Why Investors Are Paying Attention To These Mining Stocks
In 2020, mining stocks have remained very popular for both retail and institutional investors. There are many reasons why this is the case including fears of inflation, the stability of mining stocks, and the long term prospects. While mining stocks may not be for everyone, they do present an interesting opportunity for investors to consider. The more popular stocks usually are based in the mining of precious metals. This includes gold and silver which have historically been a great way to hedge bets against geopolitical events. But, outside of precious metals are various other mining stocks that all have different value points.
One of the key things to consider with mining stocks is the future of industrialization around the world. Because of Covid, industrial development has slowed in the past six months. But, as this illness hopefully winds down, many countries are working to get industries moving again.
This means that there could be greater consumption of raw materials and resources in the near future. In addition, Covid has created a very volatile stock market. As stated before, historically mining stocks have been a more stable asset than traditional stocks. For this reason, many investors turn to mining stocks when political or natural events occur.
Top Mining Stocks to Watch:
- Walcott Resources Ltd. (OTC : WALRF Stock Report) (CSE : WAL)
- Alcoa Corp. (AA Stock Report)
- Cleveland-Cliffs Inc. (CLF Stock Report)
- Teck Resources Ltd. (TECK Stock Report)
While mining stocks aren’t necessarily the fastest-growing stocks to watch, they can at times provide stable gains to investors. For example, the iShares MSCI Global Metals and Mining Producers ETF (PICK Stock Report), has returned around 4.3% to investors in the past year. While specific mining stocks have returned more, this gives a broad overview of the trajectory of the mining industry. With this in mind, let’s take a look at four mining stocks to watch for November 2020.
Mining Stocks to Watch: Walcott Resources Ltd.
Walcott Resources Ltd. is a mining company with a primary business model of acquisition, exploration, and mining of precious metals such as gold and silver. Recently, Walcott has been working at its newly acquired Tyr Project in Australia. This project has shown a vast amount of silver reserves with high yields per ton of mined ore. Specifically, Walcott plans to re-open two historic silver mines with conservative inferred resource estimates and many high-grade surface mineral occurrences up to 4,710 grams per ton of silver (g/t Ag).
If you’re not up to speed on that magnitude of occurrences of that size, Buenaventura’s Uchucchacua mine, located in Peru, is the highest-grade silver mine in the world. It holds reserve grades of 445 g/t Ag. Furthermore, looking locally, South 32’s Cannington Mine produces 6% of the world’s silver; it has a measured mineral resource of 56Mt @ 193 g/t Ag.
According to Walcott, the proximity, geology and mineralization patterns suggest these are part of a large-scale mineralized system. Tyr is located in the New England Orogen, a significant mineral province and home to a variety of mineral deposits. Furthermore, extensive zinc occurrences near New Century Resources’ Century Mine could also present upside potential for Walcott, specifically. These occurrences are adjacent to the Century South tenure.
Mining Stocks to Watch: Alcoa Corp.
Alcoa Corp. is one of the leading producers of aluminum throughout the world. Recently, the company announced some less than stellar projections for the next quarter. But, this could present an interesting opportunity for investors. Alcoa Corp. stated that its aluminum business may decline in the fourth quarter. This is due to both the rising price of production as well as a partial decline in demand. At the same time, however, Alcoa announced earnings that were much stronger than expected. As with many other resource-producing mining stocks, Alcoa saw a large decline from the Covid pandemic.
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Andrew Cosgrove, a market analyst, stated that “the cost guidance for the fourth quarter was above expectation incrementally. Ultimately, should aluminum prices continue to stay elevated and improve through year-end and into 2021, these cost hiccups will be washed away.”
Around the world, many countries have been pushing demand higher for these raw materials. Benchmark aluminum prices also have seen an increase in the past two quarters. In the last three months alone, there was a 9% gain for aluminum prices. Whether or not Alcoa Corp. can continue to show potential remains to be seen. But in the long term, AA stock is one of the mining stocks to watch.
Mining Stocks to Watch: Cleveland-Cliffs Inc.
Cleveland-Cliffs Inc. is another major producer of raw materials. During the trading day on October 23rd, shares of CLF stock rose by around 6%. The main reason behind this gain was a solid earnings report posted the night before. In the report, CLF stock posted a third quarter net income of $2 million with an adjusted EBITDA of $126 million. Total revenue came out to around $1.6 billion which is more than double the previous years revenue of $556 million.
“Our strong third-quarter results reflect positive outcome of the actions we took in Q2, when we saw opportunity when others were paralyzed. During the almost three months when our main market, the automotive industry, went through unprecedented shutdowns across the entire sector, we prepared inventories and our plants to be ready as soon as our clients were back in business. As a direct consequence of that, we generated $150 million in free cash flow during the quarter.”President and CEO of Cliffs, Lourenco Goncalves
In addition to a solid earnings report, Cleveland-Cliffs recently announced that it has plans to acquire ArcelorMittal USA. This deal should help the company to continue diversifying and seeing more business as time goes on.
Mining Stocks to Watch: Teck Resources Ltd.
Teck Resources Ltd. is a diversified Canadian mining company. In the past few months, we have seen several days where TECK stock has shot up in the double digits. On September 11th, shares of TECK stock rose by around 13% before giving up a few percentage points prior to days end.
Teck mines zinc, copper, coal, and oil. As stated before, the consumption of these resources has declined slightly throughout 2020 due to Covid. But, Teck has been able to work on its business model in the meantime. In 2020, the company posted second-quarter earnings of $0.17 per share. This is down from around $0.88 that it posted in the same quarter of the previous year. The majority of this decline can be attributed to Covid related shutdowns at several of its major plants.
In the past few months, China has shown a great demand for these materials in the past few months. This is important to Teck because China accounts for around half of its revenue wholly. Since April, shares of TECK stock have bounced up by a solid 88%. Although TECK stock has been slightly volatile in the past month, it looks like there is a strong, bullish interest in the company. If manufacturing continues to bounce back, Teck Resources could see an uptick in interest.
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