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Trending tickers: Glencore | Rio Tinto | Barclays | Scottish Mortgage

Glencore  Phosphate mine processing mill
Glencore posted record profits of £27bn thanks to soaring commodity prices. Photo: Getty (wiratgasem via Getty Images)

Glencore (GLEN.L)

Global commodity trading and mining company Glencore has come down in price in the last three months.

At the start of the year, the firm was trading at around 550p but now can be bought for around 440p.

Last month, Glencore posted record profits of £27bn ($33bn) thanks to soaring commodity prices.

UBS (UBS) also upgraded its recommendation for the mining company from "neutral" to "buy", maintaining its price target at £5.60 per share.

However, the stock has underperformed by more than 10% compared with rivals Rio Tinto (RIO.L) and BHP (BHP.L), falling approximately 26% from its January high.


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"We believe the risk/reward is again attractive and concerns of further softening in thermal coal/curtailing of cobalt production are priced in," UBS said.

UBS estimated that Glencore’s free cash flow yield is around $10bn or 14% at spot.

"We remain cautious overall on the mining sector but are encouraged by recent China data which is somewhat stronger than expected," UBS said.

Rio Tinto (RIO.L)

Rio Tinto’s dividend stock is seen as currently trading at a discount and with green energy demand growing, Rio Tinto will have massive demand and solid free cash flow in the future.

The mining company will be forced forced to cut carbon emissions after the Australian government struck a breakthrough climate deal this Monday, saying it had finally ended "10 years of denial".

Under the deal, the 215 biggest polluting facilities in Australia — such as coal mines and gas plants — will have to reduce their net emissions by almost 5% each year until 2030.

Goldman Sachs (GS) had a buy rating on the stock on Monday, and believes the company has a compelling relative valuation as compared to its peers.

Rio stock pays investors a current yield of more than 7% and investors are banking on China’s full reopening to drive demand for core metals, particularly lithium mining.

Barclays (BARC.L)

It took a beating during the banking turmoil sparked by the collapse of Silicon Valley Bank and Credit Suisse (CS), but Barclays’ shares are making a comeback as calm returns to markets.

Some traders were tempted to buy in the dip, as the share price fall made it look cheap — something rare across banking stocks — amid a banking crisis.

Investors are still fearful of catching a knife instead of buying in the dip as Barclays was one of the few UK banks to embrace global commercial banking since the 2008 global financial crisis, leaving its shares most exposed to issues in the US banking sector.

For now, Barclays remains in recovery mode.

Scottish Mortgage Investment Trust (SMT.L)

The investment trust’s stock has halved in value since 2021 amid concerns over board governance and exposure to risky private companies.

The £13.2bn trust has been reported to the UK financial watchdog by departed non-executive director Amar Bhidé, including a paper trail of evidence.

Its holdings in private companies allowed customers to take advantage of growth opportunities not otherwise readily available to retail investors.

It invested in Chinese ecommerce firm Alibaba (BABA) before it went public as well as spacecraft manufacturer SpaceX and Swedish battery maker Northvolt.

Investors have started to question the trust's managers capacity to monitor its controversial stakes in private unquoted companies. Last year, these accounted for more than 30% of the portfolio.

Bhidé hoped the Competition and Markets Authority (CMA) "looks into the concerns carefully" and said that he provided the regulator with "evidentiary back up", a paper trail and "will be speaking to them shortly".

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Scottish Mortgage has been the best performer in the global trust sector over the past decade — up 334% over ten years.

But its share price has fallen by 58% since its high of 1528p in November 2021 and now stands at a 19% discount to the net value of the trust's assets.

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