Key points
- FTSE 100 stock with an excellent earnings record
- Exciting long-term exploration projects
- Could be affected by Covid fears and the gold price
The FTSE 100 contains a number of high performance, high growth stocks. Having surveyed the entire index, I’ve found an excellent company that could provide me with growth. The stock, Polymetal International (LSE: POLY), operates gold and silver mines in Russia and Kazakhstan. Why do I consider this a great growth stock and why am I buying it right now? Let’s take a closer look.
An excellent growth record
When assessing company growth prospects, I like to first look to earnings per share (EPS). This tells me how profitable the stock is for investors. For the calendar year 2020, Polymetal recorded an EPS of ¢228. Taken in context, this is a marked increase from the same period five years previously, when it was just ¢90.
What this means is that the average annual EPS increase is 20.4%. I view this as an extremely important factor in determining that this stock will likely provide long-term growth within my portfolio.
The fourth quarter report, from 2021, also strengthens my view that Polymetal is an excellent FTSE 100 growth stock. The company registered a 2% increase in gold production for the 2021 calendar year. It is worth noting that this growth is about 5% above expectations.
Long-term production by this FTSE 100 stock
A recent development is the Novopet deposit in Russia, which is estimated to contain around 2.4m ounces of gold. Furthermore, as much as 37% of the deposit may be copper. Polymetal CEO Vitaly Nesis stated that “it also more than doubles our exposure to copper”. This is important, because copper is extremely important for future green developments, like electric vehicles.
Another exciting development is the $471m investment in the Veduga project. This is a deposit in the Krasnoyarsk region of Russia. Thinking of the long term, this project should produce 200,000 ounces of gold per year for a 21-year period. While production will begin in 2025, this venture demonstrates that Polymetal is forward-looking and planning for many years into the future.
Possible threats to this FTSE 100 stock
As is the case with many mining stocks around the world, any increase in Covid cases could stall operations at short notice. Currently, Russia is still experiencing relatively high levels of the Omicron variant. This can result in absences. The saving grace with this threat is that the problem will almost certainly be short-term. I am confident any absences will subside.
Furthermore, if the US Federal Reserve increases rates in March 2022, then this might negatively impact the price of precious metals. Nonetheless, the correlation between rate hikes and falling gold prices is not terribly strong, historically. So, while the price of gold might fall, it is not guaranteed.
Polymetal is a FTSE 100 stock with solid growth potential. Its EPS record, together with its exploration activities, demonstrates the possibility of long-term gains. Although there are Covid fears and the threat of falling gold prices, these are short-term problems that will soon become insignificant. I will certainly be buying shares in this stock now!