Glencore Share Price Forecast August 2021 – Time to Buy GLEN?
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Shares of Anglo-Swiss multinational commodity trading and mining company Glencore (LSE: GLEN) are down by more than 4p, currently trading at around the 332p mark. The company, which was the world’s leading commodities company during the 1960-80 era is starting to recover after the pandemic which has got many investors interested in its shares.
Glencore – Technical Analysis
According to Glencore’s financial statement, the company’s market cap is at £40.298 billion with total assets worth £88.616 billion. According to what Glencore released as part of its August 5th, the company’s adjusted earnings before interest and tax increased by 79% to reach $8.7 billion during 2021’s first half. Debt was reduced from $15.8 billion to $10.6 billion at the end of 2020. It also intends to reinstate dividends, returning $2.8 billion to shareholders.
Glencore’s moving averages such as Exponential Moving Average (100)(308.75), Simple Moving Average (100)(312.14), Exponential Moving Average (200)(283.69) and Simple Moving Average (200)(280.31) are pointing towards a buy action. Oscillators such as Relative Strength Index (14)(53.76), Stochastic %K (14, 3, 3)(72.39), Commodity Channel Index (20)(42.08) and Average Directional Index (14)(11.95) are neutral.
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Recent Developments
Glencore was originally founded as a trading company in the 1970s, which has since turned itself into a company employing over 130,000 staff members. The bulk of its customers are made up of industrial consumers in the steel, automotive, battery manufacturing, power generation and oil industries. It has a marketing business whose profitability helps offset any asset price falls for its more traditional businesses such as mining.
Over the past years at Glencore, the company’s CEO Ivan Glasenberg has steered it through numerous hurdles. After handing over the reins to Gary Nagel in 2021, thermal coal prices have substantially contributed to the company’s bottom line. The company has pledged to reach net-zero carbon emissions by 2050. Meanwhile, the company’s board of directors approved a pay package for incoming CEO Gary Nagle despite receiving backlash from some investors and proxy groups. According to the terms of the pay package, Nagle is set to receive up to $6.4 million in any single year, with 40% of his bonus held back until two years after his departure from the designation.
On the other hand, Glencore is currently being investigated by the US Department of Justice, in coordination with UK and EU regulators. The allegations are tied to corruption at the company’s operations in frontier regions such as Nigeria, Venezuela and the Democratic Republic of Congo. However, Glencore’s massive profits should allow the company to shrug off any hefty fines that might be put in place, clearing the path for a new era under CEO Nagel. As a company that plays a leading role in global commodity markets, it will be affected by central bank liquidity and government stimulus.
Should You Buy GLEN Shares?
Exposure to coal and other climate change responsible fuels offer some caution to investors. But previous investigations regarding group business practices by authorities also raise some questions regarding Glencore. The company has gained ground with respect to ESG ratings as mentioned above. With the economy reopening, there are high chances that the commodity rally may be a multi-year one which is good news for GLEN shares. However, risks have risen too especially since GLEN shares have increased by over 70% over the past year. Many analysts think that the share prices have reached their peak. Thus investors are advised to buy only when the shares experience a sharp dip or if industrial metal prices start increasing again.
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