Many growth stocks have managed to squeak their way into the top performers of 2024 so far. Yet one of them that might not be so well known is Lundin Mining (TSX: LUN). The copper producer has seen shares surge with the demand for copper climbing. But beyond that demand, there are many reasons to consider buying Lundin stock. So let’s get into them.
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Why the rise in copper?
First off, let’s get into copper. The price of copper has surged this year, and this has come from a variety of reasons. There have been recent cutbacks in copper production from smelters in China, a major producer of the metal. This is on top of longer-term trends of declining copper grades in existing mines and a lack of new discoveries.
Yet beyond that, demand for copper is on the rise, driven by a couple of other factors. First, there’s a general improvement in economic conditions, particularly in China and the United States. Second, the transition to renewable energy sources like solar and wind power requires a lot of copper for wiring and other components.
Then there’s the basics of copper production. Mining and refining copper is an energy-intensive process. If the cost of oil and natural gas goes up, it can make copper production more expensive, which can also contribute to higher prices. High oil prices can also indirectly increase demand for copper. This is because it can spur investment in alternative energy sources, like wind and solar power, which rely heavily on copper for their infrastructure. So, even though higher oil prices might make copper production more expensive, it can also lead to more demand for the metal.
And so goes Lundin stock
As for Lundin stock, the company remains a huge copper producer, with about 60% of its production dedicated to the material. Lundin achieved record copper production in 2023, driven by acquisitions and expansion projects. Investors might be optimistic about their future production forecasts, especially considering their plans for 2024.
There have also been reports of insiders at Lundin Mining purchasing company stock in the last year. This could signal their confidence in the company’s future prospects, which can influence investor sentiment. And analysts remain confident about the company’s future.
Still a value
Given that future production looks to increase in 2024, Lundin stock still remains a deal. Even with shares up 57% in the last year alone. The company currently trades at 1.8 times book value, putting it within value territory. It also provides a 2.24% dividend yield.
With very minimal debt, an 85% payout ratio, and strong balance sheet, Lundin stock pretty much looks like a perfect stock. So with copper demand rising, solid performance, and more to come, Lundin stock looks like an easy buy on the TSX today. Especially for investors hoping to get out of this volatile mess of a marketplace and finally see some growth.
