1 FTSE 100 stock that is a screaming buy for me now

Capital gains is my primary goal when buying FTSE 100 or any other stocks. One way I can best attain this is by finding undervalued stocks. These are stocks that are still cheap compared to their perfomance as well as prospects. This is an encouraging sign that they will rise in the future. 

One such stock for me is Polymetal International (LSE: POLY). 

Robust gold production

I was already bullish on the Russian precious metals’ miner. After it released its production update last week, I am even more so.

Consider these developments.

Polymetal International’s gold production has increased by 4% for the first quarter of 2021. Its silver production is down by 7%, but the rise in gold production more than makes up for it in revenue terms. Revenues increased by 20% compared to the same time last year, as 85%+ of Polymetal International’s revenues come from gold. 

A largely positive update is even more encouraging considering weak production for other FTSE 100 miners like BHP and Rio Tinto recently. Both saw a dip in iron ore production, which is the biggest source of revenue for them.

The only exception was Anglo American, which reported increases across segments like platinum, copper, and iron ore. 

Because Polymetal International is a precious metals miner, the comparison is not direct. Still, as a top-down investor, I like to consider miners as one segment.

Debt reduction 

Polymetal International’s net debt has also reduced by 2%. At a time when other FTSE 100 companies have seen an increase in their debt burden, this is a positive development. 

To be fair, the company has been a gainer from last year’s stock market crash and the subsequent rise in gold prices. Still, I think it is also important to consider a stock counter-factually. 

When a company is ahead, does it raise more funding, including debt, or does it pay earlier debt off? Considering the still uncertain global environment, Polymetal International has done the prudent thing, in my view. 

Historical performance for the FTSE 100 stock

But all this is only as far as the latest update goes. The company was doing well even earlier. This gold miner has been increasing both revenues and profits for the past few years. 

Moreover, it also has a pretty healthy current dividend yield of 5.7%. 

Why I’d buy Polymetal International now

Despite this, Polymetal International is trading at a price-to-earnings (P/E) ratio of sub-10%. My point here is, that this is too good a stock to be priced so low. BHP, for example, has a P/E of over 20 times and Rio Tinto is over 15 times. 

If I am cautious about it, it is due to inflation. It has mentioned cost escalation because of Covid-19 construction cost increases in its update. 

But I think rising inflation as such can impact it as a precious metals miner. In this case, industrial metals’ miners have an advantage. 

Still, I think going by its past performance and the fact that inflation may not run away in the foreseeable future, the prospects for Polymetal International make it a screaming buy for me.