Digant Haria on why it is a good time to go contra and buy into metal stocks
Digant Haria, Co-Founder, GreenEdge Wealth, says “a lot of commodities cannot do well without China doing well because it is the largest importer, largest consumer of maybe 20-25 different kinds of metals and commodities. The US is trying to re-industrialize itself. Europe has no other choice but to come out with an industrialization policy of its own. Plus, there is transition to renewable energy like wind and solar. All of this is going to be metal heavy.”
What is happening in metal stocks? China is not picking up but prices are going higher. Everybody is now of the view that the US economy will pick up. There is no recession. There is no soft landing. In fact, there is no landing at all and prices of steel or copper have gone higher in the last couple of weeks. Is it a good time to be a contra and buy into metal stocks?
Absolutely.
This is one pocket where the balance sheets of the companies across the globe, the largest aluminium producer in the world which is the largest metal company in India, are all de-levered. Who would have thought that even in a bad year like last year, Tata Steel still ended up making 8-9-10% margins and large levels of EBITDA. So there is an inherent strength in all the balance sheets of the companies and after that last one year because of the Ukraine war, there were a lot of disturbances, we will see a good pickup in demand for metals.
Metal prices are going up and China is actually doing quite well because a lot of commodities cannot do well without China doing well because it is the largest importer, largest consumer of maybe 20-25 different kinds of metals and commodities.
