Stock Pick of the Week with Momentum Securities: 12 May – Glencore

Momentum’s leading stockbroking division – Momentum Securities – will be bringing you their Stock Pick of the Week, each week on a Wednesday or Thursday. The stock pick motivation is available as written content and a downloadable video and audio clip.

This week’s pick: Glencore
About: Glencore is one of the biggest global commodity trading and mining companies, with their biggest production and supply being metals and precious minerals, as well as energy and agricultural goods.

Portfolio Manager for Momentum Securities, Wian van Wyk shares his insight on Glencore.

Click here to download:

• the audio clip
• the video clip.

“Today, we are discussing one of the world’s largest globally diversified natural resource companies, Glencore. They have three major revenue streams, with the most important revenue stream being the mining of precious metals and the majority of metals being produced, is copper.

Recently, we have seen a sharp increase in the demand for copper, and it is currently pushing into record territories, with some analysts foreseeing that it has far more room to run - currently up more than 30% year-to-date.

The global demand seems likely due to strong economic recovery being a primary driver within the price, rather than supply cuts. This is boosted further by the prospect of government sponsored infrastructure, as well as stronger electric vehicle infrastructure spending.

An interesting fact is that more than six kilometres of copper wiring can be used for a single electric vehicle. Glencore’s share price has risen more than 120% within the last year, and the company being the second largest producer of copper globally – we foresee this growth to continue.

Currently trading at just over 331 with a forward P.E of 7.2% and paying a dividend yield of around 2.6%. I believe as the commodity industry continues to see an increase in demand (as lockdown restrictions are eased further) and increased imports and exports are seen; Glencore will continue to perform and might even outperform the market outlook.”