Writing on Epiroc (OTCPK:EPIRF) (OTCPK:EPOKY) in August of 2020, I thought that the shares already anticipated a mining capex recovery, “unless you believe miners are suddenly going to open the taps on capital spending,” and that’s exactly what has happened since. Strong metal prices have driven a strong early capex cycle for mining companies, with strength in key Epiroc markets like copper, gold, and iron, and the emergence of greenfield mining projects – the first such moves in about seven years. Beyond this near-term capex cycle, Epiroc is also well-leveraged to important trends in mining like automation and electrification.
I still believe that Epiroc has a serious claim to being the best mining company out there, but I don’t think it’s so good that it can support limitless rerating. Given the valuation and the recent share price moves, I’m more interested in names like FLSmidth (OTCPK:FLIDY) and Weir (OTCPK:WEGRY) now, but I’m not willing to step in front of present-day momentum in mining and risk getting run over by a short call with Epiroc.
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