Interesting slant on from the abacus rattlers at Citi on how Glencore PLC (LSE:GLEN) can keep the momentum going to the benefit of equity investors.
It notes the digger is the best performing large-cap in the year to date with unfashionable and environmentally dubious thermal coal fuelling that performance.
It points out that Glencore is generating a prodigious 30% free cash flow (FCF) against a sector average (but still impressive) 18%.
Citi believes that Glencore can keep the momentum going by putting that cash flow to work over the next five years in the form of stock repurchases.
The cash at its disposal is eye-watering – US$88bn at current spot prices, or US$67bn based on the bank’s commodity price forecasts.
It has outlined three buyback ‘scenarios’ which could drive Glencore’s valuation to £7-£10 a share (with the £1.20-£1.70 a share in dividends effectively providing the icing on the cake).
Glencore is currently trading at £3.61 a share, down 1.88%.