in Chinese steelmaking activity.

But doubts persist whether this rebound can continue as the country’s construction sector struggles. Indeed, many market commentators feel that iron ore’s heady ascent in 2016 is down to heavy speculative trading rather than improving underlying demand, putting the share price rises of BHP Billiton and its peers under serious scrutiny.

The City has pencilled-in an 89% earnings slide at BHP Billiton for the period to June 2016, leaving the company dealing on a frankly-ridiculous P/E ratio of 87.3 times. I believe this leaves plenty of room for a serious retracement should demand indicators turn lower and supply levels keep swelling.

Digger in danger

The stock price recovery over at Lonmin (LSE: LMI) has shown no signs of cooling in recent weeks, the precious metals play rising by more than 40% in April and visiting levels not seen since autumn 2014.

But like BHP Billiton, I believe a cloudy demand outlook threatens to send shares in the mining giant rattling lower again.

Lonmin may have been propelled higher by surging platinum values, the dual-role metal climbing to nine-month peaks around $1,070 per ounce last week. Yet with the commodity’s sterling rise being thanks to a significant weakening in the US dollar rather than a reflection of a healthy supply/demand balance, Lonmin shares could suffer.

Indeed, concerns surrounding future Chinese off-take continue to persist. And the widening emissions scandal enveloping the automotive sector could have huge ramifications for the diesel engine, and consequently platinum demand, in the coming years.

The City expects Lonmin to endure losses of 16 US cents per share in 2016 as revenues slump. And with the South African producer also battling rising capex costs, I reckon Lonmin is a risk too far at the present time.

A bankable bargain

Banking giant Barclays (LSE: BARC) enjoyed a hefty bump higher during April, a double-digit rise helping the business stem the steady downtrend that kicked off last summer.

That’s not to say that Barclays is in the clear, of course. For one, the firm’s full-year results in March underlined the colossal problems caused by rising financial penalties, Barclays having to cut the dividend through to 2017 to just 3p per share due to escalating PPI-related bills.

Meanwhile, Barclays’ recent decision to significantly reduce its emerging market exposure could have huge ramifications for future revenues growth. And of course the result of June’s European Union referendum could cause serious top-line troubles in its home market.

Still, I believe Barclays remains a solid long-term growth pick. The company’s renewed focus on the robust UK and US economies should deliver strong earnings growth in the coming years, while a more sensible approach at its Investment Bank provides another exciting growth lever.

And with Barclays dealing on a very-decent P/E rating of 12 times for 2016 — in spite of a predicted 12% earnings decline — I reckon the share price could have much further to run.

The post Can April’s winners Barclays plc (+14%), BHP Billiton plc (+19%) and Lonmin plc (+42%) keep charging? appeared first on The Motley Fool UK.

More reading

• I hold Lloyds. Is it madness to buy Barclays shares too?
• With a P/E of 8.2 and a P/B of 0.7, are Barclays shares cheap?
• Down 19%! Here’s why Barclays shares look a serious bargain to me right now
• £10,000 invested in Barclays shares at the start of 2026 is now worth…
• £10,000 invested in Barclays shares 1 year ago is now worth…

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

Stuck in a hole?

Another day, another day of extreme stock price volatility over at Lonmin (LSE: LMI). The platinum explorer was last 13% higher from Tuesday’s close following another leap in commodity values.

Lonmin has been particularly responsive to changes in broader investor sentiment in recent weeks. The company saw its share price treble in less than a month, topping out at 188p earlier in March, but a stalling commodity rally since then has seen Lonmin surrender much of these gains.

Of course investors can make a handsome profit if they time their share purchases right. But they can also be left nursing vast losses should they jump in at the wrong time.

And I believe anyone ploughing into Lonmin at the present time is in danger of suffering a severe headache. The platinum market’s chronic worsening supply balance leaves the stock at the mercy of a severe share price correction.

The economic cool-down in China continues to cast a shadow over total platinum consumption in the near-term and beyond, while swathes of recycled material entering the market causes further room for concern. Indeed, the World Platinum Investment Council expects the metal’s deficit to shrink to 135,000 ounces in 2016 from 380,000 ounces last year.

As a consequence the City does not expect Lonmin to break its run of losses until the year-to-September 2017 at the earliest, with expected earnings of 1.6 US cents per share leaving the company dealing on a huge P/E ratio of 34.9 times.

This earnings multiple sails comfortably outside the benchmark of 10 times or below, a figure that indicates stocks with extremely-high risk profiles like Lonmin.

With this in mind, I believe the commodities giant has plenty of room to fall.

Dicey drillers

A weaker US dollar has also helped resources prices gain ground in Wednesday business, helping many producers like Premier Oil (LSE: PMO) gain ground — indeed, the business was last dealing 14% higher from last night’s close as Brent moved back towards the $40 per barrel marker.

This rise was not enough to stop Nostrum Oil & Gas (LSE: NOG) losing ground, however, the company last dealing 7% lower following a disappointing trading update.

Nostrum advised that revenues fell 43% during 2015 to $449m, a result that drove sent pre-tax profit shuttling 77% lower to $72m.

The business has vowed to keep reducing operating costs in “the new oil price environment,” however, while Nostrum also expects to maintain production above the 40,000-barrel-per-day marker. Output during 2015 came in at 40,391 barrels per day.

But I believe that Nostrum is likely to remain under severe pressure as a lack of co-ordinated supply cuts from the world’s major producers, combined with stagnating demand growth, weighs on the oil industry. As such, I believe the fossil fuel specialist — along with Premier Oil — remains a risk too far at the present time.

The post Is Now The Time To Buy Lonmin Plc, Nostrum Oil & Gas PLC & Premier Oil PLC? appeared first on The Motley Fool UK.

More reading

• Here’s how I’m targeting £11,363 a year in dividend income from £20,000 in this FTSE high-yield gem!
• This FTSE 250 stock’s just cut its dividend. But here are 3 reasons why I’m not selling my shares…

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

Platinum producer Lonmin (LSE: LMI) has been one of the standout performers during the past month, its share price striding 218% higher since the start of February. And sparkling stones digger Petra Diamonds (LSE: PDL) has enjoyed a 31% bounce during the period.

So can investors look forward to further gains in the weeks and months ahead?

China still tanking

A surging platinum price has been key to Lonmin’s spectacular rise over the past month.

The metal surged back above the crucial $1,000 per ounce level for the first time since last October this week, meaning prices have rocketed 15% since the start of 2016. But worries persist that recent rallies have become far too heady, and that persistent demand weakness will bring values crashing down to earth again.

These fears were given further fuel on Tuesday following the latest round of disappointing trade data from China. Exports tanked by an eye-watering 25% in February from a year earlier, the biggest decline since the 2008/09 recession throttled the global economy.

An earlier Lunar New Year Holiday this February, compared with 2015’s festivities, may have exacerbated the poor result. But with other manufacturing and factory data still steadily nosediving, today’s release comes as further evidence of China’s crashing economy.

China is responsible for around a third of total platinum demand, according to the World Platinum Investment Council, and the country’s jewellery sector consumes more than double the amount of platinum than the rest of the world combined.

But Lonmin isn’t alone in suffering from toppling Chinese commodity demand. Petra Diamonds advised last month that “a slowdown in retail demand from China” drove stones values still lower between July and December, prompting group revenues to fall 28% year-on-year to $154m.

Problems set to persist

Petra Diamonds is hoping to mitigate the impact of falling diamond prices by improving production at its Cullinan, Finsch and Koffiefontein projects in South Africa, work that should also improve carat quality.

Meanwhile, Lonmin is undergoing vast restructuring to slash costs and reduce output in a desperate bid to rectify platinum’s worsening supply/demand dynamics and prop up prices.

But these measures are not expected to revamp either firms’ fortunes any time soon, as underlying demand in the metals and diamond markets remain in the doldrums. Lonmin is expected to keep on punching losses until the end of fiscal 2017 at the earliest, while Petra Diamonds is anticipated to endure a further 20% earnings slide in the current period.

Meanwhile, the large extent of frothy buying activity means that investors should be braced for much more share price volatility. Indeed, sinking trader sentiment on Tuesday has pushed Lonmin’s stock price 8% lower on the day, while Petra Diamonds is currently nursing a 4% loss from Monday’s close.

I believe the prospect of prolonged demand weakness on both Lonmin and Petra Diamonds makes the two diggers a risk too far at the present time.

The post Are Lonmin Plc & Petra Diamonds Limited On The Way Back Up? appeared first on The Motley Fool UK.

More reading

• £5,000 invested in Nvidia stock 6 months ago is now worth…
• I hold Lloyds. Is it madness to buy Barclays shares too?
• It’s time we all took a long, cold look at the Lloyds share price
• Warren Buffett didn’t retire early. But could his investing wisdom help you do so?
• 5 compelling investment ideas for a Stocks and Shares ISA in 2026

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

Oil play keeps plunging

Shares in fossil fuels giant Tullow Oil (LSE: TLW) mirrored the behaviour of the Brent crude benchmark last week, and choppy trading conditions sent the stock 4% lower during the period.

Oil values may have steadied at $30 to $35 per barrel after recovering from January’s multi-year troughs below $28. But prices have failed to push on thanks to lasting fears over the huge imbalance washing over the crude market, leaving prices in danger of a fresh downleg.

The latest data from the Energy Information Administration (EIA) showed US stockpiles climbing by a further 2.1m barrels week-on-week, taking total supplies to a new record of 504.1m barrels.

And investor confidence over a deal between OPEC members like Saudi Arabia and Russia to put the brakes on future output has run out of steam too. With good reason, in my opinion, as production cuts rather than the proposed ‘freeze’ are needed to mitigate sluggish demand and pull inventories lower.

Despite these concerns, the City expects the bottom line at Tullow Oil to keep on improving in 2016 as production at the firm’s TEN project in Ghana kicks off. The company saw losses narrow to 111.3 US cents per share last year from 170.9 cents in 2014, and Tullow Oil is anticipated to print earnings of 14.4 cents in 2016.

However, this projection still leaves the business dealing on an elevated P/E rating of 24.8 times, sailing above the benchmark of 15 times that represents stellar value. Given the murky state of the oil market and the prospect of further revenues woes, I reckon the risks at Tullow Oil far outweigh the potential rewards.

Platinum perils

Like Tullow Oil, I reckon the chronic oversupply affecting commodity markets should keep Lonmin (LSE: LMI) on the back foot. The platinum giant surrendered 5% of its share value last week, and I reckon falls to fresh lows could be on the cards.

Lonmin has enjoyed a solid share-price bump in February despite last week’s fall as metal prices have bubbled higher. Platinum has gained 8% since the start of the month and struck three-month peaks around $960 per ounce at one point.

But fears over metal demand looking ahead remain a millstone around Lonmin’s neck thanks to China’s cooling economy, adding to intensifying concerns that the diesel market may be entering terminal decline. On top of this, monetary easing across much of the world also threatens to send the US dollar higher again in the months ahead, adding another layer of trouble to Lonmin’s top-line projections.

While it’s true the company has worked relentlessly to mend its wafer-thin balance sheet — Lonmin has slashed thousands of jobs and shuttered mines to reduce its cost base — I believe the prospect of prolonged demand weakness makes the platinum giant a risk too far.

The post Should You Buy Last Week’s Laggards Tullow Oil plc & Lonmin Plc? appeared first on The Motley Fool UK.

More reading

• £5,000 invested in Nvidia stock 6 months ago is now worth…
• I hold Lloyds. Is it madness to buy Barclays shares too?
• It’s time we all took a long, cold look at the Lloyds share price
• Warren Buffett didn’t retire early. But could his investing wisdom help you do so?
• 5 compelling investment ideas for a Stocks and Shares ISA in 2026

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

Insurer edges skywards

Insurance giant Beazley (LSE: BEZ) has seen its shares move 1.7% higher in Thursday trading following the release of positive trading results for 2015.

The London firm advised that gross written premiums advanced 3% last year, to $2.08bn, a result that nudged pre-tax profit 8% higher to $284m. The company had a “benign claims environment” to thank for the solid performance, it said.

But looking ahead, chief executive Andrew Horton told Reuters that “the rating environment across catastrophe-exposed business, due to a lack of claims in 2015 and 2014, means that rates are going to continue to go down.” He added that “margins will be under pressure this year.”

With Beazley also suffering from intensifying competition, the City expects earnings to tank 13% in 2016, leaving the business dealing on a P/E rating of 15.1 times. This number is far from shocking, but considering that earnings risks continue to rise, I believe the insurer is an unappealing pick at the present time.

Copper play pleases investors

Copper digger Xtract Resources (LSE: XTR) has gone gangbusters in Thursday’s session following positive operating news — the stock was last dealing 7.5% higher from the prior close.

Xtract Resources advised that the processing plant at its Chepica gold and copper facility in Chile had been granted permission to restart on Friday. The plant has been down since late December following two fatalities at the site.

The mining play advised earlier this week that revenues slipped 16% between October and December from the prior quarter, to $375,802, although the impact of cost-saving measures propelled profits 39% higher to $208,269. Still, the bottom-line result missed expectations, and I reckon Xtract Resources should continue to be hit by falling ore grades and weak copper prices.

The number crunchers expect the Chilean digger to report earnings of 0.02p per share in 2016, resulting in an ultra-low P/E rating of 9 times. But given the poorly state of the copper market, I believe investors expecting sustained earnings rises could end up disappointed.

Stuck in a hole

Shares in embattled mining play Lonmin (LSE: LMI) have also exploded higher in Thursday trade due to a solid bump in metal prices.

Thanks to fresh US dollar weakness, platinum was recently at week-long peaks above $880 per ounce, while sister metal palladium burst back above the critical $500 marker. This renewed strength pushed Lonmin’s share price 15% higher from Thursday’s close.

However, I reckon this near-term strength represents nothing more than a fresh selling opportunity. Lonmin advised last week that it expects “a low pricing environment will persist in the short to medium term,” and subsequent restructuring has seen the business cut more than 5,000 jobs in the past quarter alone.

But as demand indicators continue to worsen, and wider economic conditions propel the dollar steadily higher in the coming weeks and months, I reckon Lonmin’s share price should resume its crushing downtrend.

The post Should You Pick Up Lonmin Plc, Beazley PLC & Xtract Resources PLC On Thursday? appeared first on The Motley Fool UK.

More reading

• £5,000 invested in Nvidia stock 6 months ago is now worth…
• I hold Lloyds. Is it madness to buy Barclays shares too?
• It’s time we all took a long, cold look at the Lloyds share price
• Warren Buffett didn’t retire early. But could his investing wisdom help you do so?
• 5 compelling investment ideas for a Stocks and Shares ISA in 2026

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

Sure, the platinum group metal (or PGM) producer may have stomped higher in end-of-week trade — Lonmin was recently 18% higher from Thursday’s close — but the business has seen its value fall by more than half since the turn of January.

However, many investors believe Lonmin may be on the cusp of a strong recovery following the colossal cash-raising measures announced late last year. So what are the chances of a solid rebound?

Asian purchases rise

Well, market bulls took heart after Japan’s largest bullion dealer Tanaka Kikinzoku Kogyo estimated this week that platinum imports into the country more than trebled in 2015, to 537,946 ounces. This is the highest level on record, Reuters reported, as hungry bargain hunters piled into the metal — platinum prices fell 27% during the course of last year.

As a result of this buoyant buying activity, metals refiner Johnson Matthey has upscaled its deficit forecasts for the metal for 2015. The business now expects a material shortfall of 702,000 ounces, up from its November estimate of some 652,000 ounces.

However, this brief demand upswing is not a sign of strong underlying demand, naturally, and thereforedoes not represent a sign for investors to pile into the likes of Lonmin.

Dollar set to stagnate?

But platinum prices could theoretically advance should rising pessimism concerning further Federal Reserve rate hikes stem the steady rise of the US dollar.

The impact of monetary tightening has weighed heavily on commodities of all classes over the past year, with forecasts pointing to a further three rate rises on top of December’s increase. But with US inflation falling 0.1% last month — and recent datasets suggesting the world’s number one economy is cooling down — further Fed action may not be an inevitability after all.

There may be trouble ahead…

Still, I reckon the greenback should remain well bought during the course of 2016 and potentially beyond. A shaking global economy is likely to keep ‘safe-haven’ purchases of the dollar in fashion, while loosening monetary policies elsewhere should also keep the currency on an upward keel.

A rapidly-declining South African rand has of course already added to the revenues pressures at Lonmin in recent times. The currency fell to fresh record lows against the greenback earlier in January, and I reckon additional weakness can be expected as commodity prices keep on tanking.

And of course the uncertainty surrounding the future of the diesel market — the bedrock of the platinum market — looks likely to keep the pressure on Lonmin’s earnings as the car emissions scandal spreads. Falling auto sales due to the faltering global economy are already casting a long shadow over the mining play’s sales forecasts.

With platinum jewellery demand also on the back foot, prices of the precious metal ploughed fresh seven-year troughs around $815 per ounce earlier in January. And I do not believe there is enough fuel in the tank for metal prices to gallop higher any time soon, a worrying omen for cash-strapped producers like Lonmin.

The post Could Lonmin Plc Be On The Verge Of A Stunning Turnaround? appeared first on The Motley Fool UK.

More reading

• £5,000 invested in Nvidia stock 6 months ago is now worth…
• I hold Lloyds. Is it madness to buy Barclays shares too?
• It’s time we all took a long, cold look at the Lloyds share price
• Warren Buffett didn’t retire early. But could his investing wisdom help you do so?
• 5 compelling investment ideas for a Stocks and Shares ISA in 2026

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