Should Investors Buy This TSX Stock That’s up 60% in 2022?
Written by Amy Legate-Wolfe at The Motley Fool Canada
Motley Fool investors have been having a hard time finding the growth stocks that were once everywhere. Back in 2020, after the COVID-19 crash, pretty much every TSX stock was a growth stock. But that’s now in the past.
The TSX today is down by 9.3% year to date as of writing. That’s certainly an improvement over the last month or so, but it’s trading around market correction territory. And yet there are some stocks like this TSX stock that have climbed higher and higher.
Commodity stocks have been some of the strongest performers in 2022. That comes from a market that remains volatile. Investors want something safer, and commodities provide that security, if only during a downturn.
The reason is that commodities are used for essential goods and services. We need silver for batteries. We need crop nutrients to grow food. And we need copper for electrical components.
It’s this last one I’m going to focus on today, as there is one TSX stock taking full advantage right now. Not only is it trading up because of the rise in commodity stocks, but it has deals on board as well.
Turquoise Hill Resources (TSX:TRQ)(NYSE:TRQ) is a Canadian copper miner, but its major wins have been in Mongolia. Its Oyu Tolgoi copper-gold mine has become a focus in recent months as stake-holder Rio Tinto came forward saying it wants to buy the rest of the company.
This comes after Turquoise Hill received approval from the Mongolian government to finally finish its Oyu Tolgoi mine. It remains 73% complete as of 2012. But now, with approval underway, Rio Tinto wants part of the action. It put forth a plan of arrangement at $34 per share.
Analysts tend to agree, stating that the phase-two underground project would cause the company to “sector outperform.” Market conditions caused shares of the TSX stock to drop, but it then rebounded with news from the Mongolian government and support from analysts.
Should you buy?
That’s the big question. Shares flew up 85% from the beginning of 2022 to June and are still up by 56% as of writing. However, you’ll notice it’s dropped over 8.5% in the last month alone. Should investors see this as an opportunity or a worry?
Looking at its fundamentals, all signs would point to Turquoise Hill being a smart investment right now. It currently trades at 9.01 times earnings and offers a potential upside of 28% to reach consensus price targets. It also trades at 0.55 times book value and 0.46 of total debt to equity.
Its mine will be completed soon, and whether Rio Tinto buys the company or not, it will remain a strong investment for investors. However, shares have dropped in the last month. So, perhaps you want to wait for shares to even out before you get in on this TSX stock. That being said, if you want growth throughout this downturn and beyond, then Turquoise Hill could still be a great buy, even after a 60% climb this year.
The post Should Investors Buy This TSX Stock That’s up 60% in 2022? appeared first on The Motley Fool Canada.
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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.