With the rapid adoption of EVs worldwide and favorable government policies, the base metal mining industry is well-poised to witness significant growth in the near future. Amid the EV boom, fundamentally sound mining stocks Glencore plc (GLNCY), Freeport-McMoRan Inc. (FCX), and Eastman Chemical Company (EMN) could be ideal buys.
Metals and minerals serve as essential raw materials for the construction, manufacturing, technology, and energy sectors. From steel and aluminum used in infrastructure and transportation to rare earth elements powering modern electronics and renewable energy technologies, their role is crucial in driving economic growth and innovation.
According to a Research and Markets report, the mining market is expected to grow from $2.14 trillion in 2023 to $2.28 trillion in 2024 at a CAGR of 6.5%. Further, the market is projected to reach $2.83 trillion by 2028, expanding at a CAGR of 5.5%.
Moreover, the significant rise of EVs has sparked a transformation in the automotive industry, with demand for critical materials surging rapidly. As automakers transition from internal combustion engines to electric drivetrains, metals like lithium, cobalt, nickel, and copper have become essential components in EV batteries and infrastructure.
This shift to electrification has revolutionized transportation but boosted the mining industry, creating lucrative opportunities for companies supplying these critical minerals. Thus, quality mining stocks GLNCY, FCX, and EMN could be solid investments to capitalize on the EV boom.
Let’s discuss the fundamentals of the featured stocks in detail:
Glencore plc (GLNCY)
Based in Baar, Switzerland, GLNCY engages in the production, refinement, processing, storage, transport, and marketing of metals and minerals, and energy products across the Americas, Europe, Asia, Africa, and Oceania. The company operates through two segments: Marketing Activities and Industrial Activities.
On July 5, 2024, GLNCY received approval from the Government of Canada under the Investment Canada Act (ICA) for the acquisition of a 77% interest in Elk Valley Resources (EVR) from Teck Resources.
The strategic acquisition of EVR will enhance the quality of Glencore’s portfolio, broadening its ability to provide high-quality steelmaking coal to customers worldwide and contributing significant expected cashflows to the company.
GLNCY’s forward non-GAAP P/E of 12.10x is 19.8% lower than the industry average of 15.08x. Likewise, the stock’s forward EV/Sales multiple of 0.37 is 78.7% lower than the industry average of 1.74.
In the half year that ended June 30, 2024, GLNCY’s revenue increased 9% year-over-year to $117.09 billion. It reported adjusted EBITDA of $6.34 billion for the first half of 2024. The company’s funds from operations (FFO) were $4.04 billion, up 8.8% from the prior year’s quarter. As of June 30, 2024, its assets stood at $120.69 billion.
Analysts expect GLNCY’s revenue for the fiscal year (ending December 2024) to increase 5.9% year-over-year to $230.68 billion. Further, for the fiscal year 2025, the company’s revenue and EPS are expected to grow 1.1% and 1.9% year-over-year to $233.13 billion and $0.98, respectively.
GLNCY’s stock has gained 2.2% over the past nine months to close the last trading session at $9.92.
GLNCY’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock has a B grade for Growth and Stability. GLNCY is ranked #4 out of 39 stocks in the Miners – Diversified industry.
Click here to see the POWR Ratings of GLNCY (Momentum, Value, Quality, and Sentiment).
Freeport-McMoRan Inc. (FCX)
FCX is a leading global metals company. It primarily explores for copper, gold, molybdenum, silver, and other metals, as well as oil and gas. Its portfolio of assets includes the Grasberg minerals district in Indonesia, one of the world’s largest copper and gold deposits; and significant operations in North America and South America.
In terms of the trailing-12-month net income margin, FCX’s 9.63% is 48% higher than the 6.51% industry average. Likewise, its 35.35% trailing-12-month EBITDA margin is 108.9% higher than the industry average of 16.92%. Furthermore, the stock’s 19.04% trailing-12-month Capex/Sales is 170.4% higher than the industry average of 7.04%.
For the second quarter ended June 30, 2024, FCX’s revenues increased 15.5% year-over-year to $6.62 billion. Its operating income rose 45.3% from the year-ago value to $2.05 billion. Its net income attributable to common stock came in at $616 million and $0.42 per share, up 79.6% and 82.6% from the prior year’s quarter, respectively.
Street expects FCX’s EPS and revenue for the third quarter (ending September 30, 2024) to increase 9.1% and 12.4% year-over-year to $0.43 and $6.54 billion, respectively. Moreover, the company surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.
Shares of FCX have surged 12.5% over the past six months and 2.4% over the past year to close the last trading session at $41.61.
FCX’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system.
Within the Industrial – Metals industry, FCX is ranked #10 among 27 stocks. It has a B grade for Quality. Click here to see FCX’s ratings for Growth, Value, Momentum, Stability, and Sentiment.
Eastman Chemical Company (EMN)
EMN is a leading specialty materials company. The company operates through Additives & Functional Products; Advanced Materials; Chemical Intermediates; and Fibers segments.
In terms of forward non-GAAP P/E, EMN is trading at 12.90x, 14.5% lower than the industry average of 15.08x. Similarly, the stock’s forward Price/Sales of 1.24x is 9% lower than the industry average of 1.37x.
During the second quarter that ended June 30, 2024, EMN’s sales revenues increased 1.7% year-over-year to $2.36 billion. Its adjusted EBIT rose 5.1% over the year-ago value to $353 million. Also, the company’s adjusted earnings per share were $2.15, an increase of 8% from the previous year’s quarter.
Analysts expect EMN’s revenue to increase 4.8% year-over-year to $2.38 billion for the third quarter ending September 2024. The consensus EPS estimate of $2.13 for the current quarter indicates an improvement of 45.1% year-over-year. In addition, the company topped consensus EPS estimates in all four trailing quarters.
EMN’s stock has gained 12% over the past six months and 19.5% over the past year to close the last trading session at $99.24.
EMN’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
The stock has a B grade for Value. EMN is ranked #21 of 81 stocks in the B-rated Chemicals industry.
Click here to see EMN’s ratings for Growth, Momentum, Stability, Sentiment, and Quality.
What To Do Next?
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GLNCY shares were trading at $9.90 per share on Thursday afternoon, down $0.03 (-0.30%). Year-to-date, GLNCY has declined -15.64%, versus a 15.87% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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