The South32 Ltd (ASX: S32) share price has been on a tear, rising 16% in just 5 days!
South32 Ltd Share Price
As can be seen in the chart above, shares in the $15 billion South32 Ltd have caught the attention of investors.
What's going on?
South32 is the resource business spun out of BHP Billiton Limited (ASX: BHP). It produces a diverse basket of commodities, like coal, manganese, lead, alumina, bauxite and zinc. Like its mining brethren, such as Fortescue Metals Group Limited (ASX: FMG) and Alumina Limited (ASX: AWC), South32 shares have been bolstered by surging commodity prices.
Just take a look at the change in commodity prices over the past year, according to data from indexmundi.com:
- Aussie thermal coal – up 69%
- Zinc – up 78%
- Aluminium – up 21%
- Nickel – up 17%
- Silver – up 20%
- Lead – up 36%
The positive movements have been reflected in the company's financials. In its financial report for the half-year period to 31 December 2016, South32 reported an 8% increase in revenue to $3.2 billion and a profit from continuing operations of $620 million — up from a loss of $1.7 billion last year.
Should you buy South32 shares?
The spectacular rise of South32 shares might not be done yet. However, I'm not a buyer of South32 because I would not be comfortable holding a position in a business that is subject to the whims of commodity markets.
I prefer to hold shares of growing businesses with a powerful brand and leading products.
