Is Polymetal a bargain compared to its competitors or are there better options out there? Let’s explore.

Will FTSE 100 mining stocks go higher?

Three Footsie mining stocks on my watchlist have made flying starts to 2022.

The Anglo American (LSE: AAL) share price climbed 34% following a $12bn increase in operating profit and a $1.7bn net debt reduction. Over a third of the miner’s 2021 EBITDA came from platinum group metals. Looking ahead, the company should prove resilient to geopolitical uncertainty. Anglo American, which is up 33% in a year, operates on six continents and has no Russian presence, unlike Polymetal.

Antofagasta (LSE: ANTO) is also racing ahead of the Polymetal share price, rising 22% this year (but down 10% over 12 months). As copper mining is the lifeblood of this Chilean multi-national’s business, shareholders will be encouraged by Goldman Sachs‘ 12-month copper price target of $13,000 per tonne. Antofagasta can build on a robust financial position after earnings per share rocketed by $87.80 last year.

Rio Tinto (LSE: RIO) stock completes the trio — it’s up 25% in 2022, but only up 4% in a year. Iron ore production accounts for almost 78% of its underlying earnings. In 2021, Rio Tinto generated +60% net cash and ordinary dividends per share rose 71%. Moreover, China’s iron ore imports remain stable in 2022, despite its economic slowdown. This is good news for the Rio Tinto share price.

With global interest rates rising, metal prices and mining stocks may fall so all of these shares come with risks. However, I believe the metals bull market could just be beginning as production seems unlikely to meet demand. For me, the outlook remains positive while supply side issues persist.

Will the Polymetal share price go lower?

Polymetal’s focus is precious metals, particularly gold and silver. It has operations in Russia and Kazakhstan. Although it consistently increased production over five years, the share price has been hurt by liquidity troubles caused by sanctions on Russian banks.

In further worrying signs, Polymetal postponed its decision on its 2021 final dividend payment. And Deloitte recently resigned as its auditor, threatening its London Stock Exchange listing.

Arguably, the stock’s substantial decline and a dirt cheap price-to-cash-flow ratio of 1.4 mean the risks it faces are priced in. Nascent plans to separate its Kazakh assets from the rest of the business lifted the Polymetal share price somewhat in recent days.

Nonetheless, I’m pessimistic about Polymetal shares. Headquartered in Cyprus, it avoided direct sanctions like those levied on Roman Abramovich’s Evraz. In a rapidly evolving situation, this could change.

The mining shares I’d buy now

Exposure to metals plays an important role in my diversified portfolio. I’m impressed by all three FTSE 100 stocks on my watchlist. They have strong balance sheets and are collectively spread across different geographies and commodities. I’d divide any spare cash between them.

By contrast, I see potential for further declines in the Polymetal share price. It’s simply too risky for me to buy at present, so I’m looking elsewhere for a solid gold miner.

The post Will FTSE 100 miners outshine the Polymetal share price in 2022? appeared first on The Twelfth Magpie.

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Charlie Carman has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

As inflation skyrockets, the State Pension is looking even more inadequate. Especially since Chancellor Rishi Sunak has suspended the annual triple lock uplift.

The triple lock increases the State Pension either by earnings, inflation or 2.5%, whichever is higher. Pensioners were on course for an 8% increase this year, as wages rocketed in the wake of the pandemic, until Sunak intervened.

I’d rather rely on UK shares

Sunak scrapped the earnings element of the triple lock, so that pensioners will get a rise of just 3.1% from April 6. With inflation set to hit 7.25% that month, according to the Bank of England, the State Pension will actually fall by £387 a year in real terms. UK shares can be risky too, but at least politicians don’t decide how much I get each year.

The State Pension is hugely important because it offers a steady, rising income in retirement. From April, it will pay up to £9,627.80 a year. I would need a portfolio of almost £200,000 to generate a similar-sized income. So it plays an important role, but it’s not enough to fund a comfortable retirement.

That’s why I’m investing in a balanced portfolio of global funds, to spread my risk and give me international exposure. I will complement this with a blend of UK shares.

I make regular monthly contributions into a personal pension and Stocks and Shares ISA, plus lump sums when I have spare cash. I particularly like to load up on UK shares in the wake of a stock market crash, when valuations are cheaper.

It’s never easy buying shares when stock markets are falling and everybody is panicking. I get round this by reminding myself that I am investing for the long term, at least 15 or 20 years. That allows plenty of time for stock markets to bounce back.

I will reinvest all the dividends from my UK shares for capital growth, while I’m still working. When I retire, I will draw them as income, to supplement my State Pension.

I’d buy these FTSE 100 stocks for passive income

There are loads of top FTSE 100 dividend stocks paying an incredible passive income to pensioners. Fund manager M&G currently yields staggering 8.60%, while insurer Phoenix Group Holdings yields 7.65%.

Admiral Group, Antofagasta, British American Tobacco and Abrdn all yield more than 6%. That’s around 10 times the return on the average savings account, even after last Thursday’s Bank of England base rate increase.

Incredibly, housebuilder Persimmon and global minor Rio Tinto yield more than 10% right now. Although I’m always wary when UK shares offer such dizzying yields, and would investigate them carefully before buying.

Naturally, UK shares can be risky. If markets crash, so will my portfolio. Some individual stock picks will inevitably underperform. Dividends can be slashed, as well as increased. There are absolutely no guarantees. But in contrast to the State Pension, that’s down to me, rather than the whims of the Chancellor of the day.

The post The State Pension will rise by less than inflation — that’s why I’m investing in UK shares appeared first on The Twelfth Magpie.

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Harvey Jones doesn't hold any of the shares mentioned in this article. The Motley Fool UK has recommended Admiral Group and British American Tobacco. 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.

Earnings rebound

Earlier this week, Shell revealed a strong set of results. A sizeable recovery in earnings over Q2 was recorded, prompting free cash flow to soar. As one might expect, the BP share price rose by association. I wonder if there could be more to come in the next few days. The FTSE 100 titan is scheduled to provide an update on its second quarter on 3 August.

This is not to say that BP is a one-way bet. A rising oil price is beneficial, but last year showed how volatile a commodity like black gold can be. On a longer timeline, it seems inevitable that demand will drop as the cost of buying electric vehicles falls. BP’s need to adapt won’t come cheap either. This might help explain why the shares are still far below pre-pandemic levels.

On the other hand, one might say that a P/E of just 8 suggests these potential headwinds are already priced in, especially if the company ends up beating analyst expectations next week. Even if it doesn’t, I suspect income investors won’t lose sleep. BP currently yields a forecast 5.1%. 

Hot market

York-based housebuilder Persimmon (LSE: PSN) also reports to the market next month. While we don’t know for sure what its half-year numbers on 18 August will be, we do know that UK property has been white-hot of late as more people show a desire to continue working from home.

I think the near-term performance of PSN will depend greatly on CEO Dean Finch’s commentary. Any suggestion that the withdrawal of stamp duty relief will impact trading at Persimmon could knock the share price.

Then again, it’s not as if Persimmon’s valuation looks stretched. As I type, the shares trade on a forecast P/E of 11. That still looks pretty cheap considering just how highly the company scores on quality-focused metrics. A temporary loss of momentum probably won’t bother dividend hunters either. Based on analyst projections, Persimmon offers a tempting 8% dividend yield. That’s among the biggest that one can find on the FTSE 100. 

Supercycle beneficiary

A final FTSE 100 stock I’ll be following in August is copper miner Antofagasta (LSE: ANTO). 

I’m not alone in being bullish on this company. Earlier this week, broker Peel Hunt upgraded the company based on its belief that supply of the red metal will remain restricted in 2022. This should keep copper prices high, boosting profits at ANTO. Looking further ahead, a mooted commodity ‘super cycle’ brought about by the green revolution could bring forth a raft of new investors.

To be clear, this is still risky stuff. Demand for metals such as copper is often correlated to perceptions of global economic health — clearly beyond ANTO’s control. As this month’s update showed, production is also variable and can be affected by weather as much as well as grades and recovery rates. This may help explain why shares have lost momentum over recent months.

All that said, a P/E of 15 looks reasonable to me considering how financially sound ANTO appears to be. 

Interim numbers are due on 19 August.

The post BP isn’t the only FTSE 100 stock I’ll be watching in August appeared first on The Twelfth Magpie.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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 isn’t just a Covid-19 quirk. Measured over five years they are up 238% and 136% respectively. Both published results today, and both reported a further jump in profits. I think Antofagasta and Ferguson are two of the most exciting stocks on the FTSE 100, but as ever in life there is a catch.

You can probably guess what it is, too. After such barnstorming growth, these FTSE 100 stocks are looking a little expensive. So would I buy them today?

Both shares are recovery plays

Underlying full-year profits at Chile-focused copper miner Antofagasta jumped 12.3% last year to $5.12bn, on revenue growth of 3.3%. Sales volume fell, but copper and gold prices compensated by rising around 25%. Profits were further boosted by “the weaker Chilean peso, lower input costs and continued tight cost control”, management said. EBITDA margins increased from 49.1% in 2019 to 53.4%.

Antofagasta’s 2020 dividend totalled to 54.7 cents, up 22% on last year, easily beating analyst expectations. The 1.7% forward yield may look low compared to some FTSE 100 mining stocks, but it is covered 2.8 times earnings. Naturally, with all that share price growth, dividends have struggled to keep pace.

As with any metals or minerals commodity producer, Antofagasta relies on a booming economy to support demand. Many investors have been buying in anticipation of a strong post-pandemic recovery. Currently, it trades at 44 times earnings, but with a forward valuation of just 22 times. If the recovery disappoints, Antofagasta’s share price could go into reverse. 

I’m relatively optimistic about the wider recovery, but I think the Antofagasta share price has raced ahead of many FTSE 100 stocks, and I might watch and wait for now.

Ferguson, formerly known as Wolseley, is also benefiting from recovery hopes, particularly in the US, where the company mostly operates. 

These FTSE 100 stocks are flying

The group posted a 12.2% rise in underlying half-year trading profit. Revenue rose 4.2%, despite one fewer trading day. Management put this down to “excellent cost control”. It also hailed “good operating cash generation and [a] very strong balance sheet”. Ferguson still has an eye on growth, investing $224m in four first-half acquisitions. However, management dampened expectations by flagging up a “very uncertain” second-half outlook, amid supply chain pressures.

It also warned of “increasing supply chain pressures, transportation costs and the reversal of temporary cost reduction actions” during the first lockdown. So there are potential setbacks here, which could hit the share price hard because it is also expensive, trading at 21.8 times forward earnings.

Ferguson’s forward yield is 1.8%, covered 2.6 times. As with Antofagasta, rapid share price growth makes its dividends look less generous than they really are. This is still a top FTSE 100 income stock. Ferguson also treated shareholders to a $400m buyback, following the sale of Wolseley UK.

I like both FTSE 100 stocks, but marginally favour Ferguson. US President Biden’s $1.9trn stimulus splurge should give it a lift, along with the rest of the US economy. Let’s just hope that recovery arrives soon.

The post These 2 FTSE 100 stocks have thrashed the market but are they too expensive now? appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

China is causing copper prices to climb

In 2020, copper inventory levels in the London Metal Exchange (LME) fell to their lowest point in the last 15 years. The supply was drastically cut due to mine closures as global lockdowns came into effect.

But recently, China has issued an enormous stimulus package to reboot its economy on a scale not seen since the 2008 financial crisis. As most of China’s economy is driven by industrial manufacturing, the demand for copper has surged, while the supply remains limited. So it’s not surprising that copper prices have risen to over $8,800/tonne – the highest it’s been in nearly 10 years.

But what does this have to do with Antofagasta? Well, if you haven’t guessed already, the FTSE 100 company is a leading supplier of copper. It has four mines in its portfolio that predominantly extract copper from the ground, as well as some other by-products such as gold, molybdenum (used to make steel alloys), and a small amount of silver.

Overall, the business looks like it’s in a powerful position to benefit from the rising copper prices. At least that’s what I think.

The risks of investing in mining stocks

Mining is a hazardous process. It requires highly skilled engineers as well as a considerable level of health and safety precautions. But despite all the protections put in place, accidents do happen, and they can be fatal. While no catastrophic events have occurred since 2012 on Antofagasta’s watch, it remains an ever-present threat to the business.

Accidents trigger significant reputational damage to the firm. But more importantly, if employees feel that their lives are in danger due to improper safety procedures, it’s unlikely they won’t complain. The mining sector is no stranger to worker strikes or even mass walkouts. Both of which disrupt operational performance.

Another risk for this business is its international operations. As the mines are in Chile, all operational costs are paid in Chilean pesos. What’s more, Antofagasta reports its sales and earnings in US dollars. Combined, this exposes the firm to fluctuating exchange rates across multiple currencies that can negatively impact the business’s performance.

Antofagasta: a FTSE 100 mining stock worth buying?

Covid-19 has undoubtedly had a significant impact on Antofagasta. For the first three quarters of 2020, metal production fell compared to quarters the previous year. However, in the last three months of 2020, its mines began exceeding normal production levels. Both copper and gold production saw double-digit growth compared to the end of 2019.

By the end of the year, overall copper production decreased by a marginal 4.7%. Not bad, considering the number of disruptions the company faced.

With copper prices on the rise, I believe Antofagasta is on track to continue thriving in 2021. And so, its definitely a stock I’ll be considering for my portfolio.

The post This FTSE 100 mining stock doubled in 2020. Is it still worth buying today? appeared first on The Twelfth Magpie.

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Zaven Boyrazian does not own shares in Antofagasta. The Motley Fool UK has no position in any of the shares mentioned. 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.

FTSE 100 global play

If I’m going to avoid the nastiness of a no-deal exit, it makes sense to buy shares in global players. Top-tier drinks behemoth Diageo (LSE: DGE) is surely a great example. It sells its premium spirits in 180 countries around the world.

This geographical diversity is important since a disorderly Brexit could see the value of sterling fall once again, helping exporters. Indeed, it’s one of the reasons why the FTSE 100 index has done so well recently.

But Diageo has other attractions. In my book, it’s also one of the best ways to play the bounce in equities once the coronavirus storm has passed. 

Like many stocks, Diageo has enjoyed a nice recovery over the last few weeks following news of several vaccines proving effective in fighting the coronavirus. Since the beginning of November, shares are up 17%. This suggests investors are confident that bars, restaurants and sporting venues will be able to completely open their doors at some point in 2021, thus helping revenue and profits to recover. As such, the £68bn cap is still a buy, in my opinion.

Back in fashion

Despite the uncertainty surrounding Brexit, I’ve been slowly accumulating a position in luxury brand Burberry (LSE: BRBY) throughout 2020. Like Diageo, the FTSE 100 stock sticks out as a great buy given that a huge proportion of its earnings come from Asia and its increasingly affluent middle class. 

Burberry is, of course, a highly desirable brand. As I see it, the demand for luxury goods will continue to grow regardless of the outcome of the current negotiations. Those who can afford to buy Burberry’s products will do so. Never underestimate our desire to stand out from the crowd!

Burberry’s shares are up 16% in the last month. Even so, I still believe the company is undervalued, at least relative to other global luxury brands. Further gains could be on the cards when it next reports to investors in January.

Copper load of this

A final FTSE 100 stock I’d consider as a way of navigating a no-deal scenario would be miner Antofagasta (LSE: ANTO). Having extracted copper from its operations in Chile, the company then sends it to buyers around the world. Importantly, Anto generates 100% of revenues from outside the UK. In fact, most of its copper goes to Asia. 

Naturally, any investment in a company exposed to commodity prices — something it has no control over — involves risk. Even so, I think the outlook for companies like Antofagasta is very encouraging. 

Thanks to the excitement surrounding the EV revolution and clean energy in general, the copper price has been in fine form recently. Accordingly, Anto’s share price has also soared 24% in just one month!

Sure, there will be lots of ups and downs ahead. Nevertheless, I believe the miner could be another way of reducing Brexit-related portfolio exposure. Deal or no deal, Antofagasta could prove a cunning buy in years to come.

The post Scared of a no-deal Brexit? Here are 3 of the best FTSE 100 shares I’d buy today appeared first on The Twelfth Magpie.

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Paul Summers owns shares of Burberry. The Motley Fool UK has recommended Burberry and Diageo. 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.

Overvalued

Back at the beginning of 2018, Shore Capital was advising clients to buy Barratt Developments (LSE: BDEV). However, in the middle of last week, the broker decided to reverse its decision and downgraded the stock from ‘buy’ to ‘sell’.

This is a big move and it seems to be based on the company’s growth prospects. Shore downgraded the stock after the homebuilder published its results for the year ended 30 July.

While the number of properties sold increased 1.6% year-on-year, management warned the number of homes sold by Barratt would come in below expectations in the current financial year. They’d promised growth of 5%, but this is now expected to be just 3%.

The lack of growth is disappointing considering the stock’s valuation. As Peel Hunt noted after the publication of the results, Barratt is now trading at a price to net asset value of 1.45 for 2020, slightly above the sector average of 1.35. Although a dividend yield of 7.4% for 2019 does sweeten the appeal.

Sector laggard

Meanwhile, Deutsche Bank is a seller of Berkeley (LSE: BKG). The investment bank believes the company is worth just 3,428p, around 11% below the current share price. Interestingly, analysts at the German bank are overwhelmingly positive on the home building sector in general. They believe “another powerful wave” of government support could be on the cards as politicians try and win over voters.

Still, Berkeley seems to be out of favour because of its valuation. Analysts are expecting earnings per share to decline by around 29% this year. Even after factoring in this decline, the stock is trading as a forward P/E of 11.6, a premium of 30% to the broader homebuilding sector average. The company’s dividend yield of 5.2% is also below average.

Berkeley’s price to net asset value ratio sits at 1.65, which makes it even more expensive than Barratt on this metric. Looking at these figures, it’s clear why analysts at Deutsche Bank believe Berkeley is overvalued at current levels

Risky investment

Analysts at Deutsche Bank also downgraded their outlook for mining group Antofagasta (LSE: ANTO) last week. After awarding the company a ‘hold’ rating and 930p and price target back in April, analysts have now downgraded Antofagasta to ‘sell’.

This appears to be another valuation call. Over the past 12 months, the outlook for the mining group has steadily deteriorated and analysts across the City have downgraded their prospects for the business. This time last year, analysts were expecting Antofagasta to earn $0.91 per share for full-year 2019. Now they’re forecasting just $0.62, a 29% year-on-year decline.

As analyst as expectations have deteriorated, the share price has remained constant. As a result, its shares are now dealing at a forward P/E of 16, making the company by far the most expensive in the mining sector. The rest of the industry is dealing as a forward P/E of just 8.

Looking at this evaluation, it’s clear to me why analysts think now could be an excellent time to move away from the stock.

The post Top brokers name 3 shares to sell today appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Poly-talented

The Polymetal share price has jumped 44% in the last three months, and 86% over the year, at a time when the wider index has been heading in the other direction.

Gold famously does not correlate with stock markets – the price typically climbs when investors are bearish and falls when they are bullish. Right now, investors are definitely the former, as they fret about the US-China trade war, Brexit, slowing global growth and falling interest rates, and the Polymetal share price is the beneficiary.

Time to shine

The Russian multinational mining firm isn’t just a passive beneficiary of gold price movements, it recently delivered a robust half-yearly update showing revenues up a thumping 20% over the last year and adjusted earnings up 34%, while declaring it is firmly on track to meet production guidance. Talk of a special dividend and a potential move into rare earth metals added to the shine.

I braced myself for a hefty valuation, given its recent surge, but the £5.5bn group is trading at a modest 12.4 times forecast earnings, with a similarly undemanding PEG of 0.7.

One of the arguments against buying physical gold is that it does not pay interest, but gold miners do give you an income in the shape of dividends. Right now, Polymetal offers a forecast yield of 4% and cover of 1.9.

Forecast earnings growth of 15% this year and 17% in 2020 look highly promising, by which point the yield is expected to have hit 4.7%. The risk is that a sudden burst of positive sentiment could sink the gold price and Polymetal with it.

Gold may well be due a correction, after recent strong growth. So don’t expect recent strong growth to continue, but if you haven’t got any exposure in your portfolio, this could be a good way to get it.

Copper and gold

Chilean miner Antofagasta (LSE: ANTO) is seen as a copper specialist but it does dig for gold as well, and it’s been doing well on that front, with sales up 117.8% to 148,300 ounces in the first six months of 2019, helped by higher grades at its Centinela mine, which delivered EBITDA earnings of $532.5m.

Copper is still the main attraction and Antofagasta has been doing well here too, posting a 19.1% rise in total revenues to $2.5bn, as higher copper sales volumes offset a 6.3% drop in the realised copper price.

This combination of gold and copper, two of the most non-correlating assets I can think of right now, gives the stock natural in-built diversification, given that demand for copper rises while the global economy is expanding, and demand for gold rises once it contracts.

However, with sentiment firmly in decline right now, this makes the case in favour of Polymetal seem stronger as it enters the FTSE 100. Although some of you may prefer to wait and see if the gold price does correct from today’s high.

The post I’d welcome Polymetal International to the FTSE 100 by buying it today appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

Trumped!

China is the world’s biggest importer of natural resources, but that source of demand is threatened by President Donald Trump’s trade war. The Antofagasta share price has tumbled more than 13% in the last month as investors have grown nervous about the slowing world economy and lack of progress towards a trade deal.

It is flat today despite a positive half-yearly report showing EBITDA earnings up 44% to $1.3bn, helped by a 19.1% increase in revenue to $2.5bn, due to higher copper sales volumes and by-product revenues. That helped to make up for a 6.3% drop in the realised copper price.

CEO Iván Arriagada hailed today’s “robust” results with higher production across all operations, and copper up 22%. He expects this to continue with “another year of record copper production”.

Costs and competition

Antofagasta’s Cost and Competitiveness Programme is yielding savings and despite the uncertain outlook and trade talk concerns, Arriagada said Antofagasta “continues to be in a strong position generating solid cash flows and improving returns”. 

The £8bn group paid an interim dividend of 10.7 cents per share, equivalent to 35% of net earnings, and a rise of 57.4% on last year’s interim. However, the forecast yield of 3.2% is a little disappointing against a FTSE 100 average of around 4.3%, even with cover of 1.9.

Antofagasta trades at 15.5 times forecast earnings, so it isn’t hard to find cheaper FTSE 100 stocks paying far more generous levels of income. While City analysts expect a 22% rise in earnings this year, they anticipate a 2% drop in 2020. Copper is a bellwether for a troubled global economy and the stock isn’t trading at enough of a discount to tempt me, given today’s macro and political challenges.

Play it again

FTSE 250-listed gaming software provider Playtech (LSE: PTEC) has given investors a rough ride as profit warnings hit sentiment and its stock fell 60% measured over two years, and today brought little to reverse negative sentiment.

The £1.19bn group saw half-yearly profits before tax dropping 77% year-on-year to €28m, as distribution costs exactly doubled from €246m to €492.8m. Management slashed its dividend by 50%, from 12.1 euro cents per share to 6.1 cents. Yet the market response was reasonably benign, with the Playtech share price holding steady today.

Tech play

On the plus side, revenue rose 69% to €736.1m, boosted by last year’s acquisition of SnaiTech, which posted 26% growth in adjusted EBITDA to €74.7m. Management is sticking to full-year guidance, which suggests that adjusted EBITDA will fall to between €390m and €415m. That is despite a drop in forecast revenues at its Asian business, from €150m at the start of the year to €115m.

However, Playtech does now offer a juicy forecast yield of 6.3%, with cover of 2.1, coupled with a bargain valuation of 7.3 times forecast earnings. Until I saw those figures, I wasn’t tempted to recommend the stock. Now I think it might just be a good recovery play. Or you might prefer these FTSE 250 rivals.

The post Got £1,000 to invest? I’d buy this FTSE 250 high-yielder appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

A future-proof business?

Oil and mining companies have come in for a lot of criticism recently, due to the environmental impact of their activities. But I think there are still some attractive long-term opportunities in this sector.

For example, while the market for coal will (hopefully) start to shrink in my lifetime, I expect demand for copper to continue to increase. In an increasingly electrified world, demand for copper seems likely to continue growing.

That’s certainly the view of Iván Arriagada, chief executive of FTSE 100 copper miner Antofagasta (LSE: ANTO). On Tuesday Mr Arriagada said that he expects “the fundamentals of the copper market will remain positive” in 2019. He believes “the supply deficit will increase” during the year.

If Mr Arriagada is right, then copper prices could rise further this year as demand falls short of supply.

Strong numbers

Chilean firm Antofagasta could be a big winner if that happens. Figures published today show that the group’s earnings before interest, tax, depreciation and amortisation (EBITDA) fell by 13.9% to $2,228m last year. This decline was mainly due to higher costs and a lower average copper sale price.

However, Antofagasta remains a highly profitable company. Today’s numbers show an operating profit margin of 29%. Management has  also confirmed that copper production is expected to rise from 717,600 tonnes to between 750,000 and 790,000 tonnes in 2019. Higher copper prices could provide a big boost to the group’s profits.

Antofagasta’s shares rarely look cheap. But I think the group’s profitability and strong cash generation justify a strong price tag. At the time of writing, the stock trades on 18 times forecast earnings for 2019, with a 2.4% dividend yield. I’d be happy to buy at this level for a long-term portfolio.

One pharma stock I’d buy

I have mixed feelings about some of the big pharmaceutical firms at the moment. But one medical stock that is on my buy list is FTSE 250 firm Hikma Pharmaceuticals (LSE: HIK).

Hikma specialises in producing generic versions of popular medicines. These are sold as cheaper alternatives to branded products whose patent protection has expired.

The group’s revenue rose by 7% to $2,076m last year, while underlying operating profit rose by 19% to $460m. Shareholders received a 12% dividend increase, maintaining the company’s track record of market-beating income growth.

Although profit margins on generic treatments are not always as high as on patent-protected newer medicines, Hikma’s approach does have some benefits. The group takes less risk on research and development and is able to sell its products into large, mature markets, where demand is already strong.

In my view, now could be a good time for investors to get on board at Hikma. New chief executive Sigurdur Olafsson is keen to find new routes to growth. Debt levels are low and the stock’s valuation on 16 times 2019 forecast earnings seems reasonable to me.

Although the dividend yield of 1.8% is quite modest, the payout has risen by an average of 13% per year since 2013. I view the shares as a long-term buy for dividend growth.

The post 2 dividend stocks I’d buy for an ISA today appeared first on The Twelfth Magpie.

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Roland Head has no position in any of the shares mentioned. The Motley Fool UK has recommended Hikma Pharmaceuticals. 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.