Business & Investment

Why I think this is the undervalued FTSE 100 stock

The inventory in question FTSE 100 Precious metal miner Polymetal International (LSE: POLY).. You may think it is clear why stocks are traded at relatively low prices. Stock market rebounds are underway and safe stocks are at a disadvantage. Uh.

However, I think it is a mistake to think of this share as a stock market crash. If you look at POLY’s past performances, you can see the true story.

Robust finance

Polymetal International’s finances have been on the rise since before the crash. In other words, we are looking for a company that can thrive even if the wider environment is not firmly advantageous.

Its revenue is steadily increasing. Revenues in 2019 increased 19% compared to 2018. Revenue is also increasing.In fact, in 2018 and 2019, in fact taller than Than the consensus estimate edited by Financial Times..

In addition, both the 2020 and 2021 forecasts are bullish on both parameters. It is worth emphasizing that forecasts are subject to change at all times. However, research analysts are fairly accurate and confident about Polymetal.

POLY generates passive income

It’s not surprising that the FTSE 100 shares doubled their dividend in the last update, given their strong financial position. The dividend yield is 3.7%. I don’t think this is a bad yield. Dividend stability is the only reason I consider buying stocks in the year when dividend yields on many stocks have dropped from their highest levels to zero.

In addition, POLY not only paid dividends until 2020, Continue to generate passive income For investors this year as well.

Cheap UK stocks

Nevertheless, the price-earnings ratio is 11.2 times. This is much lower than other large precious metal miners.consider Fresnillo, 40 times ratio or AntofagastaIt has an even higher rate of return of 44 times.

As a long-time investor, I think it should be considered even if there is a decline in the short term as it is now. Since the recovery of the stock market began, stock prices have fallen sharply as the recovery of investor confidence has moved investors towards more risky assets.

In fact, if you want to buy stocks just by raising the gold price, Then I should avoid it.. But, as I said above, it’s more than just a rise in gold prices.

Consider risk

Of course, there is always the possibility that the overall environment will improve dramatically and precious metal prices will plummet. This can impact Polymetal’s performance.

But I think this is quite unlikely. This is especially true as the world is still in funk. In my view, the new coronavirus variant is the greatest threat in 2021. Not only are they more infectious, but vaccines may not be very effective against them.

Take out

After all, in my view, the odds are in favor of miners. I have already bought a stake in Polymetal International and am thinking of increasing my stake while the price is still falling.

Manika Premusin I own a stake in Polymetal International. Motley Fool UK recommends Fresnillo. The views expressed about the companies mentioned in this article are those of the author and may differ from the official recommendations made by subscription services such as Share Advisor, Hidden Winners, and Pro. Here at The Motley Fool, by considering different insights, Better investors than us.

Why I think this is the undervalued FTSE 100 stock Why I think this is the undervalued FTSE 100 stock

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