Looking for the best growth shares to buy? Here’s one I think could be too cheap to miss today.
Copper star
Investing in copper stocks could be a good idea as prices of the essential metal rocket. Central Asia Metals (LSE:CAML) is a company I’m considering buying to bulk up my existing exposure (I already own shares in FTSE 100 diversified miner Rio Tinto).
‘Doctor Copper’ prices have rallied 25% in the year to date due to renewed supply-related fears and signs of strong demand. And the red metal’s ascent is unlikely to be a temporary phenomenon, too. Experts believe we could be at the start of a multi-year bull run.
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As Kathleen Brooks, research director at online broker XTB, comments:
The fundamental story for copper is compelling: copper will be needed to help power all the extra electricity capacity that will be needed for the AI revolution and Electric Vehicles of the future. This is a multi-year infrastructure build-up across the world, and copper is the main ingredient.
Dirt cheap
Buying shares in mining companies is a riskier way to play the copper market. Digging the metal from the ground is a massively complicated, unpredictable, and expensive business. And setbacks can take a big bite out of a miner’s earnings.
But I believe this danger is baked into Central Asia Metals’ rock-bottom valuation. Today it trades on a price-to-earnings growth (PEG) ratio of 0.4. A reminder that any reading below one suggests that a stock is undervalued.
City brokers aren’t expecting any profits-crushing problems to occur. In fact, annual earnings are forecast to rise 26% year on year in 2024.
And Central Asia’s projected earnings pickup isn’t expected to be a short-lived thing. Analysts are also tipping the bottom line to swell 15% in 2025.
7.4% dividend yield
I’m also drawn to the AIM company because of its enormous dividend yield. For the next two years this sits at an enormous 7.4%.
To put this into context, the average forward dividend yields for FTSE 100 and FTSE 250 shares sit at 3.5% and 3.2% respectively.
It’s also important to remember that I’d get ZERO dividends by investing in a copper ETF that simply tracks the metal’s price.
Dividends from UK shares are never guaranteed. And Central Asia Metals’ predicted payouts for 2024 and 2025 are covered just 1.2 times by expected earnings.
However, a strong balance sheet means that payout forecasts still look robust. The business has no debt, and had cash in the bank of $57.2m at the end of December.
A quality stock
There are plenty of copper stocks I can buy on the London stock market. But the prospect of rapid growth, huge dividends, and great value makes Central Asia Metals one of my favourites.
I also like the business because of its quality asset portfolio. It owns the Kounrad copper mine in Kazakhstan where production continues to impress. Central Asia also owns the Sasa lead-zinc complex in North Macedonia, which provides diversification and thus reduces risk to investors.
I’ll seriously consider adding the copper stock to my portfolio when I have spare cash to invest.
