How To Take Advantage Of Boliden AB (STO:BOL) In A Bear Market

Boliden AB is a financially healthy and robust stock with a proven track record of outperformance. We all know Boliden, and having this large-cap to cushion your portfolio during a volatile period in the stock market isn’t a bad idea. Today I will give a high-level overview of the stock, and why I believe it’s still attractive.

Check out our latest analysis for Boliden

Boliden AB, a metals company, explores for, mines, smelts, and recycles metals. Formed in 1924, and led by CEO Mikael Staffas, the company currently employs 5.82k people and with the company’s market cap sitting at kr76b, it falls under the mid-cap stocks category. Volatility in the market is hardly detrimental to the financial health and business operations of a large, well-established company. Although some monetary and fiscal policy changes may impact some corporate financing decisions and strategy, what we’ve learnt over time is that these companies tend to adapt. And having a strong balance sheet and a history of proven success aids in this adaptability.

OM:BOL Historical Debt, April 5th 2019
OM:BOL Historical Debt, April 5th 2019

With kr3.4b debt on its books, Boliden has to pay interest periodically. This means it needs to have enough cash on hand to meet these upcoming expenses. Boliden generates enough earnings to cover its interest payments, more specifically, its interest coverage ratio (EBIT/interest) is 70.99x, which is well-above the minimum requirement of 3x. Furthermore, its cash flows from operations copiously covers it debt by more than 2x, which is higher than the bare minimum requirement of 0.2x. And, a given, its liquidity ratio holds up well with cash and other liquid assets exceeding upcoming liabilities, meaning BOL’s financial strength will continue to let it thrive in a fickle market.

OM:BOL Income Statement, April 5th 2019
OM:BOL Income Statement, April 5th 2019

BOL’s annual earnings growth rate has been positive over the last five years, with an average rate of 36%, outperfoming the market growth rate of 20%. It has also returned an ROE of 18% recently, above the industry return of 18%. Characteristics I value in a long term investment are proven in Boliden, and I can continue to sleep easy at night with the stock as part of my portfolio.

Next Steps:

Based on these three factors, BOL makes for a strong long-term investment in the face of a fickle stock market. If you’re a risk averse investor, lining your portfolio with proven companies you’re willing to buy more and more of as the price falls, is a good strategy to build your wealth over the long run. This is the beginning of your research, but before you decide to buy BOL, I highly urge you to understand more about the company, in particular, in these following areas:
  1. Future Outlook: What are well-informed industry analysts predicting for BOL’s future growth? Take a look at our free research report of analyst consensus for BOL’s outlook.
  2. Valuation: What is BOL worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether BOL is currently mispriced by the market.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.