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GBM Resources Limited (ASX:GBZ) And The Basic Materials Sector Outlook 2018
GBM Resources Limited (ASX:GBZ), a AUDA$7.77M small-cap, is a metals and mining operating in an industry which supplies materials for construction. This means it is highly sensitive to changes in the economic cycle, a key driver of building activities. Moreover, the basic materials sector can be affected by shifts in the housing market, as many produced raw materials are components of construction projects. For example, if new housing development slows, the demand for metal products may also decrease. Basic material analysts are forecasting for the entire industry, a strong double-digit growth of 26.31% in the upcoming year , and an enormous growth of 38.51% over the next couple of years. This rate is larger than the growth rate of the Australian stock market as a whole. Is now the right time to pick up some shares in metals and mining companies? In this article, I’ll take you through the sector growth expectations, and also determine whether GBM Resources is a laggard or leader relative to its basic materials sector peers. Check out our latest analysis for GBM Resources
What’s the catalyst for GBM Resources's sector growth?
Is GBM Resources and the sector relatively cheap?
What this means for you:
Are you a shareholder? GBM Resources has been a metals and mining industry laggard in the past year. If your initial investment thesis is around the growth prospects of GBM Resources, there are other metals and mining companies that have delivered higher growth, and perhaps trading at a discount to the industry average. Consider how GBM Resources fits into your wider portfolio and the opportunity cost of holding onto the stock.
Are you a potential investor? If GBM Resources has been on your watchlist for a while, now may be a good time to dig deeper into the stock. Although its growth has delivered lower growth relative to its metals and mining peers in the near term, the market may be pessimistic on the stock, leading to a potential undervaluation. Before you make a decision on the stock, I suggest you look at GBM Resources’s future cash flows in order to assess whether the stock is trading at a reasonable price.
For a deeper dive into GBM Resources's stock, take a look at the company's latest free analysis report to find out more on its financial health and other fundamentals. Interested in other basic materials stocks instead? Use our free playform to see my list of over 2000 other basic materials companies trading on the market.
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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
About ASX:GBZ
GBM Resources
Engages in the exploration and development of mineral properties in Australia.
Slight and slightly overvalued.
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