Interactive Investor

My FTSE 100 mining stock tip for 2023

28th December 2022 17:09

by Lee Wild from interactive investor

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After a three-year winning streak, mining analyst John Meyer picks his favourite blue-chip mining share for the year ahead. Will he make it four out of four?

Lee Wild, head of equity strategy, interactive investor:Hello. With me today, I’m lucky to have John Meyer, mining analyst and broker, SP Angel. Hello, John.  

John Meyer, mining analyst, SP Angel: Hello.

Lee: John, you’ve had an amazing run of picking the best performing large-cap mining stock. It’s three years on the trot now after another stellar performance for Glencore (LSE:GLEN), which is up 40% in ’22, at the time of filming. So for comparison, Anglo American (LSE:AAL) is up 2%; BHP Group Ltd (LSE:BHP), 16%; Antofagasta (LSE:ANTO) was about 4%. What’s your large-cap mining pick for 2023?

John: Well, Glencore certainly did well, and it’s definitely been a good environment for them. They did well not to sell their coal assets, despite being under huge pressure to decarbonise and do this. I think Glencore are still going to be a very strong stock through 2023. I would also expect Antofagasta to have a good run because it’s the purest of copper companies within the FTSE 100. And it enjoys a premium rating and it has great liquidity, and all the things the funds want, so Antofagasta is certainly a good stop.

But for me, Glencore, I would still hold Glencore because it’s very heavily invested in the battery metals, it’s big in nickel, it’s big in copper, it’s clearly big in coal, which are all doing relatively well to be honest. And it has a strong trading business. Yes, it got hit by a fine by the United States Department of Justice for some improper trading many, many years ago, and I think I have to wonder about the timing of this fine, but Glencore have more than enough cash flow to pay that sort of thing at the moment. So I think it’s onwards and upwards for Glencore.

I think it’s going to be a very strong stock from here. It’s not necessarily got the quality of assets of Rio Tinto (LSE:RIO) or BHP Billiton, but it does have a very ‘go ahead going’ ethos about it, and I think that trading business will carry it through. So we’re looking for extraordinary profits out of Glencore in this volatile trading environment.

Lee: Great. Glencore again for 2023, then, brilliant. John Meyer, mining analyst at broker SP Angel, thanks ever so much for joining me today.

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We use a combination of fundamental and technical analysis in forming our view as to the valuation and prospects of an investment. Where relevant we have set out those particular matters we think are important in the above article, but further detail can be found here.

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