Key points
Hochschild’s revenue grew 30% to $811.4m in 2021
The company has benefited from increasing silver prices
The ongoing military situation aside, Ferrexpo has displayed strong earnings growth
Given recent world events, I’m watching two FTSE All Share stocks that have excellent growth potential. While both are involved in mining, they operate in different parts of the world. Hochschild Mining (LSE: HOC) is engaged in gold and silver production in Argentina, Chile, and Peru. Ferrexpo (LSE: FXPO) is involved in the manufacture of iron ore and steel production. Why do I think these are both good growth stocks? Let’s take a closer look.
A FTSE All Share gold and silver miner
For the 2021 calendar year, Hochschild reported a 30% revenue increase to $811.4m, which can be partly explained by the rise in the silver price over this time. The firm’s cash balance grew to $386.8m, compared to just $231.9m for the same period in 2020. While there is a risk of further Covid-19 variants impacting the company’s operations, these recent results strongly suggest the business is going in the right direction.
Furthermore, the firm’s forward price-to-earnings (P/E) ratio is just 7.23. When compared with a major competitor in the precious metals market, Fresnillo, which has a forward P/E of 35.84, it is possible that Hochschild is undervalued.
What’s more, the company’s earnings have increased consistently. Between the 2017 and 2021 calendar years, earnings per share (EPS) rose from ¢8 to ¢14. This shows growth has been both strong and consistent.
An iron ore growth stock
Ferrexpo produces iron ore pellets for use in the steel industry. With operations in Ukraine, the share price understandably plummeted as military action in the region progressed.
The company released a statement that it would “prioritise the safety of its workforce” given the current events. While the situation is concerning, and is something that is on my mind, the firm’s results are attractive.
For the three months to 31 December 2021, for instance, Ferrexpo’s cash position stood at $117m. For the same period in 2020, this figure was just $4m. Indeed, EPS grew between the 2016 and 2020 calendar years from ¢33.6 to ¢108.1. Aside from the current military situation, this company is appealing to me, a potential investor.
Indeed, the business has a forward P/E ratio of just 5.09. When compared with a rival like Rio Tinto, we see that Ferrexpo may be undervalued at current levels. Rio Tinto’s forward P/E ratio is slightly higher at 7.5. This may suggest that Ferrexpo shares are currently cheap.
Both of these companies are exciting growth stocks. Due to the rapidly changing geopolitical situation in Ukraine, I’ll have to wait longer before buying Ferrexpo. I want to ensure its growth continues. Hochschild is also strong and the increasing revenue and cash position means I will be buying this company without delay.
The post Why I’m watching these 2 FTSE All Share growth stocks appeared first on The Motley Fool UK.
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Andrew Woods has no position in any of the shares mentioned. The Motley Fool UK has recommended Fresnillo. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
