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Citi pointing to buys in miners
Robert Lea10 Oct 2008
Metals and mining stocks are vastly undervalued and the biggest diversified companies like Xstrata, Anglo American and Vedanta resources appear to be screaming buys.
That's the opinion of the metals desk at Citigroup, which says all London's listed miners are trading well below their net present value based on current commodity prices.
Over the past three months, says Citi, in a research note entitled on sale While stocks Last, commodity prices have crashed on average 30%.
Stock prices in the mining sector, however, have on average slumped by more than 50%.
That means the miners are trading at between just 4.5% and 5.5% 2009 earnings calculated on current commodity spot prices. running analysis, says Citi, which factors in another 20% to 30% fall in commodity prices on stock-market values means there is upside of around 50% on diversified mining giants.
But the analysts warned there were no obvious near-term catalysts to a share price rise.
