Cheap mining stocks are an investor’s paradise at the moment, with some great quality Canadian assets changing hands at heavily discounted prices. I’ve gone through some of the best value stocks out there in terms of quality to bring you this triple-whammy of metal and mineral picks. There are some dividends on offer, some growth, and also some good diversification. Let’s see which of the three stocks is our top discounted mining pick for today.
Trevali Mining (TSX:TV)
With a base of operations that straddles Peru and Canada, Trevali Mining is one of the best natural resource stocks on the TSX, and today it’s trading at a great price. Discounted by 32% of its future cash flow value, you have a set of great multiples underlining value, with highlights being a P/E of 6.6 times earnings and P/B of 0.6 times book.
There’s not much room left to grow in this stock, though, with an 8.1% expected contraction in earnings over the next one to three years. However, a return on equity of 9% last year and low debt level of 18.5% of net worth make this a quality choice at the moment if you are looking for a bargain mining stock.
Lundin Mining (TSX:LUN)
This is a great stock to buy if you want ready diversification in your mining portfolio. Spread across Chile, the U.S., Portugal, and Sweden, Lundin Mining is trading at a discount of 35% compared to its future cash flow value. A P/E of 8.4 times earnings and PEG of 0.4 times growth look great, and Lundin Mining is also trading at book value today, underlining that valuation.
If any growth investors are combing through this list, be aware of a 21.7% expected annual growth in earnings over the next one to three years. It’s a high-quality stock, too, with a return on equity of 12% last year, low debt of 10.6% of net worth, and even a dividend, currently paying a yield of 1.88%.
Capstone Mining (TSX:CS)
With a very North American vibe, Capstone Mining is your quintessential base metal explorer and producer for Canada, Mexico, and the U.S. It’s discounted by over 50% of its future cash flow value, which is great news for value investors. Multiples-focused investors should check out its P/E of three times earnings, PEG of 0.1 times growth, and P/B of 0.3 times book.
A 26.1% expected annual growth in earnings over the next one to three years marks this one out as a solid pick for growth investors, while in terms of quality, it’s got debt of 30.5% of net worth and a return on equity of 8% last year; however, it pays no dividend.
At first glance, a definite downward trend in Capstone Mining’s share price may make it a contender for momentum traders; however, the trend appears to be ongoing, so check out the share price data for a clearer indication.
The bottom line
Lundin Mining is looking like the best of the bunch today, with great value underpinned with instant diversification and solid quality. Trevali Mining is probably the weakest of the three, with that negative outlook in terms of earnings, while Capstone Mining has some growth ahead.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.
Fool contributor Victoria Hetherington has no position in any of the stocks mentioned.