Anglo American Plc (LON: AAL) & BHP Group Plc (LON: BHP): Can they be a strategic buy after correction?

Highlights

  • Anglo American Plc and BHP Group Plc, two of the mining majors, have suffered sharp correction during the week.
  • BHP wants to streamline its dual-listing structure by moving its primary listing to Australian stock market and delist from London Stock Exchange

London is home to some of the key mining industry organisations, the International Council on Mining and Metals (ICMM), along with the world’s largest metal price exchange: London Metal Exchange (LME); this is what makes London’s capital market a broad investors base for the mining companies and a high-quality advisory community with real expertise.

London Stock Exchange (LSE), one of the oldest and biggest stock exchanges by market cap and the biggest centre to raise funds for the metal and mining industry, has some of the most prominent metal and mining stocks listed on it.

Here we will talk about two of the prominent FTSE listed metal and mining stocks that should be on investors radar:

Anglo American Plc (LON: AAL)

Anglo American Plc produces over 40% of the world’s platinum output. It is also a major producer of diamond under the De Beers Brand and other base metals like copper, iron and nickel. The company carries out its mining operation in Africa, Asia, Australia, and South America.

Positive factors

  • The company reported a 114% rise in revenue for the first half FY21 at USD 21,779 million compared to the same period last year, while its underlying EBITDA, which is a major indicator of the company’s profitability, was up by 262% at USD 12,140 million during the six months ended 30 June 2021, indicating the company has recovered from the pandemic shock, which impacted the revenue and profitability last year.
  • After the excellent result announcement, the company has committed to return USD 4.1 billion to shareholders, including USD 3.1 billion in interim and special dividend and USD 1 billion in share buyback. The company has a regular dividend payout policy hence suitable for investors looking for stocks from the mining sector with consistent dividend payout.

Reason for a recent price correction

Anglo American Plc stock price has declined over 13% this week, tracking the correction in global commodity prices. Also, there were impacts of stocks going Ex-dividend on 19 August. The company had earlier announced a sterling equivalent interim dividend of 123.33p per share and a special dividend of 57.70p per share. The investors will receive a dividend payout by 24 September 2021.

Anglo American Plc current market cap stands at £39,672.58 million as of 20 August 2021. In the last one year, the stock has given a 49.29% return to the shareholders.

BHP Group Plc (LON: BHP)

The company engages in mining and exploration businesses and has a presence in Australia, Europe and other countries.

The company reported a record profit from the operation of USD 25.9 billion and an underlying EBITDA of USD 37.4 billion in the whole year ended 30 June 2021. The basic earnings per share also improved by 42% at 223.5 cents per share. The company is moving towards an efficient and sustainable way of operations. As a result, it has completely exited from the fossil fuel business and sold it to Woodside Petroleum.

Related Article: BHP shares surge on record FY21 final dividend and Woodside merger

Reason for a recent price correction

The stock price of BHP Group Plc has declined over 8% this week after the company announced its intention to streamline its dual-listing structure by moving its primary listing to Australian stock market and delist from London Stock Exchange, which resulted in the investor sell-off and volatility in stock price. As per the market experts, the delisting of the stock could be opposed by the shareholder. 

BHP Group Plc’s current market cap stands at £45,694.58 million as of 20 August 2021. In the last one year, the stock has given a 21.02% return to the shareholders.

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