logo-loader

Broker spotlight - Glencore, Rio Tinto, Gemfields, RSA Insurance, Aviva and Dixons Carphone

Published: 12:04 22 Jan 2015 GMT

no_picture_pai

City firm Investec has taken a fine tooth comb to the mining sector and decided 2015 will not be another "Groundhog" year, in which investors see the digger indices underperforming globally.

The broker says it's optimistic that 2015 will break this trend.

"Recent falls come after the mining sector globally was once again amongst the worst performing sectors during 2014," notes analyst Hunter Hillcoat.

But he adds: "In a UK election year when Sterling could be weak, a US$ earning sector that has underperformed for four years may come to seem quite attractive."

The broker expects commodities to remain challenging this year, adding recent falls in equity prices mean valuations appear reasonable.

Investec now has a 'buy' stance on three of the four majors - Glencore (LON:GLEN), Rio Tinto (LON:RIO), which it has upgraded from 'hold' and Anglo American (LON:AAL).

Glencore offers the greatest upside potential, but is the most exposed if spot prices persist. Rio appears to have the least downside risk from spot. 

Its least preferred major is BHP Billiton, unchanged at 'hold' given its oil price exposure, said Hillcoat.

Randgold Resources (LON:RRS), it has moved to 'hold' from 'sell' and lifted the price target to 5,373p from 3,757p.

It comes as the broker revises upwards its view on  gold stocks to reflect the increasing correlation between the metal price and a strong US$ adding a role for the yellow metal as a currency hedge as well as safe haven in times of uncertainty.

Its preferred gold stock is Acacia Mining (LON: which it lifts to 'buy' from 'sell'.

Meanwhile, Investec is upbeat on the diamond sector for 2015.

Along with Anglo American, we are buyers of Petra Diamonds and Gemfields, the broker said.

Credit Suisse reckons investors should continue to support the UK's insurance stocks.

The sector has solid growth dynamics and attract dividends as well as low interest rate risk, despite some distractions possible due to this year's general election.

It has upgraded RSA Insurance (LON:RSA), in the policy and claims sector, to 'outperform' from 'neutral'.

Meanwhile, in life and savings, it repeats its positive stance on Prudential (LON:PRU) and Aviva (LON:AV.).

Elsewhere in brokerland, analysts at Deutsche have lifted the price target on electrical goods giant Dixons Carphone (LON:DC.) to 480p from 465p on the back of the broker's upgraded profit forecasts following its Christmas trading update, which showed  better sales at no cost to margin.

It rates the shares a 'buy'.

On a more negative note, Investec has repeated a 'reduce' recommendation on Royal Mail (LON:RMG), despite its nine month trading update being "broadly in line with expectations".

While parcel volumes were slightly better than we expected, pricing was slightly worse and the sector remains highly competitive, noted the broker, which targets 400p for the shares.

Royal Mail added 4.76% today to 451p, making it top riser on Footsie.

Oriole Resources outlines 2023 achievements and future exploration plans

Oriole Resources PLC (AIM:ORR) CEO Tim Livesey and chief financial officer Bob Smeeton join Proactive's Stephen Gunnion with details of the company's 2023 financial and operational performance. Livesey highlighted successful exploration programs in Cameroon, at the Bibemi and Mbe projects,...

1 hour, 3 minutes ago