Commodities & Metals

Why Mining and Metal Stocks Are Setting New Highs

Since bottoming out last March, metal stocks have been on a nearly unbroken march higher. Copper and aluminum futures trade at around 80% and 38% higher, respectively, than they did a year ago, while iron ore futures have more than doubled. Steel futures are up more than 70%.

A potentially all-Democratic federal government (president and both houses of Congress) has put even more air under the stocks of companies that mine these critical minerals or make products that other industries use to build cars, bridges and ships. Analysts and investors expect the incoming Biden administration to take massive and immediate steps to boost infrastructure spending and left demand for these minerals and products.

Here’s a quick look at how seven of these companies have performed over the past 12 months. All trade well above their mean price targets and all posted new 52-week highs Wednesday morning.

Copper and gold miner Freeport-McMoRan Inc. (NYSE: FCX) has seen its share price rise from around $5.30 last March to around $30 currently. The stock posted a new 52-week high Wednesday of $30.44, with a 52-week low of $4.82. Over the past 12 months, shares are up more than 130%, and the mean price target is around $25.50. At the current trading price, the stock trades at 62 times expected 2020 earnings per share (EPS) and 15 and 13.5 times estimated EPS in 2021 and 2022. Freeport suspended its dividend last year.

Cleveland Cliffs Inc. (NYSE: CLF), the country’s leading producer of iron ore, also posted a new 52-week high of $17.45 Wednesday, light years above its low of $2.63 and more than 125% above its year-ago price. The mean price target of around $9 is far in the rear-view mirror, but the stock’s price-to-earnings multiple is just 10.6 for 2021 and 10.3 for 2022. The company’s dividend yield is 1.38%.

United States Steel Corp. (NYSE: X) posted a new 52-week high of $20.94 earlier Wednesday morning, nearly five times higher than its 52-week low of $4.54. Over the last 12 months, the share price has improved by 70%. The mean price target on the shares is around $11.50, about half of today’s trading price. Analysts expect the company to post a net loss per share of $5.22 in 2020 and $0.25 in 2021. Shares traded up about 15% at midday Wednesday. U.S. Steel’s dividend yield is 0.19%.

Southern Copper Corp. (NYSE: SCCO) also posted a new 52-week high Wednesday, to set a new range of $23.43 to $69.69. For the past 12 months, the stock has added 70%, and the mean price target of $49.50 is well in the past. At current prices, the stock trades at 32.2 times estimated 2020 EPS, 23.7 times expected 2021 EPS and 25 times 2022 expectations. Shares traded up about 1.3% at last look. Southern pays a dividend yield of 2.93%.

Steelmaker Arcelor Mittal (NYSE: MT) traded up about 0.5%, after rising by more than 45% in the past 12 months. The stock’s new 52-week range is $6.64 to $25.00, and the mean price target on the shares is $22.50. At current prices, the stock trades at 14.2 times expected 2021 earnings and 9.5 times anticipated 2022 earnings. Arcelor Mittal suspended its dividend in mid-2019.

Steel Dynamics Inc. (NYSE: STLD) shares increased by nearly 19% over the past 12 months, and shares traded at around $40 in the noon hour Wednesday, after posting a new 52-week high of $40.24 to go with a low of $14.98. The stock trades at 15.1 times expected 2020 EPS, 13.2 times expected 2021 EPS and 14.3 times expected earnings in 2022. The company pays a dividend yield of 2.64%.

Aluminum miner and products maker Alcoa Corp. (NYSE: AA) posted a new 52-week high of $25.29 Wednesday. The stock’s 52-week low is $5.16, and the shares have added just over 10% in the past 12 months. While the company is expected to post a loss of around $1.30 per share in 2020, the stock trades at 33.7 times expected 2021 EPS and 35.3 times expected 2022 earnings. Alcoa suspended its dividend in 2016.