Is Anglo American plc A More Appealing Mining Stock Than Rio Tinto plc, Glencore PLC, Centamin PLC And Randgold Resources Limited After Results?

Will the stock price of Anglo American plc (LON:AAL) (LSE:AAL.L) rise faster than those of Rio Tinto plc (LON:RIO) (LSE:RIO.L), Glencore PLC (LON:GLEN) (LSE:GLEN.L), Centamin PLC (LON:CEY) (LSE:CEY.L) and Randgold Resources Limited (LON:RRS) (LSE:RRS.L)?

Anglo American plc
Anglo American plc

Anglo American plc’s (LON:AAL) (LSE:AAL.L) stock price has gained as much as 2.6% today after the release of its 2016 results. The mining stock has returned to profitability, with net profit of $1594 million after 2015’s loss of $5624 million. On an underlying basis, EBIT was $3766 million, while underlying earnings were $2210 million.

Investors are also likely to be encouraged by Anglo American’s reduction in net debt to $8.5 billion. This is a 34% reduction and means net debt is below the stock’s target of $10 billion. This was helped by attributable free cash flow of $2.6 billion, with capital expenditure reduced by 37% to $2.5 billion. Disposal proceeds of $1.8 billion were also received.

In my view, Anglo American’s production increase of 2% and unit cost reduction of 9% should also give investors reason to cheer. The company’s strategy seems to be paying off and portfolio upgrading is set to continue. The stock will continue to focus on high quality, long-life assets. In 2017, its priorities are to resume dividend payments to stockholders, target a return to an investment grade credit rating and register an additional $1 billion of net cost and volume improvements.

In the last year, Anglo American’s stock price has risen 214%. That’s ahead of other mining stocks such as Rio Tinto plc (LON:RIO) (LSE:RIO.L), Glencore PLC (LON:GLEN) (LSE:GLEN.L), Centamin PLC (LON:CEY) (LSE:CEY.L) and Randgold Resources Limited (LON:RRS) (LSE:RRS.L). Glencore is up 177%, Rio Tinto is 90% higher, Centamin is 110% up and Randgold Resources’ stock price is 17% higher than a year ago.

In my view, Anglo American has investment appeal. I think its stock price could keep rising, and I’m optimistic about the effect which its strategy will continue to have on its financial performance. I’m more bullish on gold miners Randgold Resources and Centamin, and hold both stocks. However, I think Anglo American, alongside Glencore and Rio Tinto, have share price potential in the long run.







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