Vale Stock A good bet as the price of iron ore crosses $ 200? – Trefis
Vale stock (NYSE: VALE) has seen a tremendous 46% increase in the past six months and is currently trading at over $ 20 a share. The strong recovery was driven by a recovery in world iron ore prices. The price of iron ore per tonne crossed $ 200 in May 2021 and is currently (as of May 24, 2021) at $ 209, reflecting an increase of over 70% over the past six months and over 125% in the last year. The rise in prices is largely due to the fact that supply has not been able to keep pace with demand in China, where crude steel production has increased by 30% in the past five years. . China’s drive to reduce carbon emissions from its steel industry has led to higher pricing of high-quality iron ore. In addition, the lifting of lockdowns in recent months and the successful rollout of vaccines have led to expectations of healthy growth in Vale’s iron ore shipments in 2021, as demand recovers and markets supply constraints are reduced. The recent increase in Covid cases is one of the risks the company faces, as the re-imposition of lockdowns will delay the process of recovering revenue and profits. But the successful rollout of vaccines and expanding vaccine coverage make it unlikely for us to see the kind of strict lockdown we’ve seen in 2020, which has the markets excited and the stock has registered a strong. increase.
So, after the recent rally, will Vale’s stock continue on its upward trajectory over the next few weeks, or is a stock correction more likely? According to the machine learning engine Trefis, which identifies trends in a company’s stock price data over the past ten years, VALE stock returns average close to 8% then three months (63 trading days) after experiencing a 46% increase in the previous six month period (126 trading days). In particular, the stock is likely to surpass the S & P500 over the next three months, with an expected return of over 4% higher than the S & P500.
But how would those numbers change if you want to hold VALE shares for a shorter or longer period? You can test the answer and many other combinations on the Trefis Machine learning to test the chances of rising stocks of VALE after a drop and vice versa. You can test the chances of recovery over different time intervals of a quarter, a month, or even a single day!
MACHINE LEARNING MOTOR – try it yourself:
IF The VALE share has moved by -5% over five trading days, THEN Over the next 21 trading days, the VALE share moves an average of 1.2%, which implies a return almost similar to that of the S & P500.
More importantly, there is a 47% chance that a positive feedback over the next 21 trading days and 41% chance positive excess return after a variation of -5% over five trading days.
Some fun scenarios, FAQs and explanation of VALE stock movements:
Question 1: Is the average return on VALE shares higher after a decline?
Consider two situations,
Case 1: VALE’s stock drops by -5% or more in one week
Case 2: VALE’s stock increases by 5% or more in a week
Is the average return on the VALE share higher in the month following case 1 or 2?
VALE stock fares better after case 2, with an average yield of 1.2% during the following month (21 trading days) in case 1 (where the stock has just suffered a loss of 5% compared to the previous week), against an average return of 1.9% for case 2.
In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days in Case 1, and an average return of only 0.5% for Case 2, as detailed in our dashboard. which details the average return of the S&P 500 after a fall or rise.
Try the Trefis machine learning engine above to see for yourself how the VALE stock is likely to behave after a specific gain or loss over a period of time.
Question 2: Does patience pay?
If you buy and hold VALE shares, it is expected that over time short-term fluctuations will cancel each other out and the positive long-term trend will favor you – at least if the company is otherwise strong.
Overall, according to data and calculations from Trefis’ machine learning engine, patience absolutely pays for most of the stock!
For VALE stock, returns over the next N days after a variation of -5% over the last five trading days is detailed in the table below, along with the returns for the S & P500:
Question 3: What about the average return after a rise if you wait a while?
The average return after a rise is generally lower than after a fall, as detailed in the previous question. Interestingly, however, if a stock has won in the last few days, you’d better avoid short-term bets for most stocks.
VALE returns in the next N days after a variation of 5% over the last five trading days is detailed in the table below, along with the returns for the S & P500:
It is powerful enough to test the trend of VALE stocks for yourself by changing the entries in the charts above.
Although VALE’s stock has moved a lot, 2020 has created a lot of price discontinuities that can provide some interesting trading opportunities. For example, you will be surprised at how the valuation of stocks for Compass Minerals vs Southwest Gas shows a disconnect with their relative operational growth. You can find a lot of them discontinuous pairs here.
View all Trefis price estimates and download Trefis data here
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