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6. Vale S.A. (NYSE:VALE)

Market Cap: $43.2 billion

FWD PE Ratio: 4.97

Average Price Target Upside: 41.72%

Vale S.A. (NYSE:VALE) is a Brazilian mining company that produces and sells iron ore, iron ore pellets, nickel, and copper both domestically and internationally. It operates through two segments: Iron Solutions, which focuses on iron ore, pellets, and related logistics, and Energy Transition Materials, which deals with nickel, copper, and by-products like gold, silver, and cobalt.

Vale S.A.’s (NYSE:VALE) stock has experienced a beat-down throughout the year and has severely underperformed the market. However, its Q3 2024 results showed strong operational performance and strategic advancements under new CEO Gustavo Pimenta, who emphasized safety, cost efficiency, portfolio optimization, and stakeholder trust as priorities for Vale’s 2030 vision.

Iron ore production hit its highest level since 2018, with pellet production increasing 13% year-over-year. The Vargem Grande project, adding 15 million tons of capacity, started ahead of schedule, while the Capanema project, 91% complete, is expected to begin operations in early 2025. The company reduced its iron ore cash costs by 17% this quarter, bringing them to $28.6 per ton, and expects to hit the low end of the $21.5-$23 guidance range for 2024.

Moreover, as discussed in our oversold blue chip stocks article, Vale (NYSE:VALE) holds a strong position in global mining, especially in iron ore production. The company’s Value-Based Management (VBM) approach is aimed at driving long-term growth, with a recent review indicating benefits that could extend into 2028 and beyond.

Analysts see Vale’s ability to generate healthy free cash flow (FCF) as key to sustaining its growth. The company’s focus on increasing production, reducing costs, and improving efficiency through VBM initiatives is expected to enhance profitability and strengthen its market position. These strategies should lead to continued earnings growth and greater shareholder value.