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Commodities Companies with the Lowest P/S – Part 2

• For general remarks, please refer to the 3 June issue.

• Vale S.A. (VALE) – Diversified Mining, Sector: Metals & Mining (Iron Ore, Nickel, Copper)

• P/S Ratio: Approximately 1.2 (October 2024, per Yahoo Finance).

• Why Low P/S? Vale’s revenues are tied to iron ore (60% of sales), which faces price pressure due to weak Chinese demand. Nickel and copper prices are also expected to stabilize or decline in 2025, keeping Vale’s P/S ratio below the S&P 500 average (2.84).

• Vale’s diversified portfolio (iron ore, nickel, copper) makes it a major commodities player, but its P/S ratio is higher than pure-play energy firms due to stable iron ore demand.

• Teck Resources (TECK) – Diversified Mining, Sector: Metals & Mining (Copper, Zinc, Coal)

• P/S Ratio: Approximately 1.4 (October 2024, per Yahoo Finance).

• Why Low P/S? Teck’s revenues are impacted by declining base metal prices (e.g., copper, zinc) and coal market weakness. Its diversified operations keep its P/S ratio low compared to growth-oriented sectors.

• Teck is a Canadian miner that focuses on copper (critical for energy transition) and metallurgical coal, making it sensitive to commodity price cycles.

• Represents mining firms likely to have low P/S ratios due to 2025 commodity price forecasts.

Is VALE a VALUE?

• VALE lost about 60% of its value over the last four years.

• Is the pain over?

• Probably not. The triangle projection points to about 6+ (5-7 range), which is between 50% and 61.8% Fibonacci retracement levels of (A).

• Wave (C) could potentially reach over 60.

• We will examine VALE and TECK cycles in the Pro newsletter.

Sentiment & Technical Analysis

• The CNN’s Fear & Greed Index drop to 54, in Neutral.

• The McClellan Summation Index (MSI), the trend indicator, is still pointing down, though reluctantly.

• Considering that SPX wave structure looks incomplete, I would not be shocked if the MSI whipsaws with another pop higher in SPX.

• Based on the charts below, NDX seems significantly overvalued.

• I posted variations of “NDX is overvalued” charts before, but please do not consider them as some short-term signals. They should be looked at from a multi-year market return potential point of view.

BraVoCycles on X

• Consider following me on X (former Twitter) in addition to the newsletter, as I often post valuable information there in real time between the newsletters.

  • Will there be another “Lehman Brothers Moment”? 

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