Key points
- One FTSE 100 copper mining company has quadrupled its profits in the past five fiscal years
- Silver is central for many efforts to find greener energy solutions
- Both companies covered here could be pivotal for my long-term portfolio growth
The FTSE 100 is full of exciting companies that are appropriate for my long-term portfolio. Recently, I’ve found two mining stocks that may be very important as the world seeks greener solutions. While I already own shares in Fresnillo (LSE: FRES), the Mexico-based silver miner, I want to know if I should buy more. Also, the copper miner Antofagasta (LSE: ANTO), from Chile, is appealing to me because of its excellent fundamentals.
The FTSE 100 copper mining growth stock
Antofagasta operates two divisions: copper mining and transportation. For the fiscal years 2016 to 2020, the firm’s fundamental data demonstrate solid and consistent growth. During this time, revenue increased from $3.6bn to $5.1bn.
Furthermore, profit before tax more than quadrupled to $1.4bn. This profitability is especially appealing to me, a potential investor. Unsurprisingly, earnings-per-share (EPS) have risen at a compound annual growth rate of 9.5%. This means that this FTSE 100 company is delivering for its shareholders year in, year out.
What’s more, the business is potentially a bargain. With a price-to-earnings (P/E) ratio of 36, Antofagasta is undervalued compared to the mining sector. The sector’s average P/E ratio is 48. With the importance of copper for future green solutions like electric vehicles, I think it’s a good time for me to buy.
While a recent drought in Chile has caused some concern about the FTSE 100 company’s ability to mine copper, I see this as a short-term issue. Furthermore, the firm beat cost objectives and hit production targets in a recent report for the three months to 31 December 2021.
A silver miner that just might take off
Fresnillo mines silver in Mexico and has mixed fundamental data. For the five calendar years from 2016 to 2020, revenue increased from $1.9bn to $2.4bn. While this is encouraging, profits have been sliding and so have EPS.
The FTSE 100 business also recently issued a production warning over Covid-19 and new labour laws, both of which have resulted in higher worker absences. The market reacted badly, with the share price falling over 20% in response.
In spite of all this, I remain optimistic. The production warning was based on issues that are fundamentally short-term in nature. In time, they will subside. Like copper, silver is also central to many decarbonising efforts around the world, not least in solar panels.
While neither of these companies is without its problems, I think demand for copper and silver will continue to grow. Antofagasta is underpinned by solid growth and I expect this to remain. Furthermore, if Fresnillo can remedy its short-term issues, I think it can drive production higher. I will be buying more Fresnillo stock and purchasing Antofagasta shares in anticipation of long-term growth for my portfolio.
Andrew Woods owns shares in Fresnillo. The Motley Fool UK has recommended Fresnillo. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
This post was originally published on Motley Fool
