Hochschild Mining shares: should I buy for my 2021 portfolio?

first_imgHochschild Mining shares: should I buy for my 2021 portfolio? Royston Roche | Friday, 19th February, 2021 | More on: HOC Enter Your Email Address See all posts by Royston Roche “This Stock Could Be Like Buying Amazon in 1997” Image source: Getty Images. Our 6 ‘Best Buys Now’ Shares I’m sure you’ll agree that’s quite the statement from Motley Fool Co-Founder Tom Gardner.But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.What’s more, we firmly believe there’s still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.And right now, we’re giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.center_img Hochschild Mining (LSE: HOC) shares rose about 35% in the past year. Commodity prices have been on an upward movement in the past few months. I believe that mining stocks will be in favour as the gradual lifting of pandemic restrictions might restart global economic growth.Hochschild Mining’s resultsThe company released its 2020 results on 18 February 2021. Revenue dropped 18% year-over-year to $621.8m. The drop in revenue was primarily from production stoppages due to Covid-19. The rise in average realised precious metal prices reduced the negative impact of the pandemic. The average realised gold price increased by 28% y-o-y to $1,814 per ounce, and the silver price increased by 35% y-o-y to $22.3 per ounce.5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…And if you click here we’ll show you something that could be key to unlocking 5G’s full potential…Adjusted EBITDA (earnings before interest, tax, depreciation, and amortisation) fell by 21% y-o-y to $270.9m. Management attributes the drop in EBITDA to the reduced production as well as a rise in mine closure provisions of $16.1m. The company’s earnings per share were $0.03 compared to $0.06 for 2019. There was an exceptional after-tax cost of $22m of Covid-19 response initiatives. Hochschild Mining’s balance sheet is good. It had net cash of $21.6m. This was the first time in eight years the company had a net cash position. This was possible mainly due to higher precious metal prices combined with strong free cash flow generation.The management’s production outlook for 2021 is between 360,000 and 372,000 gold equivalent ounces when compared to the production of 289,293 gold equivalent ounces for the year 2020. This is however lower than the 2019 production of 477,400 gold equivalent ounces.  The company also launched an Environmental Culture Transformation Plan in 2020. I believe this is positive since more and more investors prefer companies that are economically friendly.Risks to consider in Hochschild Mining sharesThe mining industry is highly capital intensive. Profits depend on commodity prices. There is no guarantee that production will reach pre-pandemic levels in the next couple of years. If the production level fails then the company’s revenue will fall again.The company will also have to comply with various environmental regulations and this could delay the company’s operations. The company’s chairman, Eduardo Hochschild, has reduced his stake in the company by 12% to 38% of the issued shared capital. The stock sold off in December on the news as investors got worried about any slowing growth.Overall, Hochschild Mining shares have performed well in the past year. The recent results are good, taking into consideration the production stoppages and other costs involved due to Covid-19. I feel the company is better than another mining stock I reviewed recently. However, there is still a lot of uncertainty in commodity prices this year. I will wait and take a look at a couple of other mining stocks to see which is better for my portfolio. Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we’re offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our ‘no quibbles’ 30-day subscription fee refund guarantee. Royston Roche has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors. Simply click below to discover how you can take advantage of this. I would like to receive emails from you about product information and offers from The Fool and its business partners. Each of these emails will provide a link to unsubscribe from future emails. 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