Is this ASX 200 mining share set to surge, regardless of commodity prices?

a small boy dressed in a superhero outfit soars into the sky with a graphic backdrop of a cityscape.a small boy dressed in a superhero outfit soars into the sky with a graphic backdrop of a cityscape.

Commodity prices may be rocky lately, but could this S&P/ASX 200 Index (ASX: XJO) mining share go higher?

The Nickel Mines Ltd (ASX: NIC) share price has dropped 12% in the past week. For perspective, the S&P/ASX 200 Resources Index (ASX: XJR) has slid 5% in a week.

Let’s take a look at the outlook for this ASX 200 mining share.

Undervalued share

The Nickel Mines share price is undervalued, according to Fidelity Australian Opportunities Fund portfolio manager Kate Howitt.

In comments reported by the Australian Financial Review, Howitt said:

The company’s output will roughly triple over the next few years, making it one of the few resources companies not needing commodity prices to do the heavy lifting of earnings growth. 

The company’s latest quarterly showed a great outcome on both production and margins; a few more quarterlies like that and the risk discount in the shares will be squeezed out.

The Nickel Mines share price jumped in late April amid the company’s quarterly results. Nickel Mines shares leapt 6% on 28 April after the company reported record earnings before interest, taxes, depreciation, and amortisation (EBITDA) of US$81.7 million, an 18.7% rise.

The company also sold US$7,386 per tonne of nickel, a 22.5% increase on the previous quarter.

Nickel Mines shares were turbulent in March during the “nickel squeeze”, as my Foolish colleague Zach reported.

However, on 24 March, the team at Bell Potter predicted the Nickel Mines share price could rise 40% in the next 12 months.

Nickel Mines share price snapshot

The Nickel Mines share price has climbed 6% over the past 12 months, but it has descended 22% year to date.

For perspective, the ASX 200 Resources Index has lost almost 4% in the past year but gained roughly 2% year to date. The benchmark ASX 200 has lost less than 1% over the past year.

Nickel Mines has a market capitalisation of about $3 billion based on the current share price.

The post Is this ASX 200 mining share set to surge, regardless of commodity prices? appeared first on The Motley Fool Australia.

Should you invest $1,000 in Nickel Mines right now?

Before you consider Nickel Mines, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Nickel Mines wasn’t one of them.

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*Returns as of January 13th 2022

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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