This move back towards an earnings-driven phase means fundamentals such as cash flow strength and balance sheet quality are becoming more important for valuation.

That shift could have significant implications for the FTSE 100. It’s particularly relevant given its heavy exposure to traditional sectors such as banks, miners, and energy companies.

These industries are closely tied to earnings trends and broader economic conditions, making them more sensitive when market focus turns back towards fundamentals. So is the FTSE 100 now shifting into a more sustained earnings-driven phase?

Market shift

The stock market’s growing focus on earnings reflects a broader shift in the macroeconomic environment. After a long period where low interest rates supported distant growth stories, investors are now operating in a very different backdrop.

Higher inflation, more volatile interest rate expectations, and renewed geopolitical risk have all contributed to a reassessment of valuation. In this environment, future cash flows are being discounted more heavily, which naturally increases the importance of near-term earnings strength.

At the same time, higher-for-longer interest rates have restored the relevance of capital discipline. Companies are once again being judged on their ability to generate cash today, rather than promises of growth further out.

FTSE 100 earnings power in focus

Nowhere is this earnings-driven shift more visible than in its core sectors. Banks, energy companies, and miners all sit at the centre of the index and are highly sensitive to changes in earnings visibility and macro conditions.

Barclays reflects the interest rate and credit cycle, while BP remains closely tied to oil prices and cash flow generation. Both highlight how quickly earnings expectations can shift in the current environment.

But Glencore (LSE: GLEN) stands out. Its earnings have traditionally been driven by cyclical commodity prices, particularly copper. However, that story is beginning to change. Copper is increasingly being viewed as a structural demand metal, driven by the AI build-out, electrification of grids, and long-term industrial demand, while supply remains constrained.

Structural growth

That shift is already starting to change how the business is being positioned. Rather than being treated purely as a cyclical commodities producer, the miner is increasingly being viewed through the lens of earnings durability and long-term demand visibility.

If that narrative holds, it alters how investors think about earnings stability. Instead of being driven solely by short-term commodity cycles, future performance would be underpinned by structurally stronger demand dynamics for copper, zinc, cobalt, and nickel.

The risk is that this transition is not linear. Commodity prices remain volatile, and global growth — particularly in China — still plays a dominant role in short-term earnings outcomes.

The bottom line

Taken together, these shifts point to a stock market that is becoming more focused on fundamentals. Earnings visibility, cash generation, and balance sheet strength are regaining importance after years where sentiment and long-duration growth dominated.

For FTSE 100 investors, that means greater emphasis on business quality and earnings durability, and less tolerance for uncertainty.

In my view, that tilt towards fundamentals is a positive development for a market dominated by cash-generative businesses. It reinforces a more disciplined market backdrop, even amid ongoing economic uncertainty.

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Yet despite stronger production, firmer metals’ pricing and a strategic pivot to copper, it still trades at a big discount to its underlying worth.

With analysts forecasting robust medium‑term earnings growth, the key question now is how high can the stock go from here?

Strong earnings growth momentum?

Strong, sustained earnings growth is the key driver for any company’s share price over time. A risk for Glencore is any setback at its Kamoto Copper Company (KCC), Mutanda or South American mines that could slow its earnings momentum. Another is any long-term bearish trend in copper or coal pricing, which could underline the strong cash generation seen in 2025.

Nevertheless, analysts forecast that its earnings will jump by an average of 23.1% a year over the medium term. The momentum behind this was seen in its 2025 results released on 18 February this year.

Adjusted EBITDA soared 49% year on year in the second half to $8.1bn (£6bn), pushing full‑year adjusted EBITDA to $13.5bn. Revenue jumped 7% to $247.5bn, while operational cash generated before working capital, interest and tax was $10.6bn.

What’s the energy transition plan?

The numbers highlighted the growing weight of Glencore’s copper‑led strategy. Management believes copper will remain the single most critical metal for the global energy transition. And Glencore owns one of the most capital‑efficient portfolios of copper assets in the world.

CEO Gary Nagle underlined the near-50% rise in second‑half copper production, driven by stronger grades and recoveries at key assets. These include KCC, Mutanda, Antapaccay and Antamina. And the finalisation of the KCC land access package unlocks life‑of‑mine extensions and a pathway to around 300,000 tonnes per annum of copper.

These are crucial to Glencore’s plan to exceed a million tonnes of annualised copper output by 2028.

So where ‘should’ the stock be trading?

When valuing a business, discounted cash flow (DCF) analysis remains one of the clearest ways to estimate where a stock should be priced. It does this by projecting future cash flows and translating them into today’s money.

Naturally, the less certain those forecasts are, the higher the return investors demand — and the heavier the discount becomes. Analysts’ DCF models differ widely, with some more bullish than mine and others more restrained. But using my own assumptions — including an 8.3% discount rate — Glencore shares are 49% undervalued at their current £5.57 price.

That points to a fair value of £10.92, nearly double the current price. If markets continue drifting towards fair value over time, this could be a superb opportunity if those DCF assumptions hold.

My investment view

Glencore’s rising earnings momentum, copper strategy aligned to long‑term structural demand, and deep undervaluation look hard to ignore.

The 2025 results highlight a business with improving operational performance and a clear pathway to materially higher cash flows.

I already hold several stocks in the commodities sector, so buying another would unbalance my portfolio. Instead, I am eyeing other deeply discounted stocks in other sectors, often with high yields attached.

However, for investors without this problem and willing to look beyond short‑term commodity swings, I think Glencore is worthy of serious consideration.

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For me, this reflects a broader shift in global asset allocation. Capital is rotating away from high-multiple stocks priced on long-duration promises to companies generating near-term cash flows.

The Glencore re-rating signal

One old economy stock that sums up this notion of the great rotation is Glencore (LSE: GLEN). Its share price is back at its 2022 all-time highs, despite materially weaker earnings.

What stands out is not just the level of the share price, but what it implies. The market appears to be valuing Glencore less as a cyclical earnings proxy and more as a cash-generative industrial commodity business, with embedded optionality in copper and energy transition metals.

That shift matters. Even with profits well below the 2022 super-cycle peak, the company still generates strong cash flow and returns capital to shareholders. That’s exactly what the market is rewarding right now.

Coal remains the key swing factor and continues to weigh on headline profitability, particularly as prices have normalised over the past few years.

More broadly, consolidation in the sector remains a live theme, with past merger discussions involving Rio Tinto highlighting how strategic positioning in copper and other critical minerals could drive the next phase of value creation in the industry.

When banks become cash machines

HSBC (LSE: HSBA) is no longer just a ‘bank trade’. It’s a global cash engine inside the FTSE 100. Geopolitics and regional risks drive short-term volatility, but often hide a far more stable underlying story.

At its core, the bank is leveraged to a structurally higher interest rate environment. Even if central banks eventually ease policy slightly, rates remain well above the ultra-low era that defined the last decade.

That matters because it supports sustained net interest income across its global deposit base, particularly in Asia where much of its earnings power is concentrated.

In simple terms, HSBC doesn’t need rates to rise — it benefits from them staying ‘normalised’ rather than collapsing back to zero.

On top of that sits a clear capital return story. A dividend yield of 4.6%, supported by ongoing buybacks, positions the stock less as a traditional growth bank and more as a yield compounder.

Risks remain, particularly around global growth and geopolitical shocks. But these tend to affect sentiment more than long-term earnings power.

The bigger picture is that the market is re-rating HSBC as a high-yield, structurally supported cash flow business.

Bottom line

What stands out to me is that the FTSE 100 is being re-rated in plain sight. Investors are shifting away from long-duration growth stories and towards businesses delivering cash today. Miners and banks are no longer being priced as purely cyclical — but as cash-generative assets with real return potential.

In that context, I think both Glencore and HSBC are worth a closer look at current levels, given their ability to generate strong cash flow and return capital through the cycle, even in more uncertain macro conditions.

If that shift continues, this may be less of a short-term trade and more of a structural rotation. For me, that suggests the FTSE 100 still has further to run.

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2025 results

Full-year results from the mining giant suggest a cycle turning rather than a business weakening. Adjusted EBITDA fell 6% to $13.5bn — below the $34bn peak during the 2022 energy shock – but statutory profit for the year swung back to a modest $0.4bn, marking a return to official profitability.

Momentum improved markedly in the second half. EBITDA jumped 49% versus H1 as metals prices strengthened, gold rallied and copper production surged nearly 50%.

The drag remains coal, with thermal and steelmaking prices down more than 20% in 2025, weighing on profitability.

Shareholders are still being paid to wait. The 10¢ base distribution is unchanged, but a 7¢ top-up –  funded by the recently listed Bunge stake –  lifts the payout in 2026 to $2bn, and translates into a dividend yield of 3.4%.

Energy transition

What continues to stand out is Glencore’s position at the crossroads of legacy fuels and transition metals. Coal prices may be weak now; but in the mining industry the cure for low prices is low prices.

Mining is cyclical, and supply is already responding. In Australia, producers are cutting output as margins vanish. Meanwhile, demand isn’t disappearing – it’s shifting. Developed markets may be phasing down coal, yet emerging economies still need abundant, low-cost power to grow.

If supply is tightening while developing-world demand stays firm, could today’s weak coal prices actually be setting up tomorrow’s rebound?

Copper

More than $10trn has poured into renewables over the past two decades, yet fossil fuels still supply roughly three-quarters of global energy.

What comes next is even bigger. Around $300trn could be spent over the next 20 years electrifying transport and power, upgrading grids and scaling AI – all of which will require staggering quantities of copper.

There’s no shortage of copper in the ground. The bottleneck is extracting it. Permitting delays, labour shortages and industry caution mean new supply is struggling to keep pace with future demand.

The chart below shows just how tight the market could become: internal estimates suggest the global copper deficit may reach 27m tonnes by 2050.

Source: Glencore

Risks

Execution risk, not commodity prices, may prove the bigger test for Glencore. Its recent withdrawal from a proposed mega-merger with Rio Tinto after failing to agree terms shows how difficult it is to judge long-term value in a deeply cyclical industry.

At the same time, future growth depends on bringing major copper projects online. To manage that risk, it’s seeking joint-venture partners for longer-dated greenfield developments. The balance is delicate: expand too fast and returns suffer; move too slowly and structural supply shortages could pass it by.

What’s the verdict?

I’ve long believed the best opportunities appear during peak pessimism.

The past few years have tested shareholders’ patience, but throughout that stretch Glencore itself was aggressively buying back its own undervalued shares. Now profits are recovering, metals momentum is building, and strategy is aligned with the next commodity cycle. If sentiment shifts even slightly, the re-rating potential could be substantial. Worth considering? I think so.

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The drawdown maths

Once the contribution phase of an ISA ends and withdrawals begin, the challenge becomes simple in theory but tricky in practice: balancing portfolio growth with a sustainable income.

The chart below illustrates this. The blue line assumes contributions stop today and a portfolio is already in place. That portfolio supports a State Pension-matched withdrawal every year until age 90.

I assume the State Pension grows at 4.5% a year, inflation runs at 2%, and the remaining portfolio delivers a conservative 4% annual return. During drawdown, protecting capital matters more than chasing high growth. Under these assumptions, the portfolio required is £240,000.

Chart generated by author

Future contributions

The picture changes if you’re still in the accumulation phase. To illustrate, let’s assume an investor is 45 and planning ahead.

Because the State Pension is assumed to rise by 4.5% a year, its annual value in 20 years would be close to £27,000.

That’s where the orange line comes in. As the chart shows, only one trajectory supports a pension-matched withdrawal through to age 90. In this scenario, the required portfolio rises to around £550,000.

Long-term thinking

Reaching a £550,000 portfolio value within a 20-year investing time frame is certainly a challenge. But I believe it’s achievable with a carefully selected portfolio of high-growth stocks and low-volatility dividend stocks.

In the former category, the energy transition provides investors with an opportunity for exposure to a trend that’s still very much in its infancy.

One metal is at the heart of the energy transition: copper and mining giant Glencore (LSE: GLEN) is positioning itself to be one of the biggest copper producers on the planet over the next decade.

The recent merger talks with Rio Tinto highlight the strong position in which the miner’s portfolio puts it. While the deal is far from certain, it underscores how valuable its copper assets are viewed by its bigger peer.

When it reports later this month, copper output will be in the region of 850,000 tonnes. By 2035, its targeting output of 1.6m.

Over the past year, copper prices have exploded 40%. This isn’t only down to increasing demand but also reflects extremely tight supply.

Chile is the undisputed king when it comes to copper production accounting for over a quarter of global production. But new discoveries are becoming increasingly harder to come by and ore grades are in long-term decline.

That said, the recent run-up in the stock can be directly attributable to merger talks. Even if an agreement is reached, a merger of this size brings with it huge risks. Rio Tinto is a pureplay conventional miner, whereas Glencore’s roots are in trading. Marrying such different corporate cultures could potentially result in a larger cost base.

Bottom line

There are many ways for investors to gain exposure to the biggest macro themes of the day including electrification, onshoring and the AI arms race. But for me the greatest value today lies not in the technologies themselves but upstream: sourcing the critical minerals that turn bold ambitions into reality. That’s why Glencore earns a place in my ISA portfolio and could be worth considering.

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Reasons for the move

Recent reports suggest Rio Tinto is exploring a potential acquisition or merger with Glencore that could create one of the largest mining giants globally. Earlier this month, Rio Tinto put out a statement saying that “Rio Tinto and Glencore have been engaging in preliminary discussions about a possible combination of some or all of their businesses”.

Of course, it’s early days, with a deal this size taking months to get things moving. But it’s clear there’s intent on both sides to make something happen, which has naturally driven a spike in interest in the Glencore share price.

Another factor helping the business in recent weeks is the move in key commodity markets. Base metals have surged in January, particularly copper. Glencore has large exposure to copper and other metals, including gold and silver. The rise in raw material prices, it means the business can benefit from selling at higher prices. This should translate into higher profits.

The direction from here

I’m very much in the camp that certain metals, such as gold and silver, are in a long-term move higher. There are plenty of reasons that support a continued price increase. These include lower interest rates globally, continued geopolitical uncertainty and higher industrial demand (particularly relating to silver and copper).

As a result, I think commodity stocks like Glencore could do well as the business grows profits amid elevated commodity prices. This really works in its favour due to operational leverage. This refers to how revenue can increase faster than costs. For example, gold prices could jump 10% tomorrow, but the cost of production hasn’t changed. This is why companies like Glencore do very well during boom periods for raw materials.

The merger with Rio Tinto is definitely something that will dominate conversations in the coming months. If things proceed, there’s the risk that Glencore gets delisted, with the combined company trading under the Rio Tinto brand. Ultimately, this could make any investment in Glencore short-lived, which is something that needs to be noted. Another risk is that if the deal falls apart or gets messy, Glencore shares could slump as optimism quickly fades.

Therefore, although the strong performance over the past month is partly due to fundamentals, I’m cautious about buying now given the uncertainty around the Rio Tinto deal. I’d prefer to consider other commodity stocks that aren’t in merger talks for a cleaner investment opportunity.

The post The Glencore share price is up 23% in a month! What’s going on? appeared first on The Twelfth Magpie.

Copper giant

There seems to be little doubt about it. A massive supply deficit in copper is looming that could supercharge prices of the red metal over the next decade — it recently hit new peaks above $13,000 a tonne.

Investing in copper stocks could be a great way for investors to monetise this. As one of the world’s biggest copper miners, as well as a major trader of the industrial metal, I feel Glencore (LSE:GLEN) could be a great stock to consider.

Holding copper stocks over an exchange-traded fund (ETFs) that tracks metal prices is a riskier strategy. However, the FTSE 100 company’s enormous scale can reduce the impact of operational issues at any one or two assets significantly.

It has eight red metal projects spanning North America, South America and Africa. This is in addition to its dozens of other assets spanning other high-demand metals and minerals. Be mindful, though, that Glencore’s share price could endure short-term volatility in the event of an economic downturn.

Still, at current prices I think the miner deserves serious attention. Its price-to-earnings growth (PEG) ratio for 2026 sits at a bargain-basement 0.1. Any reading below 1 suggests stunning value.

Another ISA contender

Global power generation is tipped to explode over the next decade. A rising population, combined with soaring energy demand from sectors like data centres and electric vehicles, is set to push energy demand through the roof.

Greencoat UK Wind (LSE:UKW) is one star stock to consider for this upswing. As the name indicates, it operates in the renewable energy sector which is set for strong growth as the transition from fossil fuels accelerates.

Conditions are especially favourable in the UK where the FTSE 250 company operates. Last week the government dished out offshore wind farm contracts for 8.4GW of new capacity, a record-breaking auction putting it closer to its goal of generating 95% of the country’s energy from green sources.

Given their essential operations, renewable energy stocks can enjoy strong and reliable cash flows they can then distribute in dividends. This isn’t always the case, though: during unfavourable weather conditions, power generation can fall off a cliff.

However, Greencoat UK’s wide portfolio helps protect (if admittedly not eliminate) this threat. The 49 assets on its books span all four corners of Britain, which reduces the impact of calm conditions in one or two areas on overall performance.

Today, the company trades at a 30% discount to its net asset value (NAV) per share. This reflects the impact of higher interest rates in recent years that have eaten into profits.

With the Bank of England steadily cutting rates though, I expect Greencoat UK’s share price to rebound sooner rather than later.

The post 2 top shares to consider stuffing in an ISA and holding until 2036! appeared first on The Twelfth Magpie.

For Glencore, the focus is less on headlines though and more on what the deal could mean for copper – and how the company’s coal exposure factors into the discussion.

Merger details

Early details are limited, and both companies stress that nothing is agreed yet. Rio Tinto is clearly looking to expand its copper portfolio, while Glencore brings not just metals but a major trading division.

Coal is the obvious sticking point. Rio has exited coal entirely, whereas Glencore’s operations in Australia and beyond still account for around half of total revenue. Yet in practice, coal is far less central to Glencore’s cash flows than many assume.

The chart below shows the miner’s adjusted earnings (EBIT) across its two divisions: while coal earnings have collapsed since the post-Covid spike, metals and minerals have remained remarkably resilient. That shift gives Glencore flexibility in any deal and reduces the risk that coal alone could derail a transaction.

Chart generated by author

Copper is the story

If you strip away the headlines, this is fundamentally a copper story. Glencore is positioned to be one of the world’s largest producers, targeting around 850,000 tonnes this year and potentially reaching 1.6m tonnes by 2035.

Supply is constrained: Chile’s output is flat, new discoveries are rare, and permitting can take 15 years.

Meanwhile, demand is climbing, driven by electrification, renewable energy, AI data centres, and industrial growth. Even modest price stability combined with steady volumes can meaningfully boost earnings.

Rio Tinto, by contrast, has been light on copper, relying heavily on iron ore. Accessing Glencore’s copper assets would give it a far more credible position in a market where a 30% supply shortfall is projected by 2035. For shareholders, that’s the angle that really matters: copper is now central to the energy transition, and both companies are looking to the long term.

Glencore’s trading business is the ace in the pack. Many rivals have tried to copy it, none have succeeded. In a world of increasing supply constraints and volatile prices, this division is effectively priceless.

Risks

Any merger of this scale would be behemoth-level, with enormous regulatory hurdles across multiple jurisdictions. Integrating two very different corporate cultures – one trading-heavy, the other conventional mining – is far from trivial.

Coal, while smaller than before, could still pose ESG, political, or financing complications. And the sheer size of the combined company would make it highly exposed to commodity cycles, geopolitical tensions, and operational disruption.

Bottom line

The Glencore-Rio Tinto story isn’t about immediate share price spikes. It’s about copper optionality, disciplined production, and strategic positioning in a market likely to remain undersupplied for years.

For investors comfortable with Glencore’s volatility, today’s merger headlines add context but don’t change the fundamentals. Copper remains the driver – the part of the story most likely to shape earnings, growth, and long-term market relevance.

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Volatile stock

After hitting a three-year low in April, Glencore (LSE: GLEN) has enjoyed a powerful rebound, more than doubling from its lows. Yet despite that rally, the shares rose only 14% over 2025, leaving the miner well behind many of the index’s biggest winners.

One reason for that cautious pricing is the lingering focus on volatility. Glencore’s earnings have swung sharply with commodity prices for years, and the market appears to assume that will continue.

But that framing misses an important structural point: the company’s earnings and cash flows have built-in operating leverage. In other words, the business can benefit disproportionately from even modest stabilisation in commodity markets – and we may already be seeing that take shape.

Copper prices

Take copper, for example. The red metal has enjoyed a strong run, climbing roughly 40% over the past year. That rally is being supported on both the demand and supply side.

Demand is coming from multiple sources, including electrification, renewable energy, industrial activity and the AI data-centre build-out.

Meanwhile, supply remains constrained. Major producing nations such as Chile have seen flat output, while ore grades continue to decline over time.

Layer on top of that uncertainty around tariff policy, countries stockpiling metals and the threat of export bans, and a potent mix is forming beneath the surface.

But here’s the key point: copper prices don’t need to go parabolic for the miner’s cash flows to improve meaningfully. Price stability, combined with steady volumes and disciplined cost control, can be enough to shift the earnings outlook from contraction to expansion.

Market mispricing

Crucially, that’s not how the market appears to be pricing Glencore today. Many investors continue to assume that prolonged weakness in coal will swamp any metals upside, leaving earnings range-bound or worse. As a result, expectations remain muted, even as share prices recover.

However, an adjusted EBIT chart – which strips out one-off accounting items – tells a different story. It shows that, despite weak metals prices in 2023 and 2024, the Metals and Minerals division has remained remarkably resilient. By contrast, Energy and Steelmaking coal earnings have collapsed, now contributing less to overall profits than the metals business.

Chart generated by author

This suggests the market may be underestimating the company’s true operational strength.

Key risks

Operational risks remain, from weather-related disruptions to rising costs as mines go deeper and labour tightens.

The miner’s global footprint also exposes it to geopolitical and regulatory uncertainty, including shifting tariff regimes and government intervention in key producing regions. These factors could affect production and cash flows, even if metals demand remains robust.

Bottom line

Glencore remains a stock I continue to watch closely in my own portfolio. Its resilient metals earnings and operational flexibility mean that even modest stabilisation could improve cash flows. For investors looking for exposure to long-term commodity trends, it’s worth considering – particularly as the FTSE 100 sits near 10,000.

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Glencore shares are finally showing recovery potential, rising 12.7% over the last year, with much of the excitement coming since April. By contrast, Diageo slumped 36% across 2025.

I added both stocks to my Self-Invested Personal Pension (SIPP) in 2023, after their troubles had begun rather than beforehand. I like targeting FTSE 100 stocks that are having a hard time, in the hope of benefitting when they recover. In both cases, I jumped in too soon. Troubled companies rarely turn on a sixpence. It takes time to win back investor trust.

Investment risks and rewards

That’s worth bearing in mind when examining how Glencore and Diageo might fare in the year ahead.

I’m encouraged by Glencore’s recovery, although a little surprised. Key market China continues to struggle. So does the US. At the same time, new sources of demand are emerging. The energy transition and the rapid expansion of AI data centres require vast quantities of copper. Renewed infrastructure and defence spending could further boost demand for metals and minerals.

If interest rates continue to fall in 2026, the global economy may also pick up. Still, there are plenty of potential threats.

China is no longer the growth engine it once was. Glencore’s coal exposure brings political, regulatory and reputational risks. Resource nationalism, tax disputes, environmental liabilities and corruption investigations have all hurt the group in the past. Net debt stood at $14.5bn in June.

This is a cyclical sector, though, and we could be approaching an upturn. I think Glencore shares are worth considering with a long-term view, but I’m also braced for plenty more short-term volatility in 2026.

FTSE 100 recovery play

Diageo has struggled as cash-strapped drinkers spend less on its premium brands, while tariffs hit US sales. Diageo still sells more than $20bn of booze a year, but profit margins have been squeezed. New boss Dave Lewis took charge on 1 January, and I’m banking on him to turn this crate around. I suspect the sell-off has gone too far, making the shares look like a potential bargain with a price-to-earnings ratio of 13.9, although the risks are clear.

Lewis needs to rebuild battered margins and revive sales in an increasingly health-conscious world. Consumer stocks are cyclical too, and a decent economic recovery could help restore the party spirit.

I like both shares and have considered topping up my stakes in January. Of the two, Diageo is my favourite and I’m tempted to average down for what will be the fifth (and final) time. What do the experts think?

They aren’t hugely excited about Glencore, with a consensus one-year median share price target of 427p. That’s just 4.5% above today’s level. It’s a different story at Diageo, where consensus points to 2,102p, implying price rise potential of more than 30%.

Forecasts can’t be relied on, but that broadly reflects my gut feeling. I’m backing Diageo shares to come good and beat Glencore in 2026. Only time will tell if I’m right.

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