Mining supercycle shows strong momentum

Sentiment is very positive towards the prospects for mining companies. Not only are the metals and materials they source essential to economic recovery and transitioning to a lower carbon  energy mix, commodities are a natural hedge against rising inflationary pressures. This month, Anglo American (AAL), Glencore (GLEN) and Antofagasta (ANTO) all passed seven of eight tests on our earnings upgrade momentum screen. They are all expected to deliver bumper earnings growth in the next financial year, which is perhaps why they all fail the test that analysts should forecast year-on-year earnings growth the following year, too.  

Of the smaller FTSE all share constituents that score well against our rules for large cap companies, Clipper Logistics (CLG) is also a star against the tests for smaller companies that are run against the FTSE All Small Companies list.  Its e-fulfillment and returns services have done well in the pandemic mail order boom and clearly the market is confident it can continue to thrive as more people spend on ‘going out’ wear, and return it, as the lockdowns ease. 

Five Aim-listed companies get full marks on the small cap tests. These include Sylvania Platinum (SLP), which is another play on precious metals demand and possible inflation. There is also Panoply Holdings (TPX), a technology services company with segments in consulting, software development and automation. 

Perfect marks for the Mortgage Advice Bureau (MAB1) is interesting. The housing market has been strong which is good for business but there are plenty of uncertainties to navigate.  

Impax Asset Management (IPX) and Ergomed (ERGO), which provides drug development services to the pharmaceutical industry, also score 8/8.