After a short wobble at the start signal, Glencore (LSE: GLEN) shares are trading higher today (August 7) following the release of its half-year results.
Given the stock’s performance since the beginning of the year, I suspect most investors will breathe a sigh of relief.
Mixed bag
Despite the applause “Strong strategic successes“, Glencore reported a net loss of $233 million for the first six months of 2024. This was a result of lower energy prices and the fact that the company booked $1.7 billion of what it described as “Important elements“, including impairment losses.
This is a big difference from the net income of £4.6 billion achieved over the same period in 2023.
However, there were also positives. Net debt stood at $3.6 billion at the end of June, a significant reduction from the $4.9 billion on the company’s balance sheet at the end of 2023.
The company also maintained its full-year production guidance (with a shift to the second half of the year) and confirmed that it would maintain its coal and carbon steel materials business following consultation with shareholders.
Speaking of owners, how much would I have now if I had invested £10,000 in one of the world’s largest diversified commodity companies at the beginning of the year?
Let’s go through these numbers
On January 2, Glencore’s share price was 469 pence. As I write this, it has fallen to 402 pence, a loss of 14% and an unfavourable comparison to FTSE100 Index in which the company is represented. Despite recent volatility, it has risen by almost 5% since the market opened in January.
If I had invested £10,000 back then, my position in Glencore would be worth around £8,600 today.
I suppose it could be worse. Had I invested that £10,000 when shares hit a record 576p in January 2023, I would have suffered a capital loss of about a third, or £3,000!
I also did not take into account the contribution of a single dividend payment in June. On the other hand, I doubt that would have made much of a difference.
As things stand, Glencore’s forecast yield is just under 3%. That’s not bad at all. But it’s pretty average for stocks of this size. Compare it to peers in the industry. Rio Tinto6.8% return and I know what I would rather keep as passive income from mining.
Not for me
To be clear, there are things I like about this company. It is active in over 60 commodities and operates in over 35 countries. It serves a wide range of customers in different sectors (e.g. automotive, manufacturing, oil) and also provides financing and logistics for commodity consumers and producers.
All of this must be attractive given the efforts towards decarbonisation and clean energy sources, which depend on the type of metals Glencore trades.
As things stand, however, I can see better opportunities in the UK stock market. The fact that economic growth in one of the world’s biggest buyers – China – is not quite as strong as it once was makes me wary of the short-term prospects.
The shares are not cheap for the sector either; they changed hands for almost 12 times forecast earnings.
The post “If I had invested £10,000 in Glencore shares in early 2024, here’s what I’d have now” appeared first on The Motley Fool UK.
Further reading
Paul Summers does not own any of the stocks mentioned. The Motley Fool UK does not own any of the stocks mentioned. The views expressed in this article about the companies mentioned in this article are those of the author and as such may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool, we believe that considering a diverse range of insights makes us better investors.
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