Analyst Note
| Mathew Hodge, CFA |After treading water in the third quarter, mining stocks have powered ahead. The S&P ASX200 resources index has added just over 21% since our last update in mid-October. Our coverage has moved from a modest average 4% premium to our fair value estimates to now sit at an average 24% premium. Only coal-exposed firms New Hope and Whitehaven are trading in 4-star territory, although a handful of stocks remain moderately undervalued including Glencore, Iluka Resources, Newcrest, and South32. The window of material undervaluation from COVID-19 was brief and the recovery strong, thanks to Chinese government stimulus and expansionary lending. Iron ore has benefited most, while copper and other base metals have also strengthened.