What is the BlackRock World Mining Trust?

As the name suggests, this fund is dedicated to owning companies that explore, extract and sell key metals and minerals needed across the globe. 

Unsurprisingly, the portfolio’s major holdings are some of the biggest miners going. Brazilian giant Vale features heavily, as do FTSE 100-listed firms, BHP Group, Anglo American and Rio Tinto. While 40% of assets are invested in mining firms that source a number of metals, 20% of the fund is invested in copper plays. Almost the same amount is devoted to gold miners.

Naturally, an actively-managed investment trust means fees. Based on its most recent fact sheet, BRWM charges 0.9% a year to manage holders’ money. 

Why is it getting popular?

I think there are two reasons why this investment trust is in demand. First, there are fears over inflation and demand for safe-havens. Mining companies are one example of the latter.

The thinking behind this is that prices tend to rise when economies are flying. Since more things are being made, it makes sense to back those companies who provide the materials needed to make them.

The second reason why the Blackrock World Mining Trust might be proving popular is the excitement surrounding renewable energy sources and electric vehicles. The fact that these featured heavily in the $2trn spending plan announced by US President Joe Biden back in March shows how hot these themes will be going forward. It’s clear that vast amounts of metal will now be needed to bring everything to fruition.  

Both of the above should prove to be tailwinds for miners. A rise in demand should lead to higher earnings. Higher earnings should boost share prices and investor returns. A boost to investor returns should, rather neatly, provide some protection from the aforementioned inflation. 

I’d also expect more dividends for shareholders. As things stand, this investment trust offers a yield of 3.2%. That’s lower than you could get from buying some of the individual miners from the FTSE 100. However, payouts will arguably be obtained at a lower level of risk. 

Should I buy?

Based on future prospects, I find the case for investing in BlackRock pretty compelling. Even so, it pays to consider the flip side. 

If concerns over inflation subside, those already holding could flee the investment trust and recycle their profits into growth stocks again. Even if this doesn’t happen, there will always be some who want to bank gains. It’s also worth remembering that commodity investing can be an ‘interesting’ ride, even when times are good. 

Personally, I’m fine with above-average volatility, so long as I know I can stay on board for the long term. And, even if (when) the investment trust does temporarily dip in value, that dividend stream should compensate. If I’d held the shares, I’d simply receive, reinvest and repeat. Yes, the ongoing charge is on the high side, but the diversification aspect makes me think BRWM is worth the cost.

With a potential commodity supercycle on the way, I’m sorely tempted to begin building a position in this investment trust in haste.

The post This investment trust is soaring in value. Should I buy in June? 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.

Having breached the 7,000 barrier last week, I’ve begun to wonder when (and if) the top tier of UK businesses — the FTSE 100 — will eclipse its 2018 all-time high (7,903) and perhaps even charge across the 8,000 boundary. 

Today, I’m looking at few arguments for why this may and may not happen in 2021.

FTSE 100: reasons to be bullish

There’s certainly no shortage of reasons to think that recent momentum might continue.

Regardless of anyone’s political persuasion and views on the overall handling of the pandemic, I don’t think there can be much doubt that the UK’s vaccination programme has been a success relative to many other nations. On paper, this should breed confidence in the ability of the economy to recover strongly.

Naturally, the more home-focused FTSE 250 gains the most here (demonstrated by its own new all-time high). Even so, there’s no lack of London-listed giants that stand to benefit from this positivity. Drinks firm Diageo should see better numbers as bars and pubs fully reopen. If last week’s great unlock is anything to go by, Primark-owner Associated British Foods should see a swift rebound in business. Gambling behemoth Flutter Entertainment stands to gain as people are allowed back in sporting venues. 

Despite the 41% gain seen in the top tier since markets hit the bottom in March 2020, I think UK blue-chip stocks still offer good value. That’s even if they arguably aren’t as innovative and disruptive as the US tech companies are. Even so, I’d much rather buy great defensive businesses at a reasonable price than a loss-making stock at a gravity-defying price.  

Then again, there are a few reasons to be cautious. 

Dips in the road

For one, it’s important to recognise that many of the FTSE 100’s members do most of their business overseas. That’s clearly handy at times when UK plc is in the doldrums. I only need to look back at how share prices reacted during the Brexit process for evidence of this.

Then again, I need to consider the probability that our biggest companies will be held back by negative coronavirus news from abroad. Airlines such as IAG will naturally weigh on the index. So too will Intercontinental Hotels Group and engine-maker Rolls-Royce. 

Another thing worth remembering is that a few sectors are heavily represented in the FTSE 100. These are finance, mining and oil and gas. If we believe that the FTSE 100 is only going up then we must also believe that the same applies to things like commodity prices. The excitement over renewable energy and electric cars could support this. Alternatively, this may priced-in to stocks like BHP Group already. 

No rush

The FTSE 100 at 8,000? I’m can’t say it won’t happen in 2021. Nonetheless, another 14% gain or so from here in the next eight months is a big ask. That’s why I think staying the course is more important than setting arbitrary targets.

Equities are likely to remain the ‘best show in town’ for long-term investors. So, while no one can say for sure whether the FTSE 100 will eclipse previous all-time highs this year, we can hope that this record will be beaten eventually. And in the meantime, those invested in individual stocks or a cheap FTSE 100 exchange-traded fund can enjoy the dividend stream that holding shares (usually) provides.

The post The FTSE 100: next stop 8,000? 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 owns shares of Flutter Entertainment. The Motley Fool UK has recommended Associated British Foods, Diageo, and InterContinental Hotels Group. 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.

Here are three from the FTSE 100, all of which report to investors next month.

Patience needed

In just a few days (4 August), we’ll get full-year figures from drinks giant Diageo (LSE: DGE). Despite recovering alongside other stocks since March’s market crash, the Guinness owner’s share price is still 10% below where it was at the start of 2020 and a little over 20% off its all-time high. 

At least some of this may be down to the rather bearish stance taken by some brokers. One — Bryan Garnier — believes it could take the beverage sector five years for alcohol volumes to return to where they were before the pandemic. Spirits could also underperform beer sales due to the consumers keeping an eye on their finances. With its premium brands, this could hurt Diageo in the near term, as could any hint of bars being forced to close again.

At Fool UK, however, we’re in for the long ride. Unless you believe that everyone will dramatically reduce their alcohol consumption over the next few months and years, the shares are surely a solid hold.

Buy on weakness

Investment platform Hargreaves Lansdown (LSE: HL) also reports to the market next month (final results on 7 August). Based on what it had to say in May, the numbers are likely to be really rather good.

Back then, Hargreaves reported adding 94,000 net new clients and £4bn of net new business over the four months to the end of April. Thanks to huge amounts of dealing, year-to-date total revenue was already up 13% to £448.1m.

As well as boasting rock-solid finances and a market-leading position, Hargreaves has a long history of generating huge returns on capital for its owners. The fact that US trading app Robinhood has now cancelled its UK launch suggests it’s likely to maintain its dominance on these shores for the foreseeable future. 

If you believe people will go on investing for retirement post-coronavirus (which, of course, they will), then any significant drop in the share price over the next few months might be worth taking advantage of.

Mining for profits

A final FTSE 100 member reporting next month is miner BHP Group (LSE: BHP). It’s down to release results for the year to the end of June on 18 August.

BHP’s share price has now recovered to roughly where it was at the beginning of 2020. Had you the skill (or luck) to buy back in mid-March, however, you’d now be sitting on a near-80% gain. For such a massive company, that’s a remarkable turnaround. 

Regardless of whether markets crash again in 2020, I think BHP could still be worth backing in the long term given the sizeable future demand for metals such as copper from electric car companies such as Tesla. The former does, after all, currently own and operate one copper mine in Australia and several in Chile. 

Investing in anything commodities-related almost guarantees a choppy ride, but those willing to buy the world’s biggest miner and sit on their hands could be well rewarded.

The post Fear another market crash? I’m watching top FTSE 100 stocks 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 recommended Diageo and Hargreaves Lansdown. 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.

Its 4.5% dividend yield is superior to the income returns that are currently available on property investments in a number of regions across the UK.

Meanwhile, the valuations of its members suggests that it could offer capital growth at a time when UK house prices are high relative to their historic levels, and when compared to average earnings.

As such, now could be a good time to buy these two FTSE 100 stocks. They appear to offer good value for money, as well as long-term growth potential from improving strategies.

Aviva

Although the Aviva (LSE: AV) share price has fallen by 16% in the last five years versus a rise in the FTSE 100 of 10%, the life insurer could offer an improving outlook. After turning around its financial performance in recent years, it is now seeking to improve its financial position through a debt-reduction programme. This is expected to lead to an annual interest saving of £90m over the medium term, which could further improve the financial standing of the company and enhance its profitability.

After a disappointing period for investors, Aviva now has a price-to-earnings (P/E) ratio of just 6.8. Alongside a dividend yield of 7.7%, this suggests that the company could offer an impressive total return outlook.

With Aviva forecast to post a rise in earnings of 8% in the current year, it seems to offer an improving outlook for investors. Certainly, its operating conditions could prove to be uncertain in the near term, but over the long run its strategy under a new CEO may lead to a rising stock price under a revised strategy that aims to strengthen its position in key markets.

BHP

Also underperforming the FTSE 100 in the last five years has been diversified mining company BHP (LSE: BHP). It has declined by 4% during that time, although investor sentiment has proved to be relatively resilient in recent months despite risks to the global growth outlook from an intensifying trade war between the US and China.

The company is seeking to reduce debt levels in order to provide a more resilient future outlook for investors. Since the start of 2016, for example, it has reduced debt levels by $16bn. At the same time, it has sought to simplify its portfolio through disposals, with a significant proportion of the cash raised being used to reward shareholders through dividends.

As such, BHP seems to be an improving business that is increasingly focused on core activities which could offer relatively impressive growth prospects. With the stock currently trading on a P/E ratio of 12, it seems to offer good value for money given the potential risks which may be ahead from an uncertain global economic outlook.

The post Forget buy-to-let: I think these 2 FTSE 100 shares can help you get rich and retire early appeared first on The Twelfth Magpie.

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Peter Stephens owns shares of Aviva. 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.

The Hastings share price is down by 15%, following a trading update that the market has taken as a profit warning. I can see why. I think Friday’s numbers have highlighted some worrying trends.

Rising losses

Hastings boss Toby van der Meer says he’s “really pleased” with the company’s progress. But although premium income rose by 4% to £235.5m during the first quarter and policy numbers climbed 3%, the underlying news isn’t great.

The group’s net revenue, which excludes amounts paid to reinsurers, fell by 1% to £183.1m. And claims costs continued to rise, thanks to rising car repair costs and property damage claims.

As a result, this year’s loss ratio will be at the upper end of its 75%-79% range. An insurer’s loss ratio measures how much of its premium income is used to settle claims. Hastings’ costs have been rising steadily, as this table shows:

I’ve also included Hastings’ expense ratio in this table. This measures the insurer’s operating expenses, relative to income from insurance premiums.

As you can see, expenses have been rising as well as claims costs. The company cautioned today that changes to VAT rules and other industry-specific costs mean that “certain expenses” are expected to increase in 2019.

Is Hastings’ 6%+ dividend safe?

Today’s figures suggest to me that the insurance operations will remain profitable this year, but at a slightly lower level. This isn’t a disaster.

However, the update was widely seen as a profit warning, a view I share. Such warnings often mark the start of a period of weak performance.

Hastings shares could be cheap at this level, but they could have further to fall. We’ll know more later this year. In the meantime, I wouldn’t take the risk. If I owned the shares I’d hold, but I wouldn’t buy more after today’s news.

This 8% payout looks safe to me

Insurers are struggling with costs. But one sector that’s delivering bumper returns for investors is mining. One of my top picks in this sector is Anglo-Aussie giant BHP Group (LSE: BHP).

After being traumatised by the 2015 mining crash, mining bosses are being very careful with their cash. Spending on major new projects is being tightly controlled, as are operating costs. Against this backdrop, strong commodity prices mean that profits have risen fast.

BHP is expected to report a full-year profit of more than $10bn in 2018/19, compared to $3.7bn in 2017/18. This strong growth means that the firm’s operations are producing a lot of spare cash.

Shareholders are expected to receive dividends totalling $2.04 per share this year, which gives the stock a yield of 8.8%. Although this includes a one-off return from the sale of the group’s US shale operations, dividend forecasts for 2019/20 still indicate a hefty 6.1% dividend yield.

My view: BHP’s mix of iron ore, copper and petroleum assets are all large scale and fairly low cost. I see this diversified group as one of the best ways to make money from mining. I’d buy the shares for income today, and then wait for the next market slump to buy more at a lower level.

The post Why I’d ditch big faller Hastings and buy this FTSE 100 8% dividend appeared first on The Twelfth Magpie.

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• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
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Roland Head 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.

Could this be the start of a sustained recovery? Let’s take a closer look at today’s full-year numbers first.

Fall in profits

Initial impressions aren’t great, with the firm announcing a 41% drop in net income to $3.4bn due to “non-cash impairments” at Mutanda — its large-scale copper and cobalt operation — and Mopani.

In contrast to peer BHP, which yesterday announced a reduction in net debt, Glencore’s debt burden also increased by 44% over the period to $14.7bn. That’s still within its desired range of between $10bn-16bn, but nevertheless higher than some analysts were expecting.

There were, however, a few positives. Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) increased 8% to $15.8bn and net income before significant items rose 5% to $5.8bn. 

Commenting on today’s numbers, CEO Ivan Glasenberg stated that, despite a “challenging operating environment,” Glencore’s portfolio of assets had “continued to deliver overall competitive all-in unit costs” which, in turn, allowed it “to capitalise on healthy average commodity prices and generate attractive margins.”

Looking ahead, Glencore expects production in all commodities to be higher in 2019 than in the previous year. The company also stated that it would continue to invest in the low-carbon economy.

Buyer beware

Like rival BHP Group, Glencore might appeal to Foolish investors wanting exposure to important metals without the risk associated with small-cap explorers and producers. It produces and markets more than 90 commodities, has offices in 50 countries, and owns roughly 150 assets around the world.

In addition to being a truly diversified business, last year’s rout means the shares look fairly cheap. Available for a little under 10 times forecast 2019 earnings before markets opened this morning, Glencore’s stock is less expensive than the aforementioned BHP, Rio Tinto and Anglo American.

Yielding 5%, there are worse places for income hunters to be investing their cash. Today’s recommended 20¢/share distribution is in line with the prior year and dividends are expected to be covered twice by expected profits in 2019. That’s a lot more comforting when compared to the state of affairs at other FTSE 100 income favorites.

News that the company has decided to initiate a new $2bn buyback programme that will run to the end of the year could also help improve sentiment. Interestingly, the firm will “look to top this up” so long as market conditions allow, supported by “a targeted $1bn of non-core asset disposals.” 

All this, however, doesn’t necessarily make Glencore a great investment at the current time. Like all companies in the resources sector, the £42bn-cap’s fortunes are also dependent to an extent on things it can’t control. 

With fears that global growth is slowing, there’s no guarantee the stock won’t continue to slide in value going forward. As such, anyone contemplating getting involved should be prepared to hold for the long term.

While I remain bullish on Glencore’s prospects over the next decade or so (thanks to the electric vehicle ‘revolution’), those with shorter time horizons may wish to consider less cyclical stocks for their portfolio.

The post This FTSE 100 dividend stock looks cheap. Time to pile in? 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.

In my opinion, that’s still true today. In this piece, I’m going to take a look at two stocks where big dividends are a top priority for management.

This firm is returning $10.4bn to shareholders

My first pick is FTSE 100 commodity giant BHP Group (LSE: BHP). This £86bn Anglo-Australian firm can trace its roots back to 1851. Last year, it sold $43bn of resources, mostly iron ore, oil, gas, copper and coal.

The company is currently in the final stages of returning $10.4bn to shareholders from the sale of its US onshore oil fields last year. Of this cash, $5.2bn has been used to buy back shares, while the other $5.2bn is being paid out as a special dividend of $1.02 per share.

City analysts’ consensus forecasts indicate that BHP is expected to pay a total dividend of $1.77 per share for the 2018/19 financial year, which ends in June. This gives the stock a forecast yield of about 8.5% at current levels.

Why I’d buy

I should point out that this payout is exceptional. Last year, shareholders received a more modest payout of $1.18 per share. Forecasts for 2019/20 are at a similar level. However, this still suggests a tasty 5.5% dividend yield.

Commodity profits will always depend on market prices for raw materials, such as oil and iron ore. But BHP benefits from owning a number of large, low-cost assets that provide good cash generation, even at lower prices. Debt levels are low and spending seems to be under control. I rate these shares as a buy for income.

This could be a cash machine

If you’re looking for a smaller business with greater growth potential, one stock I’ve invested in is mining royalty firm Anglo Pacific Group (LSE: APF). This company makes money by providing upfront cash payments to mine owners, in return for a percentage of future sales.

For mining operators, royalties can be a useful source of funding. For Anglo Pacific shareholders, they’ve provided an attractive income.

Figures released today suggest that 2019 could be another good year. Anglo Pacific shares were 5% higher at the time of writing after the firm reported a record portfolio income of £48m-£50m in 2018. The company says that the dividend for 2018 will be “not less than 7p” per share, giving a yield for last year of at least 4.6%.

The group’s biggest source of income is a stake in the Kestrel coal mine in Queensland, Australia. This generated about 75% of income during the first half of last year. There’s some risk here — Anglo Pacific’s royalty interest doesn’t cover the entire Kestrel mine. If the mine’s owners choose to develop other areas in the future, Anglo’s income could fall.

However, as things stand, the company believes it’s likely that Kestrel production will increase significantly in 2019. If coal prices remain stable, the company says this could have “positive implications for the level of dividends in 2019.”

In the meantime, the firm’s management is making use of strong cash flow from Kestrel to diversify the firm’s portfolio of investments. In my view, the shares are worth a closer look at current levels.

The post A dirt-cheap, 8%-yielding FTSE 100 dividend stock I’d buy for 2019 appeared first on The Twelfth Magpie.

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• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Roland Head owns shares of Anglo Pacific. The Motley Fool UK owns shares of Anglo Pacific. 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 cast-iron ‘sell’

The amount of froth thrown up by rampant investor buying makes near-term share price directions in the commodities segment nigh-on impossible to predict.

Diversified giant Anglo American (LSE: AAL) has seen its share price surge 223% during the past three months, for example, including an additional 8% increase between last Monday and Friday.

Large swathes of short-covering — combined with slumping US dollar values — set metals and energy prices soaring skywards back in January, dragging the wider commodities sector with it.

But make no mistake: the long-term picture for these companies remains extremely dangerous, leaving the likes of Anglo American in line for a severe retracement.

Sure, iron ore prices — a material from which Anglo American sources around a third of total earnings — may continue to march higher, the steelmaking ingredient soaring to fresh multi-month highs around $70 per tonne. Values have gained fresh momentum following positive Chinese steel output data released in recent days.

Still, concerns remain as to whether the Asian powerhouse can keep this momentum going, a necessity given that the likes of BHP Billiton, Rio Tinto and Vale continue to extend capacity.

A slippery stock pick

Of course iron ore is not the only market swimming in excess material. Indeed, Anglo American’s other markets like coal, copper and diamonds are also battling against poor demand indicators.

And the supply/demand imbalance whacking the oil sector leaves Premier Oil (LSE: PMO) in danger of a meaty reversal, too. The fossil fuel producer gained 33% during Monday-Friday, thanks in no small part to a surge of buying activity in end-of-week business.

Investors remain hung up on a potential supply freeze from OPEC et al — speculation that is yet to bear fruit despite months of negotiation. Meanwhile, a steady build in global inventories continues to cast a cloud over Brent prices in the medium-term and beyond.

Recent share prices advances leave Anglo American dealing on a huge P/E rating of 26.4 times for 2015, a rating that does not fairly reflect the firm’s high risk profile, in my opinion. And the City expects Premier Oil to keep churning out losses until 2017 at the earliest. I reckon these factors make both stocks highly-unattractive investment destinations at the present time.

Banking issues

Financial goliath Royal Bank of Scotland (LSE: RBS) also received a boot higher between last Monday and Friday, the share advancing 7% during the period.

But I reckon the huge problems coming down the line leave little in the tank for RBS to keep charging. Massive divestment activity has significantly hampered the firm’s revenues outlook, and signs of economic moderation in the UK could heap further pressure on the firm’s growth prospects, particularly if the country topples out of the European Union in June.

And of course RBS is also battling the spectre of galloping PPI charges ahead of a possible 2018 claims deadline. Indeed, institution stashed away an extra £500m in last year’s final quarter to cover the cost of the mis-selling scandal.

The banking giant is currently dealing on a P/E rating of 13.3 times for 2015. And while a reasonable ‘paper’ valuation, I believe this value is far too expensive given that RBS’ major peers like Lloyds and Barclays are in much better shape and carry far cheaper valuations.

The post Can last week’s winners Anglo American plc, Premier Oil plc & Royal Bank Of Scotland Group plc keep climbing? appeared first on The Twelfth Magpie.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Barclays and Rio Tinto. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Indeed, many of the Footsie’s major diggers and drillers have staged an impressive recovery since falling through the floor in January.

Diversified producer BHP Billiton (LSE: BLT) has seen its share value ascend 57% during the past three months, while oil giant Shell (LSE: RDSB) and gold play Centamin (LSE: CNY) have advanced 39% and 75% respectively.

Market imbalances

However, I find such stunning rises rather difficult to comprehend. The same fear about an economic ‘hard landing’ in China — a factor that drove many resources firms down to multi-year lows at the start of 2016 — continues to loom in the background.

Sure, Chinese imports of copper, iron ore and oil may have continued to rise in March. But many commentators believe this is merely the result of strategic stockpiling, rather than a signal of strong underlying demand. Indeed, GDP growth of just 1.1% between January-March and the final quarter of 2015 is not indicative of an economy cranking back into gear.

At the same time, the world’s commodity giants continue to flood the market with unwanted material, worsening already chronic supply/demand imbalances. BHP Billiton for one has a stream of development projects across the copper, oil and potash markets that threaten to keep material prices under the cosh in the years to come.

Gold shines

The gold market does not suffer from the same market dynamics as most other commodities, making Centamin’s recent heady ascent more justifiable, in my opinion.

The digger has benefitted from a steady rise in precious metal values, with enduring concerns over the health of the global economy prompting fresh inflows into these ‘rush to safety’ assets. And creaking global economic growth could send gold and silver values still higher in the months to come.

Meanwhile, Centamin’s products — like those of Shell and BHP Billiton — have received an additional leg-up in the form of a weakening US dollar. These commodities are priced up in dollars, making them cheaper to buy when the North American currency fades.

High risk

However, I believe that the recent feeding frenzy for these stocks is so severe that all three in danger of a colossal correction should recent newsflow begin to change.

A predicted 90% earnings decline for 2016 leaves BHP Billiton changing hands on a ridiculously-high P/E ratio of 84.5 times. And while Shell deals on a much-better multiple of 24.4 times, an estimated 37% bottom-line drop illustrates the colossal revenues woes it still faces.

At least it can be argued that Centamin’s lower earnings multiple leaves it in less danger of a biting retracement. The 10% earnings bounce projected for this year results in a P/E rating of 13.3 times.

All things considered, I believe the gold excavator is the superior stock amongst the three. But that’s not to say that Centamin is in the clear, however, as a likely recovery in the dollar later in the year could put gold prices — and with it the firm’s stock price — on the back foot once again.

The post BHP Billiton plc, Centamin PLC & Royal Dutch Shell Plc: Which Commodities Stock Is Best? appeared first on The Twelfth Magpie.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Royal Dutch Shell. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Still, the rapid ascent of the UK’s prime index has been fuelled by an upsurge in many stocks that I would consider already-expensive due to their poor growth prospects.

The commodities sector

A meaty recovery in commodity prices over the past month has been the main driver behind the Footsie’s exceptional rise.

Brent crude values have surged from lows of $27.67 per barrel punched back in January (the cheapest level since 2003) and the commodity was recently changing hands just shy of $37. And bellwether metal copper has galloped back above the $4,800 per tonne marker to levels not seen since the autumn.

A consequent surge back into resources stocks has seen Anglo American (LSE: BLT), BHP Billiton (LSE: BLT) and Rio Tinto (LSE: RIO) emerge as three of the FTSE 100’s biggest winners during the past month.

But with all three expected to endure further heavy earnings woes in 2016 and possibly beyond, these bumps higher have made the stocks far too expensive in my opinion as supply/demand dynamics worsen across key commodity classes.

An anticipated 60% earnings slide in fiscal 2016 for Anglo American results in a P/E ratio of 25.1 times, far above the benchmark of 10 times that reflects high-risk stocks. Meanwhile, predicted earnings dips of 49% at Rio Tinto and 85% at BHP Billiton result in heady multiples of 22.6 times and 66 times, respectively.

And investors can’t put faith in huge dividends to offset these value shortfalls either. Anglo American elected to bin the payment last year owing to its weak balance sheet and poor revenues outlook. And similar drastic action is expected to be followed by other mining and energy giants including BHP Billiton and Rio Tinto in the near future.

Supermarket strugglers

I believe that the FTSE 100’s supermarkets are also far too expensive relative to their bottom-line prospects.

Sure, Morrisons (LSE: MRW) may be about to re-enter the FTSE 100 later this month as part of the latest quarterly reshuffle. But I believe the return may prove fleeting amid rising deflationary woes and continued market share grabs by Aldi and Lidl.

City forecasts suggest that the Bradford firm will enjoy a 20% earnings bounce in the year to January 2017, while rival Tesco (LSE: TSCO) is predicted to record an 81% rise in the period to next February.

I reckon that these projected rebounds will prove disastrously inaccurate however, as competition in the supermarket segment worsens. But even if these figures do come to pass, subsequent P/E ratings of 21.5 times for Tesco and 18 times for Morrisons can hardly be as described as attractive value for money.

Meanwhile, prospective dividend yields of 3% for Morrisons and 0.6% for Tesco both lag the wider FTSE 100 average of 3.5% by a distance. As a consequence, I believe that both stocks are strong candidates for a hefty share-price correction.

The post The FTSE 100 Stocks That Offer Worst Value For Money! appeared first on The Twelfth Magpie.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Rio Tinto. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.