- Glencore might well benefit from the likely commodity supercycle in the metals world
- THG – The Hut Group – might be able to put behind it the problems of this year
- Both Glencore and THG could therefore gain from substantial revaluations in 2022
Looking ahead into 2022 there are two tips being discussed around the market at present. The details of each share price will continue, as always, to be driven by events and as they happen. However, it is worthwhile sometimes to stop, take stock and look at longer-term cycles of likely events.
The first one concerns Glencore PLC (LON: GLEN) and the effects of the renewables and EV revolution. One way of looking at all of this is that it is the replacement of fossil fuels with metals. Or, the same thing, we’re going to derive our energy not from fossil fuels but from things made of metals. This will be of benefit to Glencore given the positions in both copper and cobalt.
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However, there’s the idea – a thought – that there’s going to be more than just an uptick in prices here. When China came into the global market it triggered a “supercycle” in the metals sector as the materials needed to build a civilisation for 1.3 billion people were sought. The current thought is that building out an electrically powered – both batteries for cars and also reducing gas and oil use in heating systems – is going to trigger a similar secular rise in prices across the metals sector.
This will of course make junior miners of great interest but Glencore is a mature company intending to return cash to shareholders next year. So, Glencore becomes a possible play on that metals supercycle while also earning income. An attractive possible prospect.
What used to be The Hut Group and is now THG PLC (LON: THG) the story is rather different. Many can spy a decent enough business in there. But there’s been so much uncertainty that the share price is down from 800p and change to the current 225p. Simply concerns about the management of the group. Too one man, worries over Softbank, the strategic direction and so on.
Effectively the pro-THG tale is that this simply cannot happen all over again. Well, obviously, anything is possible, so it’s rather more “surely this can’t all happen again”.
At which point the option of that decent enough business shining through begins to become believable and so a rerating upwards of the gaffe-prone stock.
Neither of these is the strongest tales to be told about an individual stock. Neither are likely to create any significant short term movements in either price either. But if they do turn out to be true then the year would see a steady and sustainable rise in both of those share prices, Glencore and THG.
That is, they’re neither of them short-term trading opportunities, even if the stories are true about what is to happen. It’ll be, if it happens at all, slow and steady changes in valuations.
