A gold and silver gem

Fresnillo is the world’s leading silver producer and one of Mexico’s largest gold producers. It has a near 500-year history of mining precious metals in South America. Its mining concessions extend to approximately 1.7 million hectares where it operates both underground and open pit mines.

In 2021, revenue was $2.8bn, representing a 9% increase on the previous year. This was mainly down to average realised silver prices, which rose 16% during the year.

It possesses a rock-solid balance sheet. Its earnings before income tax depreciation and amortisation (EBITDA) stands at $1.2bn. With a net debt of $1.1bn that means its net-debt-to-EBITDA ratio is negative.

Silver – a versatile metal

Like its more expensive cousin gold, silver is predominantly viewed as a monetary metal. However, it also has many industrial applications too. With the greatest electrical and thermal connectivity of all metals, silver is a key component in solar panels, semiconductors and electric vehicles.

Decarbonisation of the global economy together with the ‘internet of things’, in which hundreds of billions of physical devices are connected to the internet, are two unstoppable megatrends that should ensure silver remains in high demand well into the future.

Silver also acts as an inflationary asset. In the early 1980s, when inflation was rampant, the price of silver hit $50 an ounce. More recently, during the Covid crash, silver prices rose as the general stock market tanked.

What I like about silver is that the metal looks historically undervalued relative to other commodities, including gold. That’s why I have been buying shares in Fresnillo over the last few months as I don’t know when it’s likely to bottom. But in light of the structural forces highlighted above, it’s a fair bet that Fresnillo’s share price should be higher in the long term.

Challenging environment

As one would expect of a cyclical commodities business, Fresnillo’s dividend has ebbed and flowed over the past decade. However, it has increased its dividend for the past three years. Its policy is to pay out between 33% and 50% of profit after tax each year. In 2021, the payment was $245m.

Like so many mining companies, Fresnillo has been particularly impacted by soaring energy prices, which it relies on to fuel its transport fleet.

And last year, the Mexican government introduced a law that prohibited the use of contractor labour. This hit the business particularly hard. Long term though, it’s likely to provide it with greater operational resilience.

Overall, I believe that the prospects for the company are good. Later this year, a major new mine, Juanicipio, comes on-line. This will boost gold and silver production significantly. As Fresnillo’s share price languishes at multi-year lows over recessionary fears hitting silver demand, I recently bought more shares for my Stocks and Shares ISA.

The post Why Fresnillo is one of the best UK shares to buy now appeared first on The Motley Fool UK.

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Andrew Mackie has positions in Fresnillo. The Motley Fool UK has recommended Fresnillo. 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.

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.

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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.

A hidden mountain of wealth

As previously stated, SolGold is a young mining business that’s still firmly within its exploratory phase. It operates primarily within Ecuador at the Andean copper belt. But it also has operations in Australia and the Solomon Islands.

What makes the company quite unique is its Alpala project. Despite its youth, it’s secured the rights to a site that sits directly on top of a vast copper, silver and gold deposit. The management team has already proclaimed it to be among the world’s best-underdeveloped locations, with an estimated mining lifetime of 55 years. And based on the preliminary results, I’d certainly agree.

The multi-billion-dollar project is estimated to contain up to 9.9 Mt of copper, 21.7 Moz of gold and 92.2 Moz of silver. Needless to say, that’s a mountain of wealth to be extracted. So, given the enormous opportunity this project presents, why is the SOLG share price behaving like it’s on a rollercoaster?

SolGold’s volatile share price

It seems there remains quite a bit of uncertainty surrounding the Alpala project. There have been consistent delays in the completion and publication of the company’s pre-feasibility study. Consequently, it’s unlikely SolGold will be able to take advantage of current high commodity prices.

However, the business of metals exploration is fraught with risk. And while delays are frustrating, the additional due diligence of the management team does seem a prudent decision, in my opinion.

But delays raise costs. So far, the Alpala project’s expenses are estimated to be between $2.4bn and $2.8bn. This is particularly troublesome as SolGold currently has no revenue stream. That means the company is entirely dependent on external funding, which created some problems for Cornerstone Capital Resources.

The Canadian firm owns a 15% stake in the Alpala project as well as an 8% interest in SolGold itself. And unfortunately, the two firms have a conflict of interest. The first wants to sell the project, while the second intends to develop it. The situation only got worse after a failed hostile takeover, adding even more uncertainty to the SOLG share price.

The bottom line

There’s no denying the Alpala project is an enormous opportunity for this business. And if executed correctly, I believe the SOLG share price could explode in the next few years. However, early-stage mining companies are already exceptionally risky. And seeing stakeholders in the project have significantly different strategies on how to proceed raises some alarm bells.

As big as this opportunity may be, the level of uncertainty and discord gives me pause. Therefore, I’ll be keeping SolGold on my watch list for now. At least until more information becomes available.

The post Is the Solgold share price about to explode? appeared first on The Motley Fool UK.

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Zaven Boyrazian does not own shares in SolGold. 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.

Gold recently rose to within a whisker of the psychologically-critical $1,300 per ounce marker, the highest since mid-June. And silver values have also stepped to their highest for around two months, the dual-role metal moving back above $17 per ounce in end-of-week trade.

The mounting concern over conflict on the Korean peninsula has played into the hands of London’s quoted gold and silver miner producers, including FTSE 100 constituent Fresnillo (LSE: FRES) whose share value has also leapt to its highest since June this week.

And the stand-off between Washington and Pyongyang looks unlikely to calm down any time soon. On Friday President Trump’s no-nonsense dialogue went up another notch, the commander-in-chief Tweeting that “military solutions are now in place… should North Korea act unwisely.”

Not only is the intrigue surrounding Trump’s White House, both at home and abroad, likely to keep the nerves of traders and investors under some strain, but a number of broader geopolitical and economic concerns across the globe, including fears that stock markets are now looking overbought, should also provide gold and silver with sustained support.

Against this backcloth, the City expects earnings to march higher at Fresnillo, helped by soaring production levels (the Mexican digger saw total silver volumes advance 11% between January-June, to 28m ounces).

The 19% profits rise currently forecast for 2017 leaves the business dealing on a forward P/E ratio of 30.5 times, sailing above the British blue-chip prospective average of 15 times. However, I reckon the strong possibility that precious metals values could really take off in the near future still makes Fresnillo worthy of serious glances right now.

Construct colossal returns

The aforementioned washout across share bourses has seen Taylor Wimpey (LSE: TW) continue to stall following July’s healthy advances. Still, I reckon the homebuilder remains an attractive pick right now, particularly given its rock-bottom valuations.

An expected 4% earnings rise in 2017 leaves the Footsie play dealing on a forward P/E multiple bang on the widely-regarded bargain watermark of 10 times. And Taylor Wimpey also offers a lot for dividend chasers to get excited about, City predictions of a 13.2p per share reward for this year creating a monumental 7% yield.

Those expecting the firm to generate the stunning profits growth of previous years are likely to end up disappointed as clampdowns on the buy-to-let sector, combined with the impact of political and economic strife on many would-be purchasers’ appetite, dents home sales. And rising construction costs are likely to dampen bottom-line growth across the sector.

Still, I am convinced the likes of Taylor Wimpey should remain reliable earnings generators in the years to come as supportive lending conditions keep buying activity for first-time purchasers ticking over. And government failure to address the UK’s shortage of new houses should prevent property values slumping.

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Royston Wild owns shares in Taylor Wimpey. 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.

The gold and silver star has seen its stock value ascend 33% since the start of 2016. And I believe the foundations could be laid for much, much more strength looking ahead, particularly as an already-tense political backdrop is becoming ever-more turbulent.

The UK’s decision to hit the Brexit button, and Donald Trump’s ascension to the Oval Office in 2016, were undoubtedly the earth-shaking political events so far this century. And the geopolitical waters are becoming ever-muddier, particularly as tensions between the 45th president and long-term foes Russia, North Korea, Iran and Syria threaten to spiral out of control.

Looking elsewhere, the political landscape in France is becoming ever-more jittery as far-left presidential candidate Jean-Luc Mélenchon continues to pick up steam, making an already tough-to-call election still tougher to predict.

And British Prime Minister Theresa May’s decision to call a June general election earlier this week throws plenty of more uncertainty into the mix. While recent polling suggests a bruising Tory majority is around the corner, recent failures by pollsters around the globe suggest that nothing should be taken for granted. Anything other than a Conservative win would throw a spanner in the works of an EU exit.

When you also throw in signs that inflation is back on the rise, allied with persistent tension over economic turbulence in emerging regions, it comes as little wonder that precious metals are back in vogue.

Production powering up

This backcloth is helping support gold prices close to the critical $1,300 per ounce marker, around $1,285. And a burst through this level in the days ahead could see the safe-haven metal really light up, and pull the share price of Fresnillo with it.

But the near-term direction of gold values is not the only reason to be excited about the Mexican digger.

Fresnillo delivered record silver production of 50.3m ounces in 2016, up 7.1% year-on-year, while gold output soared by almost a quarter to 935,513 ounces. And planned project expansions like that at Fresnillo’s San Julián asset should keep output levels rising long into the future.

I reckon the silver surfer is in terrific shape to deliver splendid returns in the near term and beyond.

Sailing higher

Car insurance colossus Admiral Group (LSE: ADM), like its sector peers, has been one of the strongest performing stocks in 2016 as driver premiums continue to tick higher. The stock has added 11% in value since New Year’s Eve, and should continue to rise in line with insurance costs.

While claims inflation is ticking merrily higher, data across the industry suggests that this continues to be offset by rampant price rises. Indeed, Barclays Capital notes that while inflation stands at around 5%, price increases stand at double this figure at 10%.

Investors should also be cheered by Admiral’s ability to keep its customer base ticking higher, with 720,000 new clients taking the number on its books to a fresh record of 7.2m. And with the car insurer also making increasing progress abroad (revenues outside of the UK surged 57% last year), I reckon Admiral’s share price should keep on rising.

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Royston Wild has no position in any 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.

Russian gold and silver digger Polymetal International (LSE: POLY) saw its stock value ascend to six-month peaks above £10.40 late last week, investors piling-in with gusto on the back of spiralling metal values.

Bullion prices breached the $1,250 per ounce landmark late last week as the turbulence surrounding President Trump’s administration continued, this time as attempts to get a replacement for Obamacare through the House of Representatives spectacularly failed.

This put pressure on the US dollar and in turn lent the commodities complex further support. And safe-haven metals like gold and silver could gain further traction in my opinion should Trump struggle to get other legislation, like tax reforms, pushed through in the weeks and months ahead.

Meanwhile, the store-of-value metal investments are likely to gain further traction once the British government triggers Article 50 on Wednesday, firing the starting gun on EU withdrawal and possibly prompting years of massive political and economic uncertainty.

And Polymetal is steadily hiking production to reap the fruits of the current environment. The company dug 1.27m ounces of gold out of the ground in 2016, and plans to hike volumes to 1.4m ounces this year and to 1.55m ounces in 2018.

So it comes as little surprise that the City expects earnings to keep rising at Polymetal at a terrific rate. Indeed, growth of 23% is pencilled-in for 2017, and 11% for next year. These projections result in very-cheap P/E ratios of 11.6 times and 10.4 times respectively.

I reckon Polymetal could prove to be a splendid growth share in the years ahead and is a particularly attractive bet at current prices.

Bubbling over

I also reckon AG Barr (LSE: BAG) could see investors pile back in with gusto, possibly as soon as the firm’s next trading statement (full-year financials are scheduled for Tuesday, March 28).

Due to recent market difficulties at home, the number crunchers expect AG Barr’s recent record of decent earnings growth to grind to a halt with a 2% decline in the year to January 2017. But the beverages behemoth is anticipated to rebound with rises of 4% and 5% in fiscal 2018 and 2019 respectively.

Subsequent P/E ratios of 18.2 times and 17.5 times may be slightly toppy, but I believe the Irn Bru maker’s rising success across the globe merits these premium values.

AG Barr announced in February that “our second half trading performance strengthened,” helped by new product introductions like Rubicon Spring and IRN-BRU XTRA. The manufacturer now expects full-year like-for-like revenues to have risen 1.5% last year.

While trading conditions in the UK remain difficult, I am confident that the company’s drive to reduce the amount of sugar in its drinks in line with changing consumer habits should help to mitigate the worst of these troubles. And looking further down the line, I believe AG Barr’s improving momentum across The Americas should deliver excellent returns.

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

The Mexican miner advised that revenues leapt 31.9% in 2016, to $1.91bn, Fresnillo benefiting from improved metal prices and surging production levels. Total silver output clocked in at 50.3m ounces, up 7.1% year-on-year, while gold production of 935,513 represented a 22.8% increase from 2015.

And Fresnillo expects metal volumes to keep rising in 2017 thanks to higher grades and project ramp-ups. Silver output of 58-61m ounces is currently expected, while gold production of 870,000-900,000 ounces is also estimated.

Furthermore, the precious metals play also continued to make progress on the costs front last year, assisted by a collapse in the Mexican peso versus the US dollar. Adjusted production costs dropped 2.5% in 2016, the average 17.7% drop in the value of the peso versus the North American currency providing a massive boost.

These factors helped pre-tax profits explode at Fresnillo last year, the firm reporting a 238.2% bottom-line surge to $718.2m.

Bravo Rio

But Fresnillo isn’t the only FTSE 100 mining goliath to release robust trading numbers in recent weeks.

Diversified giant Rio Tinto (LSE: RIO) announced this month that sprinting iron ore values had helped underlying earnings leap 12% during 2016, to $5.1bn. The steel-making ingredient is responsible for more a shade over three-quarters of earnings at the digger.

So which is best?

Well, the City expects earnings at both Fresnillo and Rio Tinto to keep rocketing in the medium term at least.

For 2016 the silver specialist is anticipated to print a 36% earnings rise, while Rio Tinto is predicted to enjoy a 47% earnings bump. However, I believe Fresnillo’s earnings outlook is on much sounder footing than that of its diversified peer.

While it is difficult to definitely predict where commodity prices will head in 2017, I believe precious metals are in great shape to gain ground as political and economic turbulence in the US and Europe drives demand for safe-haven assets. Indeed, these fears powered gold above the $1,250 per ounce marker for the first time since early November just this week.

I am far less optimistic concerning the price direction of Rio Tinto’s base metals in 2017 and beyond, however.

Although Chinese exports rose 8% in January, trade data over the past year has largely been patchy, casting concerns over the state of raw materials demand from the manufacturing Goliath looking ahead. And these fears have been fanned by the rising protectionist rhetoric exemplified by new US President Donald Trump.

At the same time, mega producers like Rio Tinto are also turbocharging expansion projects in segments like iron ore to capitalise on recent price strength. But such measures threaten to put values on the back foot again should demand fail to suck up existing oversupply.

So while Rio Tinto’s forward P/E ratio of 9.7 times is far more appealing than Fresnillo’s corresponding multiple of 32.8 times, I reckon the silver star is a much more ‘investible’ commodities pick at present.

The post Fresnillo plc vs Rio Tinto plc: which mining stock will make you the most money? appeared first on The Motley Fool UK.

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

FTSE 100 gold giant Randgold Resources (LSE: RRS) saw its share price losing 24% of its value during July-December, while blue-chip peer Fresnillo (LSE: FRES) suffered a 26% decline.

FTSE 250 producer Centamin (LSE: CEY) was a bright spark in a battered sector however, its stock actually gaining 5% in value.

But I believe the Egypt-based producer’s gain last year could pale in comparison with those in 2017 and reckon — along with its gold-and-silver-digging colleagues — Centamin could explode in the months ahead.

Back in fashion?

Gold prices, and with it the share prices of large and small producers alike, fell from their July highs as investor caution gave way to frenzied buying of so-called risk-on assets. This caused bullion to slip from July’s 28-month highs around $1,370 per ounce and end the year over $200 cheaper.

Meanwhile, dual-metal producer Fresnillo was also whacked by a slide in silver values — the metal shed a fifth of its value in H2.

But precious metals values have spiked again in recent sessions as the so-called Trump Rally — a phenomenon that had powered stocks across both sides of the Atlantic higher — has run out of steam.

Indeed, gold values hit three-month peaks above $1,230 per ounce in start-of-week trade thanks to signs of fresh geopolitical turbulence in Europe.

Muddy waters

Gold values struck last summer’s peaks in the aftermath of Britain’s momentous decision to leave the EU. And this issue looks set to run and run as a variety of political hot potatoes, particularly on the topics of trading tariffs and immigration, dominate how the country’s self-imposed exile plays out in the years to come.

The future of the EU itself as Britain plans to go it alone also went up a notch or several last week after French presidential hopeful and Front National leader Marine Le Pen called for a Frexit referendum that could theoretically see Europe’s third largest economy also withdraw from the bloc.

Furthermore, Le Pen’s threat of pulling France out of NATO has prompted investors to buy back into safe-haven assets like gold, her comments echoing recent swipes at the defence club by President Trump. Clouds over NATO’s fate couldn’t come at a worse time with fears of a Cold War 2.0 versus Russia back on the rise.

And back on the economic front, Le Pen’s determination to pursue an anti-globalisation agenda — again, mirroring the aims of the newly-minted US leader — threatens to rip up the old order and create an age of recalibration and uncertainty.

But trouble in Britain and France aren’t the only cause for worry, the threat of a Greek debt default is once again rearing its head and putting the future of the euro back in the spotlight.

Naturally, a fresh wave of US Federal Reserve hikes in 2017 could put paid to meaty advances in the gold price, developments that would serve to strengthen the US dollar and make commodities of all classes more expensive to buy.

Still, I believe there are a number of political and economic factors that could send cautious investors piling back into the comfort of precious metals as we progress through 2017, propelling the share prices of producers like Randgold, Fresnillo and Centamin sky high.

The post These 3 commodity stocks could be about to surge appeared first on The Motley Fool UK.

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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.

Irrespective of wider economic pressures, the supreme pricing power of Diageo’s brands command customer loyalty like no others. And fuelled by rapidly-improving economic conditions in North America — by far the company’s largest single market — I reckon the firm can look forward to sales still rising in the months and years ahead.

And Diageo continues to invest vast sums in product marketing and development across the globe to stay at the front of the pack. Just last week the business rolled out its Smirnoff Spiked Sparkling Seltzer low-calorie drinks, latching onto surging demand for healthier alcoholic beverages.

While Diageo may deal on an elevated prospective P/E ratio of 20.9 times, I reckon a chirpy interim statement — currently slated for January 26 — could push the drinks ace’s share price higher again.

Hold on gold

The future is a lot less certain for precious metals producers such as Fresnillo (LSE: FRES) however, as buoyant risk appetite damages demand for so-called safe-haven assets.

There’s still plenty of uncertainty in the air that could fuel a fresh rally in gold and silver values in 2017, however. Indeed, the yellow metal broke back above $1,200 per ounce this week — the highest level since late November — as continued fogginess around the UK’s Brexit negotiations continues.

And this issue, along with other key geopolitical issues like general elections in Germany and France, as well as concerns over the approach of President-elect Donald Trump, could continue to support gold in 2017.

But on the other side of the coin, the likelihood of further Federal Reserve rate hikes this year could put the metals suite heavily under the cosh, as was the case during most of 2016.

A forward P/E ratio of 28.3 times for Fresnillo leaves little room, at least on paper, for a share price surge in the current climate. As such, I reckon it’s a good idea for holders of the commodities colossus to sit tight for the time being.

Shop around

Supermarket giant Morrisons (LSE: MRW) saw its share price gallop to three-year peaks this week after its Christmas trading statement busted analyst expectations.

The Bradford chain saw like-for-like sales leap 2.9% during the nine weeks to January 1, the best performance since 2010. Morrisons put the strong performance down to “improving the offer, becoming more competitive, and serving customers better,” as it continued the company’s recent recovery at the tills.

But the situation is set to become a lot more difficult as 2017 progresses. Rising inflation is likely to drive consumers’ demand for cheaper goods, bolstering the need for Morrisons to continue its path of earnings-crushing discounting. And the bottom line is likely to come under further pressure as sterling weakness ramps up supplier costs.

I believe the retailer’s long-term earnings outlook remains extremely risky, and that this isn’t reflected in Morrisons’ weighty forward multiple of 20.8 times.

The post One Footsie stock I’d buy, one I’d hold, and one I’d sell in January appeared first on The Motley Fool UK.

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The stock has shed 29% of its value in the past month alone, and is now dealing at a whopping 43% discount to the six-year tops struck in the days following June’s Brexit referendum. However, I believe there’s plenty of mud left in the system that could drive metal values — and with it market appetite for Fresnillo — back up again.

A resurgent US dollar has put paid to the rising cost of gold and silver in recent months, with robust economic indicators across the Pond leading to fevered speculation of fresh Federal Reserve rate hikes in the months ahead. This has also led to investors ploughing into riskier assets like stocks and away from so-called ‘safe havens’ like precious metals.

This environment has led gold to 10-month troughs around $1,150 per ounce just this week. Still, there are a number of huge political events in 2017 — like key elections in France and Germany, Britain’s troubled extraction from the EU, and questions over the future direction of the US under a Trump presidency — that could turn market appetite on its head once again.

These factors saw investment demand for gold pump 44% higher during July-September from a year earlier, according to recent World Gold Council data.

On the one hand, Fresnillo’s heady P/E ratio of 21.7 times for 2017 — some distance above the FTSE 100 average of 15 times — could hamper investor appetite for the stock in the coming months. However, I believe it’s far from inconceivable that the producer could still pump higher again given the scale of the challenges facing the world’s economic and political stage next year.

Brand behemoth

I’m certainly optimistic concerning the long-term investment outlook for household goods leviathan Reckitt Benckiser (LSE: RB), and believe a 15% share price dip from July’s record peaks represents a prime opportunity for dip buyers.

While sales expansion has moderated in recent months — like-for-like revenues advanced 2% during July-September, halving from 4% during the first half of 2016 — the huge long-term potential of its emerging regions was once again underlined. In particular Reckitt Benckiser observed “strong growth in India and China” in the quarter, and rampant demand in the Asian powerhouses drove underlying sales from developing markets 7% higher.

The City certainly feels the recent sales cooldown is nothing more than a mere blip, and earnings are expected to rise 15% in 2017, speeding up from a predicted 13% rise in the current 12 months. This leaves Reckitt Benckiser dealing on a P/E ratio of 19.2 times for next year.

Sure, further share price weakness can’t be categorically ruled out in the near term, but I reckon Reckitt Benckiser is great value at resent. The formidable brand strength of labels like Durex condoms and Nurofen painkillers across the globe gives the firm exceptional earnings potential, while the possibility of further earnings-driving acquisitions in fast-growth areas like consumer health provides another reason to expect sterling returns.

The post Is the worst finally over for these Footsie fallers? appeared first on The Motley Fool UK.

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