Copper mining for growth, iron ore for value creation By Investing.com

Investing.com – Analysts at Jefferies have forecast higher commodity prices over the next six to 12 months due to rising demand, noting that iron ore mining stocks are the most undervalued, while copper mining stocks stand to benefit most from an eventual recovery.

According to their estimates, mining stocks are currently discounting a price of $4.74/lb (compared to a spot price of $4.39/lb) and an iron ore price of $81/t (compared to a spot price of $106.35/t).

Analysts also pointed out that a rise in the price of copper is crucial for copper mining stocks to meet the demand for electrification, onshoring and a growing global economy. They believe that a rising price of copper is also necessary for the share prices of copper mining stocks to rise.

Despite the recent sell-off in copper, Jefferies’ top picks for leverage on the expected subsequent recovery are Freeport-McMoran Copper & Gold Inc (NYSE:), Teck Resources Ltd (NYSE:) and Mining company Lundin (except on invoice:) (TSX:).

Analysts at Jefferies, on the other hand, believe that a uniform price would be sufficient for the major iron ore producers. They assume that the shares of the three largest iron ore producers have factored in an average iron ore price of $81 per ton in the long term.

This is significantly lower than the current spot price and their long-term forecast of $90/t. Therefore, they conclude that shares of iron ore mining companies should perform well over time, even if the iron ore price stagnates at current levels. Their top picks in the iron ore space in terms of value and yield are Rio Tinto ADR (NYSE:) and BHP (ASX:) Group Ltd ADR (NYSE:).