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The Glencore (LSE: GLEN) share price has a habit of making hay while the sun shines. When the global economy is booming, and demand for metals and minerals is high, the stock can fly. Natural resources is a highly cyclical sector, so when growth and sentiment dip, Glencore shares can fall even faster. It’s been down in the dumps for several years but suddenly I’m seeing signs of a recovery. Is the cycle now swinging back in its favour?
While the FTSE 100 commodity stock is still up 62% on five years ago, it’s down 35% over three, with a 4% dip in the last year. Profits have been volatile. Glencore posted $4.28bn of net income attributable to equity holders in 2023, but swung to a $1.63bn loss in 2024. That’s a huge reversal, driven by lower energy coal prices and impairments. Yet the clouds are parting and Glencore shares up 27% in the last three months. Time to hop on board?
Cyclical FTSE 100 stock
It’s not just Glencore. Five of the top 10 FTSE 100 performers over the last three months hail from the natural resources sector: Fresnillo, Antofagasta, Endeavour Mining, Anglo American and Glencore (in ninth place). Rio Tinto lags but is still up 18% in that period. The main driver seems to be a wider recovery in emerging markets. Demand for copper and other metals needed for energy transition and data centres may have helped.
Glencore has ramped up production, with copper output up 36% quarter on quarter in Q3, though it’s still down 17% over the year. Zinc and nickel production rose, while cobalt and energy coal were flat. The group continues to target full-year adjusted marketing earnings at the midpoint of its $2.3bn to $3.5bn guidance range. The worst appears to be over but what do the experts predict?
Analysts are cautiously optimistic. Consensus one-year share price forecasts sit just under 405p. If correct, that’s about 10% above today’s 365.6p. Which is okay but hardly says screaming Buy. Of the 20 analysts offering stock recommendations in the past three months, 12 named Glencore a Strong Buy, two said Buy and six Hold. None recommended selling. I wouldn’t either at this stage of the cycle. But a Strong Buy? I’m not seeing it, sadly.
Poor dividend track record
Dividends have been patchy. The trailing yield is a pretty feeble 2.1%. As my table shows, big hikes in 2021 and 2022 were followed by cuts in the next two years.
| 2020 | 2021 | 2022 | 2023 | 2024 | |
| Dividend | 12 US cents | 26 US cents | 40 US cents | 13 US cents | 10 US cents |
| Growth | – | 116.67% | 53.85% | (-67.50%) | (-23.08%) |
It doesn’t look like the dividend is set to rocket either. Analysts forecast a modest forward yield of 2.14% for 2025, nudging up to 2.77% in 2026. And despite its troubles, Glencore looked pricey. The forward price-to-earnings ratio is a thumping 45.7 for 2025, albeit expected to hit a more sensible 13.9 in 2026.
Glencore’s quick rally has reduced my paper loss to around 20%. I think the shares are worth considering, and should take off at some point, but I’m in no rush to buy more today. With the global economy struggling, and the US potentially facing a recession, I think there could be more volatility ahead.
