Why Vedanta stock climbed 11% in morning trading today


What happened

Actions of Vedanta (NYSE: VEDL) rose to 11.5% at the start of trading on October 18. The company – which mines a variety of metals, drills for oil and natural gas, generates electricity, and produces steel and aluminum – is probably not a household name to most American investors. That’s understandable, given that the $ 13 billion market-capitalization conglomerate is based in India. That said, one analyst seems to like what the company has to offer.

So what

Simply put, Vedanta’s stock has been improved by Swiss credit. Investors tend to like upgrades and stocks have risen accordingly. More specifically, Credit Suisse raised its rating from neutral to outperforming. The price target has been increased by 47%. This is a particularly important adjustment.

Image source: Getty Images.

Vedanta benefited from high commodity prices. This includes the increase in oil and natural gas which has gained momentum in recent times and industrial metals like zinc and aluminum. That said, aluminum accounted for a whopping 60% of sales for the quarter ended June 30 and accounted for 75% of segment profits. And aluminum has seen a massive spike in the past month, hitting prices not seen in more than a decade. It is therefore not surprising that Credit Suisse has an optimistic view of the future here and that investors are also interested.

Now what

While Vedanta’s backstory is interesting, U.S. investors should be sure to take the time to understand the business before hitting the buy button. While aluminum is clearly an important part of the business, there is a lot more to it; this is far from being a pure game. And the fact that it is an Indian company complicates things a lot, as there are different rules and regulations that you have to take into account in a last one. call. In other words, most investors will probably have an interest in finding a national alternative in the aluminum sector, such as Alcoa, when looking for a game on metal. However, if you’re up for the legwork, upgrading Credit Suisse could be an opening for you to dig in and get to know this Indian aluminum giant.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.

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