Looking at Southern Copper Corporation's (NYSE:SCCO ) insider transactions over the last year, we can see that insiders were net sellers. That is, there were more number of shares sold by insiders than there were purchased.

While insider transactions are not the most important thing when it comes to long-term investing, we do think it is perfectly logical to keep tabs on what insiders are doing.

Check out our latest analysis for Southern Copper

The Last 12 Months Of Insider Transactions At Southern Copper

The Independent Director, Vicente Ariztegui Andreve, made the biggest insider sale in the last 12 months. That single transaction was for US$114k worth of shares at a price of US$76.11 each. So it's clear an insider wanted to take some cash off the table, even below the current price of US$78.65. As a general rule we consider it to be discouraging when insiders are selling below the current price, because it suggests they were happy with a lower valuation. However, while insider selling is sometimes discouraging, it's only a weak signal. We note that the biggest single sale was only 25% of Vicente Ariztegui Andreve's holding. Vicente Ariztegui Andreve was the only individual insider to sell shares in the last twelve months.

You can see the insider transactions (by companies and individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!

insider-trading-volume

If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).

Insiders At Southern Copper Have Sold Stock Recently

Over the last three months, we've seen significant insider selling at Southern Copper. In total, Independent Director Vicente Ariztegui Andreve sold US$114k worth of shares in that time, and we didn't record any purchases whatsoever. This may suggest that some insiders think that the shares are not cheap.

Insider Ownership

For a common shareholder, it is worth checking how many shares are held by company insiders. I reckon it's a good sign if insiders own a significant number of shares in the company. Insiders own 0.08% of Southern Copper shares, worth about US$47m. This level of insider ownership is good but just short of being particularly stand-out. It certainly does suggest a reasonable degree of alignment.

So What Do The Southern Copper Insider Transactions Indicate?

An insider sold stock recently, but they haven't been buying. And even if we look at the last year, we didn't see any purchases. Insiders own shares, but we're still pretty cautious, given the history of sales. We're in no rush to buy! In addition to knowing about insider transactions going on, it's beneficial to identify the risks facing Southern Copper. Be aware that Southern Copper is showing 3 warning signs in our investment analysis, and 1 of those can't be ignored…

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

For the purposes of this article, insiders are those individuals who report their transactions to the relevant regulatory body. We currently account for open market transactions and private dispositions, but not derivative transactions.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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By Mrinmay Dey

(Reuters) -Canadian copper miner Teck Resources Ltd has been approached by mining companies including Vale SA, Anglo American Plc and Freeport-McMoRan Inc to explore deals for its base metals business if a planned split of the company happens, sources close to the matter told Reuters on Sunday.

Teck has received expressions of interest from more than six mining companies, which are interested in several other transactions after the split, according to the sources.

These approaches from international miners come as the Vancouver-based miner is fending off unsolicited bids from Glencore Plc.

A spokesperson from Teck said the company does not comment on market rumours or speculation.

Freeport, Vale and Anglo American declined to comment.

Glencore on Tuesday modified its $22.5 billion all-share takeover bid for Teck to include up to $8.2 billion in cash, but Teck's board called it "largely unchanged".

Teck has repeatedly rejected Glencore's offer of merging the companies and subsequently spinning off their combined thermal and steel-making coal businesses, saying it would expose shareholders to thermal coal, oil, LNG and related sectors.

It has instead urged its investors to vote for a restructuring proposal which will see it spin off its highly polluting coal business and focus on production of copper.

Teck investors will decide on the Canadian miner's restructuring plan on April 26.

Influential proxy advisor Institutional Shareholder Services (ISS) on Thursday advised shareholders to reject Teck's restructuring plan on uncertainties and structural issues.

Large investors often follow the recommendations of proxy advisory firms including ISS and its smaller rival Glass Lewis.

The Globe and Mail first reported interest in Teck's base metals business.

(Reporting by Mrinmay Dey and Lavanya Ahire in Bengaluru; Editing by Bill Berkrot and Sandra Maler)

(Adds Freeport declined to comment)

April 16 (Reuters) – Teck Resources Ltd has been approached by a unit of Vale SA, Anglo American Plc and Freeport-McMoRan Inc to explore deals if a planned split of the company happens, The Globe and Mail reported on Sunday, citing two sources familiar with the discussions.

A vote on Teck's plan to fully separate the copper and zinc business Teck Metals from the steelmaking coal Elk Valley business is scheduled on April 26.

These approaches from international miners come as the Vancouver-based miner is fending off unsolicited bids from Glencore Plc that would involve combining and spinning off the thermal and steelmaking coal businesses of both companies.

The Swiss mining company has offered Teck shareholders 24% of the combined metals group and up to $8.2 billion in cash for those who may not want exposure to thermal coal.

Two proxy shareholder advisory firms have recommended that Teck Resources shareholders vote against the planned split.

Institutional Shareholder Services (ISS) advised shareholders to reject Teck's restructuring plan. On Saturday, Bloomberg News reported that Glass Lewis also asked Teck Resources shareholders to vote against Teck's plan to spin off its coal business.

Teck has received expressions of interest from at least half a dozen major mining companies, who are interested in various transactions post-split, the Globe and Mail added.

Teck, Freeport, Vale and Anglo American declined to comment to Reuters' request for comment. (Reporting by Lavanya Ahire in Bengaluru; Additional reporting credit by Mrinmay Dey in Bengaluru; Editing by Bill Berkrot and Sandra Maler)

By Fabian Cambero and Divya Rajagopal

SANTIAGO, April 14 (Reuters) – Lundin Mining Corp's bid for control of Chile's Caserones copper mine comes despite ongoing uncertainty over potential policy changes to royalties and taxes, an indication that investors may be regaining confidence in the world no.1 copper-producing country.

Lundin last month agreed to pay $950 million for 51% control of the mine, calling the deal "an endorsement that we believe the mining royalty and taxation discussions are trending in the right direction."

The deal caused some surprise. In the past 18 months, mining giants have been vocal about concerns in Chile. BHP Group Ltd said it might reevaluate its investments depending on new tax plans by the government, while Freeport-McMoRan Inc has said it would pause expansion plans in Chile, citing political uncertainty.

But with the outlook looking rosier for investment and global demand surging for the key green energy metal, reluctance has diminished, experts and officials say.

Chile's mining minister, Marcela Hernando, told Reuters on Thursday she felt "confident" that the concerns of the industry had been taken into account with the royalty proposals and that she had seen hints investment was starting to improve.

"What one observes are signs, you see how some investments have materialized, how a very important deal was completed a few weeks ago," she said, referring to the Caserones purchase.

"We aren't worried investments are going to be scared away."

A proposed new constitution that, among other changes, would have given the state greater control over mining was rejected by voters last September, while an ambitious tax overhaul plan was voted down by Congress in March.

Meanwhile, another government plan for new royalties on mining, currently moving through Congress, has also been tempered amid industry complaints that an increased tax burden at a time when deposits were facing decreased production would hurt the country's competitiveness.

"As the proposed bill has moderated, some companies have gotten to a risk level compatible with their investment decisions, as happened with Lundin," said Juan Carlos Guajardo, head of the Plusmining consulting agency in Santiago.

"Some companies have a more optimistic vision about the final evolution of the royalty bill, which is sparking investment decisions, but there are others that are still in 'wait-and-see' mode."

Canada-based Teck Resources has also recently boosted investment in Chile, submitting for environmental approval this year a $3 billion project to increase capacity at its Quebrada Blanca 2 mine.

But BHP said its stance on investment in Chile had not changed. Freeport did not reply to a request for comment.

Lundin said it was considering raising its stake to 70% of the mine for an additional $350 million, but that it would "continue to evaluate any potential royalty and taxation changes" as a factor in that decision.

ENVIRONMENTAL CONCERNS

Lundin's purchase from JX Nippon Mining & Metals comes at a time when companies are seeing longer delays for permits as opposition has risen from local communities. Some projects have been rejected by the state or by courts on environmental impact concerns.

Caserones, located 4,300 meters above sea level, has itself faced strikes by workers and lawsuits by farmers, who have complained about water over-extraction.

Chilean courts have since approved plans from JX Nippon to rectify environmental damage and Lundin told Reuters one of the company's "primary objectives is to minimize potential environmental impacts through implementation of environmental management controls."

The company added that its nearby Candelaria operation uses desalinated water and has a guaranteed minimum of 80% of renewably-sourced electricity.

Lundin remains confident in the future of the Caserones project, which began operations in 2014 and has annual output of 100,000 tonnes of copper. Peter Rockandel, Lundin Mining's CEO, said the firm had "no concerns" of what lay ahead in a conference call following the announcement of the deal.

The purchase is emblematic of the emerging copper industry trend of buy versus build, said Christopher LaFemina, an equity analyst at Jefferies, with falling share prices and ballooning development costs favoring purchasing, rather than constructing, new mines, even at "premium prices."

"The optimal time to pursue sizable acquisitions is now," LaFemina said in a report, adding that the window might close if investors wait for "the macro environment to improve." (Reporting by Fabian Cambero and Divya Rajagopal; editing by Alexander Villegas, Ernest Scheyder and Rosalba O'Brien)

(Bloomberg) — The key iron ore export hub of Port Hedland reopened after the biggest cyclone to hit Western Australia in at least a decade made landfall, with a major gold mine lashed by destructive winds as the storm moved inland.

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Port Hedland reopened at 11 a.m. local time Friday after an inspection of the channel and berths confirmed safe operations can resume, according to Pilbara Ports Authority. BHP Group and Fortescue Metals Group Ltd. export iron ore from the harbor, which was closed on Thursday.

Severe tropical cyclone Ilsa crossed the coast overnight east of Port Hedland in a sparsely populated region as a category 5 — the strongest on the Australian scale. The storm is weakening as it tracks inland but had maintained cyclone intensity as it reached Newcrest Mining Ltd.’s Telfer gold and copper operation, which is 400 kilometers (248 miles) from the port.

Newcrest is aiming to start bringing the majority of workers back to Telfer over the weekend, pending inspections of the airstrip and village at the mine, according to a spokesperson. The company had reduced staffing at the site to a skeleton crew ahead of the cyclone.

Ilsa had weakened to a category 1 cyclone as of 2 p.m. local time on Friday, according to a notice from the Bureau of Meteorology.

The mayor of Port Hedland told the Australian Broadcasting Corp. that winds from the cyclone were “like a freight train” but the town appeared to have been spared from major damage. The owners of Pardoo Roadhouse, a tavern and gas station along the coastline, reported “great damage” to their building after riding out the storm, according to local media.

BHP will return to full operations once all vessels have safely returned to the inner harbor at Port Hedland, a spokesman said. There’s been no significant damage to the company’s sites at the port, they added.

Fortescue said no major damage has been reported across any of the company’s Pilbara operations and monitoring will continue over the coming days to assess potential flooding risk, according to a spokesperson. Some teams are commencing post-cyclone ramp up activities, the spokesperson said.

Ilsa is the sixth tropical cyclone and the strongest to make landfall in Australia this season, which runs from Nov. 1 to April 30, according to the bureau. The storm is expected to dump as much as 200 millimeters (7.8 inches) of rain in some areas on Friday.

–With assistance from Liz Yee Xing Ng and Kevin Varley.

(Updates with latest bureau notice, comments from Newcrest and BHP.)

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Southern Copper (NYSE:SCCO) has had a great run on the share market with its stock up by a significant 9.1% over the last month. Since the market usually pay for a company’s long-term fundamentals, we decided to study the company’s key performance indicators to see if they could be influencing the market. In this article, we decided to focus on Southern Copper’s ROE.

Return on equity or ROE is a key measure used to assess how efficiently a company’s management is utilizing the company’s capital. In other words, it is a profitability ratio which measures the rate of return on the capital provided by the company’s shareholders.

Check out our latest analysis for Southern Copper

How To Calculate Return On Equity?

The formula for ROE is:

Return on Equity = Net Profit (from continuing operations) ÷ Shareholders’ Equity

So, based on the above formula, the ROE for Southern Copper is:

33% = US$2.6b ÷ US$8.1b (Based on the trailing twelve months to December 2022).

The ‘return’ is the income the business earned over the last year. Another way to think of that is that for every $1 worth of equity, the company was able to earn $0.33 in profit.

Why Is ROE Important For Earnings Growth?

Thus far, we have learned that ROE measures how efficiently a company is generating its profits. Based on how much of its profits the company chooses to reinvest or “retain”, we are then able to evaluate a company’s future ability to generate profits. Assuming everything else remains unchanged, the higher the ROE and profit retention, the higher the growth rate of a company compared to companies that don’t necessarily bear these characteristics.

Southern Copper’s Earnings Growth And 33% ROE

Firstly, we acknowledge that Southern Copper has a significantly high ROE. Additionally, the company’s ROE is higher compared to the industry average of 17% which is quite remarkable. As a result, Southern Copper’s exceptional 26% net income growth seen over the past five years, doesn’t come as a surprise.

Next, on comparing Southern Copper’s net income growth with the industry, we found that the company’s reported growth is similar to the industry average growth rate of 31% in the same period.

past-earnings-growth

The basis for attaching value to a company is, to a great extent, tied to its earnings growth. It’s important for an investor to know whether the market has priced in the company’s expected earnings growth (or decline). Doing so will help them establish if the stock’s future looks promising or ominous. If you’re wondering about Southern Copper’s’s valuation, check out this gauge of its price-to-earnings ratio, as compared to its industry.

Is Southern Copper Using Its Retained Earnings Effectively?

Southern Copper’s significant three-year median payout ratio of 83% (where it is retaining only 17% of its income) suggests that the company has been able to achieve a high growth in earnings despite returning most of its income to shareholders.

Moreover, Southern Copper is determined to keep sharing its profits with shareholders which we infer from its long history of paying a dividend for at least ten years. Upon studying the latest analysts’ consensus data, we found that the company is expected to keep paying out approximately 74% of its profits over the next three years. As a result, Southern Copper’s ROE is not expected to change by much either, which we inferred from the analyst estimate of 29% for future ROE.

Summary

Overall, we are quite pleased with Southern Copper’s performance. We are particularly impressed by the considerable earnings growth posted by the company, which was likely backed by its high ROE. While the company is paying out most of its earnings as dividends, it has been able to grow its earnings in spite of it, so that’s probably a good sign. That being so, a study of the latest analyst forecasts show that the company is expected to see a slowdown in its future earnings growth. Are these analysts expectations based on the broad expectations for the industry, or on the company’s fundamentals? Click here to be taken to our analyst’s forecasts page for the company.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Join A Paid User Research SessionYou’ll receive a US$30 Amazon Gift card for 1 hour of your time while helping us build better investing tools for the individual investors like yourself. Sign up here

Yahoo Finance Live’s Rachelle Akuffo discusses the decline in stock for American Airlines.

Video Transcript

RACHELLE AKUFFO: Thank you.

All right, now for our trending ticker. Investors lowering the altitude of American Airlines on the airline’s updated profit outlook. The airline releasing updated earnings expectations for later this month that are coming short of analysts’ expectations with adjusted earnings per share between $0.01 to $0.05 versus expectations of $0.05 per share based on Bloomberg consensus.

Airlines like American, of course, particularly exposed to movements in the energy sector as the peak summer travel season looms. We see that the stock down almost about 9 and 1/2% on the day.

NORTHAMPTON, MA / ACCESSWIRE / April 12, 2023 / American Airlines:

In 1972, Bonnie Tiburzi wrote to every major airline carrier in the United States asking for a job, and every single airline turned her down, except for one. In March of 1973, American Airlines offered Bonnie a position as First Officer – making her the first woman to fly for a major commercial airline at the early age of 24.

Bonnie bravely broke barriers in the male-dominated profession and paved the path for women aviators to follow. As we celebrate 50 years since she started flying for American, we honor the women that inspired her and those she has inspired to take the controls on the flight deck.

View additional multimedia and more ESG storytelling from American Airlines on 3blmedia.com.

Contact Info:

Spokesperson: American AirlinesWebsite: https://www.3blmedia.com/profiles/american-airlinesEmail: info@3blmedia.com

SOURCE: American Airlines

View source version on accesswire.com: https://www.accesswire.com/748820/50-Years-Later-A-Trailblazer-Paved-the-Path-for-Women-on-the-Flight-Deck

In the US, Wall Street pushed higher on Wednesday after key inflation data showed a smaller-than expected rise in prices for March.

The Dow Jones (^DJI) rose 0.10% to 33,718.31 points, while the S&P 500 (^GSPC) climbed 0.57% to 4,132.50 points. The tech-heavy NASDAQ (^IXIC) also gained – by 0.82% to 12,130.15.

FTSE 100 and European markets

Across the pond, European markets and the FTSE 100 edged mostly higher as investors also turned their attention to the latest inflation data.

The FTSE 100 (^FTSE) rose 0.38% to close at 7,814, while the CAC 40 (^FCHI) in Paris finished flat at 7,387 – and in Germany, the DAX (^GDAXI) gained 0.20% to 15,686.

Stocks at the top

The top FTSE 100 risers were Frasers Group (FRAS.L), up 1.66%; Unite Group (UTG.L), up 1.24%; Weir Group (WEIR.L), up 1.21% – and Burberry (BRBY.L), up 1.21%.

In contrast, Anglo American (AAL.L) and Ocado Group (OCDO.L) were at the bottom of the basket with their shares down 1.16% and 1.15% respectively.

Asia financial markets

In Asia, Tokyo’s Nikkei 225 (^N225) rose 0.68% to 28,113 points, while the Hang Seng (^HSI) in Hong Kong fell 0.58% to 20,366. In mainland China, the Shanghai Composite (000001.SS) gained 0.24% to 3,321.67 points.

Economic data

In the US, new data showed that inflation cooled in March as the Federal Reserve’s interest rate increases showed more impact, the Labor Department reported on Wednesday.

The Consumer Price Index (CPI), a measure of the costs for goods and services, rose 0.1% for the month.The general expectation was that the CPI would have increased by 0.2% in March, as compared to a gain of 0.4% in February.

Excluding food and energy, core CPI increased 0.4%, meeting the median estimate of 0.4%.

Meanwhile, Deutsche Bank Research said in a note to clients on Wednesday that the prospect of another Fed hike was given some support by various Federal Open Market Committee speakers yesterday.

“Early in the session, New York Fed President Williams said that the Fed’s median forecast for a further rate hike was a “reasonable starting place”. And later in the session, Philadelphia Fed president Harker said that he wanted to “get rates above 5 and then sit there for a while”, which would imply at least one more 25bp move.

However, Chicago Fed president Goolsbee struck a notably more dovish tone relative to some recent speakers, saying that the Fed should “be careful about raising rates too aggressively until we see how much work the headwinds are doing for us in getting down inflation.”

Read more: Trending tickers – De La Rue | SSE | Ocado | Centrica

Bank earnings

It’s also a big earnings week for banks, including JPMorgan (JPM), Wells Fargo (WFC), and Citi (C) – with all three due to report their first-quarter results on Friday.

The three banks were part of a consortium last month that injected some $30bn in deposits into First Republic to shore up the struggling lender.

Tina Teng, market analyst at CMC Markets, said: “Higher interest income is expected for the banks specialising in lending, such as JPMorgan Chase and Wells Fargo. However, the outlook may stay gloomy due to the bank crisis in early March. The risks will be upon reduction in deposits, increase in loan loss provisions, and decline in the capital markets.”

Read more: Bank stocks to watch ahead of earnings reports

Oil prices

Meanwhile, US crude oil, or West Texas Intermediate (CL=F), gained 0.12% to $81.63 a barrel, while Brent crude (BZ=F) also went up – by 0.15% to $85.74 a barrel.

British pound

In currency news, the British pound fell slightly against the US dollar (GBPUSD=X) – down 0.01% to 1.24, meaning £1 will get you $1.24. Against the Euro, the British pound (GBPEUR=X) also fell – by 0.04% to 1.13.

De La Rue shares

Meanwhile, De La Rue (DLAR) shares plunged on Wednesday by over 30%, bringing its one-year loss to around 68% and its 5-year share price decline to more than 92%.

It comes after the company issued a profit warning with full-year earnings for fiscal 2023 expected to fall short of market estimates.

Victoria Scholar, head of investment at Interactive Investor, said: “2023 adjusted operating profit is now seen coming in at a mid-single digit percentage and for fiscal 2024 De La Rue forecasts a figure in the low £20m range.

“The British currency and passport maker has been suffering from weak demand for banknotes which is languishing at a 20-year low. Activist investor Crystal Amber Funds recently said the group’s turnaround plan announced three years ago is failing ‘by every measure’ and the company is ‘failing to control’ various fees paid out. The activist has also been trying to remove Kev Loosemore as Chairman but he survived a vote in December.”

Scholar also highlighted how, in recent years, De La Rue has struggled with the major loss of its British passport contract after Brexit, increased costs, supply chain woes, and a structural decline in demand for physical cash amid the rise of contactless payments and digital banking.

LVMH results

Investors will also be monitoring Luxury goods company LVMH (MC.PA). Europe’s most valuable company, which is home to brands such as Tiffany & Co, Christian Dior, Fendi, Givenchy, Marc Jacobs, Stella McCartney, Sephora and Bulgari, is due to report its first-quarter sales after markets close.

Rightmove UK home sales

In other news, Rightmove (RMV.L) said the number of agreed home sales in March was just 1% below pre-pandemic levels from March 2019 but is down 18% year-on-year. A pickup in buyer demand resulted in a 10% increase in agreed sales from 2019 versus an 11% drop at the start of the year.

Victoria Scholar commented: “The market has been recovering since the turmoil around the mini-budget last year which sent mortgage rates temporarily sharply higher. Reduced asking prices have helped to generate a pickup in sales, with particular strength in the British capital thanks to strong demand from workers and overseas buyers for London apartments.

“With the housing market likely to cool further this year, and the Bank of England nearing the peak of the rate hiking cycle, we could see more buyers return to the market, as the recent headwinds which have stymied transactional activity subside.”

Watch: Tips to tackle grocery and gas prices amid inflation

Download the Yahoo Finance app, available for Apple and Android.

For Immediate Release

Chicago, IL – March 2, 2023 – Zacks Market Edge is a podcast hosted weekly by Zacks Stock Strategist Tracey Ryniec. Every week, Tracey will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life. To listen to the podcast, click here:  https://www.zacks.com/stock/news/2060610/which-commodity-stocks-should-be-on-your-short-list

Which Commodity Stocks Should Be on Your Short List?

Welcome to Episode #350 of the Zacks Market Edge Podcast.

• (3:00) – Breaking Down Oil’s Current Performance: What Should Investors Expect Going Forward?

• (11:50) – The Smart Metal: What Is Copper Telling Us About The Economy?

• (16:35) – Is Steel A Good Long Term Investment?

• (20:40) – What Should Investors Know About Chicken: The Wing Stop Story

• (28:40) – What Commodity Trends Should You Be Keeping On Your Radar?

• (32:15) – Episode Roundup: PXD, RRC, ROCC, APA, FANG, LNG, FCX, SCCO, CLF, NUE, WING, GDX, GDXJ

• Podcast@Zacks.com

 

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

This week, Tracey tapped the knowledge and expertise of the editor of the Zacks Commodity Innovator newsletter, Jeremy Mullin, to take a deep dive into what is going on in commodities in 2023. In 2022, commodities went on a wild ride as the Ukraine War caused many commodities to spike higher. Some, like oil, traded at 10-year highs.

But many of those commodities have since fallen back to pre-Ukraine War levels. Are there buying opportunities in some of those stocks?

5 Commodity Stocks to Watch in 2023

1.      Cheniere Energy (LNG)

Cheniere Energy is a large-cap liquid natural gas producer headquartered in Houston. Earnings are expected to jump 165% in 2023 to $14.95 from $5.64.

Shares are up 22% over the last year and have recently rallied 6.6% in the last 5 sessions. Cheniere is cheap, with a forward P/E of just 10.6.

Cheniere also pays a dividend, currently yielding 1%.

Should a liquid natural gas producer like Cheniere be on your watch list?

2.      Freeport-McMoran (FCX)

Freeport-McMoran is a copper producer. Copper prices came down from their Ukraine War highs but are now back over $4.00 per pound again.

Shares of Freeport-McMoran are down 13.4% over the last year but in 2023, they have rallied 8%. Freeport is trading at 20x forward earnings. It pays a dividend yielding 1.5%.

Is it time for copper and Freeport-McMoran in 2023?

3.      Southern Copper Corp. (SCCO)

Southern Copper is a large cap copper producer. The Zacks Consensus Estimate for 2023 is calling for $3.40, which is down only a penny from 2022’s earnings of $3.41.

Shares of Southern Copper have rallied 22.3% year-to-date. It trades with a forward P/E of 21.

But many investors like Southern Copper because of its generous dividend, which is currently yielding 4.8%.

Should Southern Copper be on your commodities stock short list?

4.      Cleveland-Cliffs Inc. (CLF)

Cleveland-Cliffs is the largest flat-rolled steel producer in North America.

Shares of Cleveland-Cliffs are up 33% year-to-date but are still cheap, with a forward P/E of 12.9. Earnings are expected to fall 47.5%, however, to $1.60 from $3.05 last year.

Cleveland-Cliffs is one of Jeremy’s favorite steel stocks.

Should Cleveland-Cliffs also be on your short list?

5.      Wingstop Inc. (WING)

Wingstop operates 1950 locations worldwide. How did a restaurant chain get into a podcast about commodities? Chicken wings. The price of chicken wings has come down from 2022 highs, which is boosting Wingstop’s margins.

Shares of Wingstop are up 24.7% year-to-date. It’s not cheap, with a forward P/E of 91. Jeremy believes it can grow into the valuation, however.

Wingstop does pay a dividend, currently yielding 0.4%.

Is Wingstop a hidden commodities stock in 2023?

What Else do you Need to Know About Commodities in 2023?

Listen to this week’s podcast to find out.

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(Bloomberg) — A major coal port in Australia said vessels bound for China had arrived at the facility this month, adding more evidence of an easing of curbs on sales to the top consuming nation.

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“There are early signs that the informal ban on Australian coal imports to China may be in the process of being removed,” Dalrymple Bay Infrastructure Ltd., which operates the world’s largest metallurgical coal export facility in Queensland, said Monday in a statement.

Coal suppliers including BHP Group Ltd. have resumed exports to China after authorities gave clearance for some purchases to restart after an easing of diplomatic tensions between the two nations. Imports by China, previously a key customer, halted in late 2020 as an informal ban was imposed following disagreements on issues including the origins of coronavirus.

China could import as much as 20 million tons of hard coking coal from Australia this year, producer Coronado Global Resources Inc. said last month.

Dalrymple Bay shipped 53.3 million tons in 2022, with Japan, South Korea, India and Europe accounting for 75% of exports, the company said in its statement.

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(Bloomberg) — A decade ago, a UK startup’s plan to build a $4 billion mine more than a mile under the North Sea caught the nation’s imagination. It became a retail shareholder sensation and promised riches for many landowners. But when the company failed to raise the last piece of financing, it all came crashing down.

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For the last three years, the giant fertilizer project — which would be the UK’s biggest mine in more than four decades — has largely sat on ice, drifting from the public consciousness as its new owner Anglo American Plc figured out what to do with it.

Today it provided the answer. After taking a $1.7 billion writedown on the mine, Anglo unveiled its plans to spend almost $5 billion to bring the project into production by 2027, a decision that will likely secure thousands of jobs in one of the country’s poorest regions and become a major engine of growth for the company.

One of the world’s top mining companies, Anglo was attracted by the huge size of the deposit combined with the longer-term prospects for fertilizer demand. About 1.8 billion tons of a fertilizer called polyhalite are sitting more than 1.5 kilometers below the surface, and stretching out under the sea, which could be mined for more than 40 years. Demand for crop nutrients is expected to keep growing as a rising global population boosts food consumption.

“This resource is so unique, it’s one of a kind in terms of its size and shape,” Anglo Chief Executive Officer Duncan Wanblad said in a Bloomberg TV interview on Thursday. “We will be able to bring some very, very profitable fertilizer on to the market.”

Retail Interest

Sirius Minerals Plc, the mine’s previous owner, became a retail investor darling when it started fundraising for the project. Across the UK, regular people poured money into the company while the planned mine gained an almost cult-like following in North Yorkshire — in addition to buying shares, many locals saw the prospect of life-changing royalties on the mineral rights that fell on their land. Others simply hoped for jobs.

The overwhelming support helped Sirius win a license to build the project despite being in a National Park and overlooking the seaside town of Whitby, the setting for part of Bram Stoker’s “Dracula.”

But then Sirius ran out of money, and Anglo eventually stepped in with an offer.

While investors lost out — the takeover price was well below the heights at which many had bought their shares — Anglo’s decision to press ahead will be a major boon for the region and the wider UK. The project will likely employ more than 1,000 people once in full production and become a major exporter.

A $4 Billion Mine Was Meant to Lift Northern England. Instead Locals Lost Big

The investment in the Woodsmith project also forms part of a wider shift at the world’s biggest miners, as they retreat from fossil fuels and seek growth in commodities like fertilizers and metals that are needed for the green-energy transition.

Writedown

Anglo has written down the value of the project to reflect a change in the way it will be developed, compared with Sirius’s plans.

When Anglo bought Sirius in a half a billion dollar deal it was always likely the project would be delayed and changed. The smaller firm had been rushing to get into production as fast as possible, and Anglo has spent the last three years looking at ways to develop the project more strategically.

The result is that Anglo will now look to start production in 2027 after spending about $1 billion a year on top of the $2.6 billion it has already spent. That will allow it to target annual production of 5 million tons of fertilizer a year, with the capacity already built into crucial infrastructure such as the shafts, and to ultimately expand it to 13 million tons a year.

Polyhalite, or Poly4, is a type of potash found under the North Sea. It’s a relatively unknown type of fertilizer, so Anglo faces the additional challenge of proving how big the market will ultimately be.

Anglo’s plans also come at a time of massive volatility in global fertilizer markets. Prices spiked last year after Russia’s invasion of Ukraine threw the world’s crop-nutrient sector into disarray. While prices have since eased, the long-term outlook remains strong as the global population and its demand for food grows.

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Mining group extends cost and timeframe estimates for bringing Woodsmith project into production by 2027

A little over a year ago, Melbourne-based BHP Group Ltd., the world’s largest miner, bowed out of the highly publicized bidding war with Australian billionaire Andrew Forrest’s Wyloo Metals Pty. Ltd. for a nickel project in Ontario’s Ring of Fire region.

The tug of war between the two Australian miners over a Canadian asset included multiple bids over almost half a year before Wyloo’s $616.9-million bid in December 2021 led to the takeover of Noront Resources Ltd. — and with it the much talked about Eagle’s Nest project in northern Ontario.

Losing out to Wyloo, however, didn’t discourage BHP on planting more flags in Canada. The company has made a series of alternative investments since bowing out of the Noront auction that haven’t received as much attention, but suggests that BHP may be open to building a battery metals empire in Canada.

“Mergers and acquisition is one lever for growth but not the only lever for growth for us at all,” Rag Udd, BHP’s president of minerals for the Americas, said after the company reported its latest quarterly financials on Feb. 21. “We see Canada as a highly prospective and desirable location to actually making investments,” he added.

Rag Udd, BHP’s president of minerals for the Americas.

BHP is coming off a down year. The company said this week that revenue fell 16 per cent over the final six months of 2022 from the same period in 2021, while profit tumbled 27 per cent. Udd attributed the decline to lower prices of iron ore and copper last year and rising costs. The company’s stock dropped sharply on the news, but recovered, and is now about four per cent higher than year ago.

Still, BHP, like most miners these days, is optimistic. The demand for metals that are crucial in powering batteries and driving the transition to greener energy — primarily lithium, nickel and copper — is on the rise as more countries look to meet their climate goals. Major mining companies such as Teck Resources Ltd., Barrick Gold Corp. and Rio Tinto Ltd. have been involved in building, exploring and buying projects containing these minerals to take advantage of the boom.

Governments also want a piece of the action. Canada, for its part, is attempting to lure miners and automakers to the region through tax credits and funds in order to build its own electric vehicle industry.

We see Canada as a highly prospective and desirable location to actually making investments

Rag Udd, BHP’s president of minerals for the Americas

BHP, which already produces a vast amount of nickel and copper at mines around the world, set up an office for minerals exploration in Toronto about a year-and-half ago. The group has a special focus on metals such as copper and nickel, and the objective is to find Canadian miners with good assets and invest in them.

Over the past year, the Australian miner invested $13.6 million in a copper project run by Vancouver-based Brixton Metals Corp., renewed its exploration alliance with Montreal-based Midland Exploration Inc. and invested $100 million in Vancouver-based Filo Mining Corp., which is developing a copper-gold project on the Argentinean-Chilean border.

These investments aren’t significant, especially for a company the size of BHP, which earned a revenue of about US$65 billion in 2022, Udd acknowledged. One of the reasons BHP has taken a cautious approach to investing in green metals in Canada is because it already runs the Nickel West operations in Australia, which it says is the world’s leading nickel supplier to the battery metals market.

A tonne of nickel powder made by BHP Group sits in a warehouse at its Nickel West division, south of Perth, Australia.

However, Udd said that Canada’s recently announced critical minerals strategy makes it a “very very attractive jurisdiction” for BHP and aligns it with the “company’s priorities moving forward.”

Released in December, Canada’s first significant critical minerals strategy aims to expand exploration, speed up mining projects, tackle labour shortages, and build secure supply chains with allied nations in a bid to build its on electric vehicle industry.

While the strategy comes with a list of 31 minerals that the government has deemed as “critical,” the country will initially prioritize six: lithium, graphite, nickel, cobalt, copper and rare earth elements.

If one of the goals was to attract international investment, then the strategy could be working because Prime Minister Justin Trudeau’s government got BHP’s attention.

“As we are looking to bring new supply to the market quickly, we hope that Canada actually continues to not only focus on the critical minerals strategy but also the efficiency of the regulatory processes associated with that,” said Udd.

Ottawa knows regulation is getting in the way of investment. Jonathan Wilkinson, the natural resources minister, said repeatedly last year that he’s working on making the system more efficient. When he released the critical minerals strategy in December, he acknowledged that permits need to be granted faster, and suggested the federal and provincial governments could conduct reviews concurrently instead of consecutively.

• BHP to start recruiting hundreds to operate potash mine in Saskatchewan

• Rio Tinto invests in early stage copper project amidst next ‘M&A cycle’

• Ottawa to give BHP up to $100 million to cut emissions at Jansen potash project

Of course, BHP’s main focus in Canada currently isn’t on battery metals, but potash, a vital crop nutrient that is also deemed as a critical mineral by the federal government. BHP is currently pressing forward with Jansen, a $7.5-billion project 140 kilometres east of Saskatoon that will be the world’s largest potash mine once completed.

However, judging by BHP’s activities in the last year and Udd’s statements on BHP’s future in Canada, few would be surprised to see the world’s largest miner expand its interests in Canada.

“We are looking to build up on in terms of thematics around decarbonization, electrification and population growth,” Udd said. “We see these as the mega-trends that are going to play out in the next 50 years globally, and we think Canada is well positioned.”

• Email: nkarim@postmedia.com | Twitter: naimonthefield

Listen to Down to Business for in-depth discussions and insights into the latest in Canadian business, available wherever you get your podcasts. Check out the latest episode below:

VANCOUVER, BC, Feb. 21, 2023 /CNW/ – Bravo Mining Corp. (TSXV: BRVO) (OTCQX: BRVMF) (“Bravo” or the “Company”) has retained Integral Wealth Securities Limited (“Integral”) to provide market-making services in accordance with TSX Venture Exchange (“TSXV”) policies. Integral will trade common shares of Bravo on the TSXV to maintain an orderly market, improve the liquidity of Bravo’s shares and provide Bravo with market intelligence. In consideration for the services provided by Integral, Bravo has agreed to pay Integral a cash fee of $6,000 per month for an initial minimum term of three months, after which the agreement may be terminated by Bravo at any time upon 30 days’ written notice.

Bravo and Integral are unrelated entities. To the knowledge of Bravo, Integral has no present, direct or indirect interest in Bravo or its securities. There are no performance factors in the agreement, and Integral will not receive shares or options as compensation. Integral is a member of the New Self-Regulatory Organization of Canada (New SRO). Accordingly, Integral can access all Canadian stock exchanges and alternative trading systems.

About Bravo Mining Corp.

Bravo is a Canada and Brazil-based mineral exploration and development company focused on advancing its Luanga PGM+Au+Ni Project in the world-class Carajás Mineral Province of Brazil.

The Luanga Project benefits from being in a location close to operating mines, with excellent access and proximity to existing infrastructure, including road, rail and clean and renewable hydro grid power. The project area was previously de-forested for agricultural grazing land. Bravo’s current Environmental, Social and Governance activities includes replanting trees in the project area, hiring and contracting locally, and ensuring protection of the environment during its exploration activities.

For further information about Bravo, please visit www.bravomining.com or contact:

Alex PenhaEVP Corporate Developmentinfo@bravomining.com

SOURCE Bravo Mining Corp.

Cision

View original content to download multimedia: http://www.newswire.ca/en/releases/archive/February2023/21/c7717.html

A look at the day ahead in European and global markets from Ankur Banerjee:

After a sputtering start to the week for the equities market, flash PMI data from Eurozone, UK and Germany will likely give some sort of direction for traders. Investors have put on their risk-off hats so far, with the dollar ascendant on Tuesday, having erased its year to date losses and as Asian equities flirt with six-week lows.

With U.S. markets set to reopen after Monday's holiday, investor focus will be squarely on minutes from the Feb. 1 Federal Reserve meeting, scheduled to be released on Wednesday.

At that meeting, the central bank raised interest rates by 25 basis points and said disinflation was underway. Resilient economic data for the past month has brought back investor fears that the Fed will have to hike more and stay higher for longer.

Minutes from the Reserve Bank of Australia's policy meeting in February showed the board abandoned all thought of pausing rate hikes in the face of sticky inflation and signalled more hikes would be needed in the months ahead.

Meanwhile, Russian President Vladimir Putin was due to make a speech on Tuesday setting out aims for the second year of his invasion of Ukraine. It comes just a day after U.S. President Joe Biden's surprise visit to Ukraine where he walked the streets of Kyiv and promised to stand with Ukraine as long as it takes.

In the corporate world, global miner BHP Group reported a dour first half earnings but pinned hopes on a rebound in demand from China, its biggest customer.

Europe's largest bank HSBC Holdings unveiled plans for a special dividend and share buybacks as rising interest rates swelled net interest income.

Earnings from Walmart later in the day will shed light on American consumers' buying habits in the face of rising expenses.

Key developments that could influence markets on Tuesday:

Economic events: Flash PMIs for Germany, France, UK and Eurozone

(Reporting by Ankur Banerjee; Editing by Sam Holmes)

(Bloomberg) — China’s reopening should help stabilize global commodities demand, according to the world’s top miner, but the prediction comes with caveats.

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BHP Group Ltd. reported a drop in first-half profit after the strict virus policies in its largest customer derailed demand for key commodities including iron ore, its biggest revenue earner. Beijing’s swift exit from Covid Zero that began in December is now breeding optimism that consumption will recover and offset slowing growth elsewhere in the world.

Raw materials from iron ore to copper and coking coal have rallied in anticipation of the return of Chinese buyers, although an extended Lunar New Year holiday and high stockpiles have dented hopes of an immediate lift to consumption.

“China has been buoyed by the green shoots we’ve seen since the start of this calendar year,” Chief Executive Officer Mike Henry told an earnings call. “So there’s a lot there that’s giving us confidence that we will see an acceleration in the Chinese domestic economy.”

However, the risk remains that China could fare worse than expected if the global downturn hits demand for its products. “If we see a sharper pullback in the US and Europe, that will have a bigger impact on Chinese exports,” he said.

Demand for iron ore from China’s vast steel industry is now expected to improve, BHP said in its earnings report, although it warned that the impact on profitability at steel mills, which affects the premium paid for higher grade ore, remains uncertain.

Beijing has also established a new state-owned company, China Mineral Resources Group, to consolidate purchases on behalf of its largest steelmakers. Henry said the development, designed to improve China’s leverage in the $160 billion trade, is “bringing an added dimension to the market” but downplayed concerns it would give buyers too much power.

In the medium term, BHP said Chinese consumption of iron ore will fall from current levels as steel output plateaus and more scrap is used. China’s steel production has been in decline for the past two years after the government moved to cut emissions and rein in its heavily indebted property sector, the biggest source of demand.

For copper, the miner’s next biggest earner, demand growth is expected to be modest, with improvements in China offsetting weakness in the developed world. More broadly, “the electrification mega-trend” is likely to be major tailwind for consumption of those metals like copper and nickel that are crucial to the transition away from fossil fuels, it said.

The Week’s Diary

Tuesday, Feb. 21

• Nothing major scheduled

Wednesday, Feb. 22

• China Photovoltaic Industry Forum in Beijing

• CCTD’s weekly online briefing on China’s coal market, 15:00

Thursday, Feb. 23

• EARNINGS: HKEX

Friday, Feb. 24

• China weekly iron ore port stockpiles

• Shanghai exchange weekly commodities inventory, ~15:30

On The Wire

Russian exports of discounted crude and fuel oil to China have jumped to record levels as the re-opening of the world’s biggest energy importer gathers pace after the dismantling of Covid Zero.

Something strange is happening in the world’s most polluting industry.

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By Sameer Manekar and Melanie Burton

(Reuters) -Global miner BHP Group was positive about demand outlook through to fiscal 2024 as top metals consumer China reopens and shifts policy towards its debt-laden property sector, the company said on Tuesday after its 2023 first-half profit missed estimates.

However, its interim dividend of 90 cents per share, while lower than last year's $1.50 per share, beat Vuma Financial's estimate of 88 cents.

"We are positive about the demand outlook in the second half of fiscal 2023 and into fiscal 2024, with strengthening activity in China on the back of recent policy decisions the major driver," Chief Executive Officer Mike Henry said.

"We expect domestic demand in China and India to provide stabilising counterweights to the ongoing slowdown in global trade and in the economies of the U.S., Japan and Europe," he said in a statement.

Last year, miners wrestled with surging costs, a tight domestic labour market and lower iron ore prices due to China's strict zero-COVID policy. But the reopening of the world's second-biggest economy and a property sector policy shift has BHP upbeat on the commodity demand outlook.

"The long-term outlook for our commodities remains strong given population growth, rising living standards and the metals intensity of the energy transition, including for steelmaking raw materials," Henry added, apparently referring to metals demand for products like electric vehicles and windmills.

However, in an environment where central banks are aggressively tightening their monetary policy, BHP expects its operating environment to remain volatile in the near term, but expects China to be a source of stability for commodity demand.

For six months ended Dec. 31, the world's largest listed miner said underlying profit attributable to continuing operations was $6.6 billion, compared with $9.72 billion a year earlier. That missed a Vuma Financial estimate of $6.82 billion.

"There was nothing in that we didn’t expect to see," said analyst David Lennox of Fat Prophets in Sydney, adding shareholders would find comfort in a slightly better-than-expected dividend payout.

"We have got BHP as a hold primarily because their share price is sitting up at record highs and they are going to have to do pretty well to justify those levels."

The Melbourne-based miner also warned it now expects the marginal cost of mining production to be markedly higher than prior to the COVID-19 pandemic.

BHP, along with joint venture partner Mitsubishi Development, has started pursuing options to divest Daunia and Blackwater coal mines, two of nine metallurgical coal mines in Queensland's Bowen Basin.

(Reporting by Sameer Manekar and Himanshi Akhand in Bengaluru, and Melanie Burton in Melbourne; Editing by Jonathan Oatis and Josie Kao)

*

H1 profit misses estimate

*

Interim dividend beats estimate

*

Positive on demand outlook from China

*

Starts process to sell two Queensland met coal mines

(Updates with cost of mining production, sale process of two coal mines, analyst comment)

By Sameer Manekar and Melanie Burton

Feb 21 (Reuters) – Global miner BHP Group was positive about demand outlook through to fiscal 2024 as top metals consumer China reopens and shifts policy towards its debt-laden property sector, the company said on Tuesday after its 2023 first-half profit missed estimates.

However, its interim dividend of 90 cents per share, while lower than last year's $1.50 per share, beat Vuma Financial's estimate of 88 cents.

"We are positive about the demand outlook in the second half of fiscal 2023 and into fiscal 2024, with strengthening activity in China on the back of recent policy decisions the major driver," Chief Executive Officer Mike Henry said.

"We expect domestic demand in China and India to provide stabilising counterweights to the ongoing slowdown in global trade and in the economies of the U.S., Japan and Europe," he said in a statement.

Last year, miners wrestled with surging costs, a tight domestic labour market and lower iron ore prices due to China's strict zero-COVID policy. But the reopening of the world's second-biggest economy and a property sector policy shift has BHP upbeat on the commodity demand outlook.

"The long-term outlook for our commodities remains strong given population growth, rising living standards and the metals intensity of the energy transition, including for steelmaking raw materials," Henry added, apparently referring to metals demand for products like electric vehicles and windmills.

However, in an environment where central banks are aggressively tightening their monetary policy, BHP expects its operating environment to remain volatile in the near term, but expects China to be a source of stability for commodity demand.

For six months ended Dec. 31, the world's largest listed miner said underlying profit attributable to continuing operations was $6.6 billion, compared with $9.72 billion a year earlier. That missed a Vuma Financial estimate of $6.82 billion.

"There was nothing in that we didn’t expect to see," said analyst David Lennox of Fat Prophets in Sydney, adding shareholders would find comfort in a slightly better-than-expected dividend payout.

"We have got BHP as a hold primarily because their share price is sitting up at record highs and they are going to have to do pretty well to justify those levels."

The Melbourne-based miner also warned it now expects the marginal cost of mining production to be markedly higher than prior to the COVID-19 pandemic.

BHP, along with joint venture partner Mitsubishi Development, has started pursuing options to divest Daunia and Blackwater coal mines, two of nine metallurgical coal mines in Queensland's Bowen Basin. (Reporting by Sameer Manekar and Himanshi Akhand in Bengaluru, and Melanie Burton in Melbourne; Editing by Jonathan Oatis and Josie Kao)

By Himanshi Akhand and Melanie Burton

BENGALURU/MELBOURNE (Reuters) – Australia's iron ore giants BHP Group, Rio Tinto and Fortescue are set to report a steep drop in their earnings, which is set to compress their payouts to shareholders, after China's COVID lockdown drove down iron ore prices.

Earnings at Rio Tinto and BHP Group are seen declining 48% and 28%, respectively, for the six months to December 2022, while Fortescue's half-year earnings are set to slide about 16%, based on estimates from Visible Alpha and Vuma Financial.

The miners are expected to offer a mixed outlook for 2023, amid uncertainty over the strength of China's recovery following the lifting of its strict COVID-19 curbs.

"We haven't seen too much hard data from China just yet, but I think there's enough for the miners to be more optimistic – cautiously so," said Adrian Prendergast, an analyst at Morgans Financial in Melbourne.

The companies are also facing higher materials and fuel costs and a dearth of skilled workers that could impinge on their expansion projects.

Average realised prices for iron ore fell sharply in the six months to December, hitting earnings.

Dividend payouts are expected to fall, undermined by the weaker earnings and a push by the major diversified miners to fund growth, be it through building their own projects or through acquisitions, analysts at Goldman Sachs wrote in a note.

Buyout activity has been ramping up in the mining sector, as evidenced by Rio's recent $3.3 billion takeover of Canada's Turquoise Hill to gain control of its Mongolian copper mine, and BHP's A$9.6 billion offer for copper and gold producer OZ Minerals.

BHP, which will report its first-half results on Feb. 21, is expected to record attributable profit from total operations of $6.82 billion, down from $9.44 billion.

First-half net profit at Fortescue, reporting on Feb. 15, is seen declining to $2.34 billion from $2.78 billion. BHP and Fortescue report on a July-June financial year.

Underlying half-year profit at Rio Tinto, which reports on a calendar year cycle, is seen declining 48% to $4.77 billion from $9.21 billion. Rio will report on Feb. 22.

(Reporting by Himanshi Akhand in Bengaluru and Melanie Burton in Melbourne; Editing by Sonali Paul)

MELBOURNE, Jan 31 (Reuters) – New South Wales is set to finalise an order by mid-February that will require all mining firms in Australia's biggest coal exporting state to reserve as much as 10% of their output for domestic supply.

A Department of Planning and Environment spokesperson said the government would issue final directions after talks with miners.

"The draft revised directions allow suppliers the option to provide coal from their own production or to strike an agreement from another supplier to meet their obligations under the directions," the spokesperson said.

The updated plan, disclosed last week, is designed to keep a lid on coal prices and drive down household power bills. The state last week had planned to issue the expanded order by the end of January, but has faced resistance from miners.

The department did not say how many tonnes of coal will be required.

Whitehaven Coal Chief Executive Paul Flynn has said the government appeared to be looking to secure around 3 million to 5 million tonnes, but the company was pressing the state to explain how that shortfall estimate had been determined.

Directions issued in December required a dozen coal mines that supply power plants in New South Wales to fill a shortfall in supply at a capped price of A$125 a tonne – well below the export price currently at about $265 a tonne – under a deal with the federal government.

The mines are mainly owned by Glencore Plc, Peabody Energy, New Hope Corp and Thailand's Banpu PCL .

The state now wants to spread the requirement to all the state's coal producers, including those that export all of their output, including BHP Group, Whitehaven Coal and Yancoal Australia.

BHP has said the new policy could affect its plan to keep its Mt Arthur coal mine, the state's largest single coal mine, open until 2030. (Reporting by Sonali Paul; Additional reporting by Melanie Burton; Editing by Edwina Gibbs)

Southern Copper Corporation SCCO is likely to register a year-over-year decline in earnings in its fourth-quarter 2022 results next week. Lower production levels, and a drop in copper and silver prices, as well as inflated costs, are expected to have weighed on the performance.

Q3 Results

In the last reported quarter, the company’s earnings and sales declined year over year. While revenues missed the Zacks Consensus Estimate, earnings beat the same. Over the past four quarters, SCCO surpassed earnings estimates in two quarters and missed in the other two, resulting in a negative average surprise of 5.45%.

Q4 Estimates

The Zacks Consensus Estimate for SCCO’s fourth-quarter 2022 earnings per share is pegged at 82 cents, indicating a decline of 24% from the prior-year quarter’s reported figure. The estimate has moved up 4% over the past 30 days. The consensus mark for the quarter’s revenues stands at $2.53 billion, suggesting a year-over-year decline of 10.5%.

Southern Copper Corporation Price and EPS Surprise

 

Southern Copper Corporation Price and EPS Surprise

Southern Copper Corporation price-eps-surprise | Southern Copper Corporation Quote

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Southern Copper this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.Earnings ESP: The Earnings ESP for Southern Copper is -1.83%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.Zacks Rank: Southern Copper currently sports a Zacks Rank of 1.

Key Factors

Copper accounts for more than 80% of the company’s sales. Over the past few quarters, SCCO has been witnessing lower production at its Peruvian mines due to lower ore grades. This trend is expected to have continued in 2022 and the fourth quarter was not an exception. Copper prices were on a downtrend throughout the fourth quarter, weighed down by uncertainties surrounding the global economy as new coronavirus restrictions in China affected the demand for the red metal, thus hurting prices. Prices were also impacted by the spike in energy costs and low global inventories.Silver prices have also been negatively impacted this year, weighed down by the stronger U.S. dollar, rising interest rates and sluggish growth. SCCO has also been facing higher costs for diesel and fuel, operating and repair materials, supplies, and energy, as well as higher labor costs.Overall, lower production levels, lower copper and silver prices, as well as elevated costs are expected to reflect on the company’s earnings in the to-be-reported quarter. Savings from the company’s stringent cost-control measures are likely to have negated some of the impacts.

Share Price Performance

 

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Image Source: Zacks Investment Research

 

The company’s shares have gained 16.7% over the past year compared with the industry’s 37.1% growth.

Stocks to Consider

Here are some Basic Materials stocks, which, according to, our model, have the right combination of elements to post an earnings beat in their upcoming releases.Air Products and Chemicals APD, scheduled to release fourth quarter 2022 earnings on Feb 2, has an Earnings ESP of +2.67% and currently carries a Zacks Rank of 2.The Zacks Consensus Estimate for Air Products’ fourth-quarter earnings has been revised 0.4% upward in the past 60 days. The consensus estimate for APD’s earnings for the fourth quarter is pegged at $2.73.Teck Resources TECK, expected to release fourth-quarter earnings on Feb 23, has an Earnings ESP of +3.48%.The Zacks Consensus Estimate for Teck’s fourth-quarter earnings is pegged at 94 cents. TECK currently carries a Zacks Rank of 2.Albemarle ALB, scheduled to release fourth-quarter 2022 earnings on Feb 15, has an Earnings ESP of +7.16% and a Zacks Rank of 3.The Zacks Consensus Estimate for ALB’s fourth-quarter earnings has moved north 3% in the past 60 days. The consensus mark is pegged at $7.89.Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Albemarle Corporation (ALB) : Free Stock Analysis Report

Southern Copper Corporation (SCCO) : Free Stock Analysis Report

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Considering Southern Copper has not realized below-30% volatility over a 50-day period in the last two years, these options appear cheap.

Wall Street expects a year-over-year decline in earnings on lower revenues when Southern Copper (SCCO) reports results for the quarter ended December 2022. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.

The earnings report might help the stock move higher if these key numbers are better than expectations. On the other hand, if they miss, the stock may move lower.

While the sustainability of the immediate price change and future earnings expectations will mostly depend on management's discussion of business conditions on the earnings call, it's worth handicapping the probability of a positive EPS surprise.

Zacks Consensus Estimate

This miner is expected to post quarterly earnings of $0.82 per share in its upcoming report, which represents a year-over-year change of -24.1%.

Revenues are expected to be $2.53 billion, down 10.5% from the year-ago quarter.

Estimate Revisions Trend

The consensus EPS estimate for the quarter has been revised 1.47% lower over the last 30 days to the current level. This is essentially a reflection of how the covering analysts have collectively reassessed their initial estimates over this period.

Investors should keep in mind that the direction of estimate revisions by each of the covering analysts may not always get reflected in the aggregate change.

Earnings Whisper

Estimate revisions ahead of a company's earnings release offer clues to the business conditions for the period whose results are coming out. Our proprietary surprise prediction model — the Zacks Earnings ESP (Expected Surprise Prediction) — has this insight at its core.

The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate for the quarter; the Most Accurate Estimate is a more recent version of the Zacks Consensus EPS estimate. The idea here is that analysts revising their estimates right before an earnings release have the latest information, which could potentially be more accurate than what they and others contributing to the consensus had predicted earlier.

Thus, a positive or negative Earnings ESP reading theoretically indicates the likely deviation of the actual earnings from the consensus estimate. However, the model's predictive power is significant for positive ESP readings only.

A positive Earnings ESP is a strong predictor of an earnings beat, particularly when combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). Our research shows that stocks with this combination produce a positive surprise nearly 70% of the time, and a solid Zacks Rank actually increases the predictive power of Earnings ESP.

Please note that a negative Earnings ESP reading is not indicative of an earnings miss. Our research shows that it is difficult to predict an earnings beat with any degree of confidence for stocks with negative Earnings ESP readings and/or Zacks Rank of 4 (Sell) or 5 (Strong Sell).

How Have the Numbers Shaped Up for Southern Copper?

For Southern Copper, the Most Accurate Estimate is lower than the Zacks Consensus Estimate, suggesting that analysts have recently become bearish on the company's earnings prospects. This has resulted in an Earnings ESP of -1.83%.

On the other hand, the stock currently carries a Zacks Rank of #1.

So, this combination makes it difficult to conclusively predict that Southern Copper will beat the consensus EPS estimate.

Does Earnings Surprise History Hold Any Clue?

While calculating estimates for a company's future earnings, analysts often consider to what extent it has been able to match past consensus estimates. So, it's worth taking a look at the surprise history for gauging its influence on the upcoming number.

For the last reported quarter, it was expected that Southern Copper would post earnings of $0.55 per share when it actually produced earnings of $0.67, delivering a surprise of +21.82%.

Over the last four quarters, the company has beaten consensus EPS estimates two times.

Bottom Line

An earnings beat or miss may not be the sole basis for a stock moving higher or lower. Many stocks end up losing ground despite an earnings beat due to other factors that disappoint investors. Similarly, unforeseen catalysts help a number of stocks gain despite an earnings miss.

That said, betting on stocks that are expected to beat earnings expectations does increase the odds of success. This is why it's worth checking a company's Earnings ESP and Zacks Rank ahead of its quarterly release. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

Southern Copper doesn't appear a compelling earnings-beat candidate. However, investors should pay attention to other factors too for betting on this stock or staying away from it ahead of its earnings release.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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Southern Copper Corporation (SCCO) : Free Stock Analysis Report

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Here are 3 companies under heavy accumulation this year.

Southern Copper Corp. (SCCO) Analysis

First is Southern Copper Corp. (SCCO) which develops and produces materials including copper, silver, and zinc. The stock is up a staggering 24% in 2023, but more impressive is its 60% climb the last 3 months.

Healthy institutional accumulation has likely helped lift the shares higher, which you can see below. Since November there’ve been 13 unusually large volume inflows (green bars):

Source: www.mapsignals.com

With a 12-month forward P/E of 23.2, shares could be attractive after a pullback. Additionally, a 4.6% dividend yield makes the shares attractive.

One thing is for sure, the shares have been in demand lately.

Steel Dynamics Inc. (STLD) Analysis

Next up is Steel Dynamics (STLD) which is a large manufacturer and metal recycler. At MAPsignals, we believe in following large institutional flows. With the stock gaining 10% in 2023, we believe healthy accumulation is part of the story.

Since October there’ve been 10 days where the stock jumped in price alongside outsized volumes. That can mean there’s institutional interest:

Source: www.mapsignals.com

The 12-month forward P/E is pegged at 9.5X according to FactSet. The shares pay a decent 1.3% dividend yield.

This trading action suggests investors are expecting upside for the company in 2023.

Commercial Metals Co. (CMC) Analysis

The number 3 materials firm racing higher this year is Commercial Metals Co. (CMC). This company manufactures and recycles steel and metal products. The market cap is just over $6 billion.

The stock has been an outperformer recently, jumping 7% in 2023. Notably, the shares have seen 8 large inflow signals since October:

Source: www.mapsignals.com

There’s no question the stock could be extended at these levels. However, this is one of the most in-demand materials stocks according to MAPsignals research.

Strong sector leadership could mean there’s more upside for the group in 2023.

Bottom Line

SCCO, STLD, & CMC represent 3 of the top performing materials stocks so far in 2023. Healthy institutional accumulation signals make these stocks worthy of extra attention.

To learn more about MAPsignals’ institutional process please visit: www.mapsignals.com

Disclosure: As of the time of this writing, the author holds no positions in SCCO, STLD or CMC at the time of this writing.

This article was originally posted on FX Empire

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To find a multi-bagger stock, what are the underlying trends we should look for in a business? One common approach is to try and find a company with returns on capital employed (ROCE) that are increasing, in conjunction with a growing amount of capital employed. If you see this, it typically means it’s a company with a great business model and plenty of profitable reinvestment opportunities. With that in mind, the ROCE of Southern Copper (NYSE:SCCO) looks great, so lets see what the trend can tell us.

Return On Capital Employed (ROCE): What Is It?

If you haven’t worked with ROCE before, it measures the ‘return’ (pre-tax profit) a company generates from capital employed in its business. The formula for this calculation on Southern Copper is:

Return on Capital Employed = Earnings Before Interest and Tax (EBIT) ÷ (Total Assets – Current Liabilities)

0.29 = US$4.6b ÷ (US$17b – US$1.5b) (Based on the trailing twelve months to September 2022).

Thus, Southern Copper has an ROCE of 29%. In absolute terms that’s a great return and it’s even better than the Metals and Mining industry average of 18%.

View our latest analysis for Southern Copper

roce

Above you can see how the current ROCE for Southern Copper compares to its prior returns on capital, but there’s only so much you can tell from the past. If you’d like to see what analysts are forecasting going forward, you should check out our free report for Southern Copper.

What The Trend Of ROCE Can Tell Us

Southern Copper’s ROCE growth is quite impressive. Looking at the data, we can see that even though capital employed in the business has remained relatively flat, the ROCE generated has risen by 70% over the last five years. So our take on this is that the business has increased efficiencies to generate these higher returns, all the while not needing to make any additional investments. On that front, things are looking good so it’s worth exploring what management has said about growth plans going forward.

In Conclusion…

To bring it all together, Southern Copper has done well to increase the returns it’s generating from its capital employed. And investors seem to expect more of this going forward, since the stock has rewarded shareholders with a 96% return over the last five years. So given the stock has proven it has promising trends, it’s worth researching the company further to see if these trends are likely to persist.

If you want to know some of the risks facing Southern Copper we’ve found 2 warning signs (1 can’t be ignored!) that you should be aware of before investing here.

If you’d like to see other companies earning high returns, check out our free list of companies earning high returns with solid balance sheets here.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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The Basic Materials group has plenty of great stocks, but investors should always be looking for companies that are outperforming their peers. Rio Tinto (RIO) is a stock that can certainly grab the attention of many investors, but do its recent returns compare favorably to the sector as a whole? Let's take a closer look at the stock's year-to-date performance to find out.

Rio Tinto is one of 239 individual stocks in the Basic Materials sector. Collectively, these companies sit at #2 in the Zacks Sector Rank. The Zacks Sector Rank considers 16 different groups, measuring the average Zacks Rank of the individual stocks within the sector to gauge the strength of each group.

The Zacks Rank is a successful stock-picking model that emphasizes earnings estimates and estimate revisions. The system highlights a number of different stocks that could be poised to outperform the broader market over the next one to three months. Rio Tinto is currently sporting a Zacks Rank of #2 (Buy).

Over the past 90 days, the Zacks Consensus Estimate for RIO's full-year earnings has moved 1% higher. This signals that analyst sentiment is improving and the stock's earnings outlook is more positive.

Based on the most recent data, RIO has returned 6.7% so far this year. At the same time, Basic Materials stocks have gained an average of 3.3%. As we can see, Rio Tinto is performing better than its sector in the calendar year.

Another stock in the Basic Materials sector, Southern Copper (SCCO), has outperformed the sector so far this year. The stock's year-to-date return is 24.9%.

The consensus estimate for Southern Copper's current year EPS has increased 12.4% over the past three months. The stock currently has a Zacks Rank #1 (Strong Buy).

To break things down more, Rio Tinto belongs to the Mining – Miscellaneous industry, a group that includes 49 individual companies and currently sits at #64 in the Zacks Industry Rank. Stocks in this group have gained about 9.4% so far this year, so RIO is slightly underperforming its industry this group in terms of year-to-date returns.

Southern Copper, however, belongs to the Mining – Non Ferrous industry. Currently, this 13-stock industry is ranked #149. The industry has moved +33.3% so far this year.

Investors with an interest in Basic Materials stocks should continue to track Rio Tinto and Southern Copper. These stocks will be looking to continue their solid performance.

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David Iben put it well when he said, ‘Volatility is not a risk we care about. What we care about is avoiding the permanent loss of capital.’ So it might be obvious that you need to consider debt, when you think about how risky any given stock is, because too much debt can sink a company. As with many other companies Southern Copper Corporation (NYSE:SCCO) makes use of debt. But should shareholders be worried about its use of debt?

Why Does Debt Bring Risk?

Debt assists a business until the business has trouble paying it off, either with new capital or with free cash flow. Ultimately, if the company can’t fulfill its legal obligations to repay debt, shareholders could walk away with nothing. However, a more usual (but still expensive) situation is where a company must dilute shareholders at a cheap share price simply to get debt under control. Of course, debt can be an important tool in businesses, particularly capital heavy businesses. When we examine debt levels, we first consider both cash and debt levels, together.

View our latest analysis for Southern Copper

How Much Debt Does Southern Copper Carry?

The chart below, which you can click on for greater detail, shows that Southern Copper had US$6.55b in debt in September 2022; about the same as the year before. On the flip side, it has US$2.18b in cash leading to net debt of about US$4.37b.

debt-equity-history-analysisA Look At Southern Copper’s Liabilities

According to the last reported balance sheet, Southern Copper had liabilities of US$1.48b due within 12 months, and liabilities of US$7.97b due beyond 12 months. On the other hand, it had cash of US$2.18b and US$1.15b worth of receivables due within a year. So its liabilities total US$6.12b more than the combination of its cash and short-term receivables.

Of course, Southern Copper has a titanic market capitalization of US$59.6b, so these liabilities are probably manageable. However, we do think it is worth keeping an eye on its balance sheet strength, as it may change over time.

We measure a company’s debt load relative to its earnings power by looking at its net debt divided by its earnings before interest, tax, depreciation, and amortization (EBITDA) and by calculating how easily its earnings before interest and tax (EBIT) cover its interest expense (interest cover). This way, we consider both the absolute quantum of the debt, as well as the interest rates paid on it.

Southern Copper’s net debt is only 0.81 times its EBITDA. And its EBIT easily covers its interest expense, being 14.0 times the size. So we’re pretty relaxed about its super-conservative use of debt. But the bad news is that Southern Copper has seen its EBIT plunge 18% in the last twelve months. We think hat kind of performance, if repeated frequently, could well lead to difficulties for the stock. When analysing debt levels, the balance sheet is the obvious place to start. But it is future earnings, more than anything, that will determine Southern Copper’s ability to maintain a healthy balance sheet going forward. So if you’re focused on the future you can check out this free report showing analyst profit forecasts.

But our final consideration is also important, because a company cannot pay debt with paper profits; it needs cold hard cash. So the logical step is to look at the proportion of that EBIT that is matched by actual free cash flow. Over the most recent three years, Southern Copper recorded free cash flow worth 55% of its EBIT, which is around normal, given free cash flow excludes interest and tax. This cold hard cash means it can reduce its debt when it wants to.

Our View

When it comes to the balance sheet, the standout positive for Southern Copper was the fact that it seems able to cover its interest expense with its EBIT confidently. But the other factors we noted above weren’t so encouraging. In particular, EBIT growth rate gives us cold feet. Considering this range of data points, we think Southern Copper is in a good position to manage its debt levels. But a word of caution: we think debt levels are high enough to justify ongoing monitoring. The balance sheet is clearly the area to focus on when you are analysing debt. But ultimately, every company can contain risks that exist outside of the balance sheet. Case in point: We’ve spotted 2 warning signs for Southern Copper you should be aware of, and 1 of them is concerning.

If you’re interested in investing in businesses that can grow profits without the burden of debt, then check out this free list of growing businesses that have net cash on the balance sheet.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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By buying an index fund, investors can approximate the average market return. But if you pick the right individual stocks, you could make more than that. Just take a look at Southern Copper Corporation (NYSE:SCCO), which is up 69%, over three years, soundly beating the market return of 17% (not including dividends). On the other hand, the returns haven’t been quite so good recently, with shareholders up just 15% , including dividends .

Since the stock has added US$6.7b to its market cap in the past week alone, let’s see if underlying performance has been driving long-term returns.

View our latest analysis for Southern Copper

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

During three years of share price growth, Southern Copper achieved compound earnings per share growth of 20% per year. We note that the 19% yearly (average) share price gain isn’t too far from the EPS growth rate. Coincidence? Probably not. This suggests that sentiment and expectations have not changed drastically. Quite to the contrary, the share price has arguably reflected the EPS growth.

The company’s earnings per share (over time) is depicted in the image below (click to see the exact numbers).

earnings-per-share-growth

It’s probably worth noting that the CEO is paid less than the median at similar sized companies. It’s always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. Dive deeper into the earnings by checking this interactive graph of Southern Copper’s earnings, revenue and cash flow.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. In the case of Southern Copper, it has a TSR of 96% for the last 3 years. That exceeds its share price return that we previously mentioned. This is largely a result of its dividend payments!

A Different Perspective

It’s nice to see that Southern Copper shareholders have received a total shareholder return of 15% over the last year. Of course, that includes the dividend. That gain is better than the annual TSR over five years, which is 13%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We’ve identified 2 warning signs with Southern Copper (at least 1 which is a bit concerning) , and understanding them should be part of your investment process.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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Copper prices hit their highest level since mid-2022 on expectations that China’s reopening will boost demand for industrial metals. The rally in copper, which on Wednesday traded above $9,000 a metric ton on the London Metal Exchange for the first time since June, is broadly a good sign for the global economy. Copper is used in construction, cars, machinery, consumer goods and energy infrastructure. Prices typically rise when demand picks up speed in line with economic growth. China is by far t