TFSA Investors: Put Your $6K Into This Mining Stock With 45% Upside

The TFSA is for growth. This stock is one of the best growth plays in the metals and mining space on the TSX!

| More on:

Setting target prices is important. Knowing how much upside an investment has and the level at which one wishes to reassess a given investment is equally important. In this article, I’m going to discuss why I think Lundin Mining (TSX:LUN) has at least 45% upside right now. This is a stock every TFSA investor ought to consider right now. The TFSA is the perfect place to put your money to work on long-term growth stocks like Lundin.

Copper exposure has been great for this stock

The majority of Lundin’s revenue is derived from copper mining. The copper sector is one which has been blessed with a rising commodity price environment of late.

I think the fundamentals for copper remain robust not only for 2021 but for many years. We’re in what I think is the middle-innings of a bull market in copper. High levels of stimulus and low interest rates are fundamental forces that bode well for copper prices. If we continue to see an industrial rebound from this pandemic, copper will continue to perform well.

These aren’t just my own opinions. Analysts from Goldman Sachs recently pointed out that the price of copper could increase to more than $5 per pound by early 2022. This would imply an upside of around 45% from current levels. Additionally, I view Lundin as a better way to play copper than the commodity itself, due to this company’s excellent operating metrics and operational efficiencies. If the company is able to continue on its current trajectory, we could see much higher capital gains than the 45% commodity price upside potential indicates.

This is more than just a copper company

One of the things I like most about Lundin is the diversified nature of this company’s operations. This is not a pure play on copper. Rather, this company earns about one-third of its revenue from other metals. Additionally, the company is geographically diversified and has proven itself to be a stable growth play in a rather depressed commodities market over the past decade.

Investors could see impressive cash flow growth if zinc and nickel prices pick up to a similar degree as copper (the other major components of Lundin’s business). I think base metals in general are undervalued right now. Accordingly, I think Lundin is a great way to diversify base metals exposure in under-diversified portfolios.

Lundin is also a great dividend company, despite a low yield of around 1.4% today. The company is expected to grow its dividend by around 50% when Q4 earnings are released. I expect future dividend increases to provide a nice income stream for investors seeking long-term income growth.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Chris MacDonald has no position in any of the stocks mentioned.

More on Metals and Mining Stocks

construction workers talk on the job site
Metals and Mining Stocks

2 No-Brainer Mining Stocks to Buy With $200 Right Now

You can buy these top Canadian mining stocks with just a $200 investment right now to start your long-term wealth…

Read more »

Concept of multiple streams of income
Stocks for Beginners

Lock Up This 9.2% Dividend Yield From a Top Royalty Stock

Royalty stocks have a strong advantage when it comes to creating passive income for investors. But this one has the…

Read more »

Safety helmets and gloves hang from a rack on a mining site.
Metals and Mining Stocks

Is First Quantum Minerals Stock a Good Buy Right Now?

First Quantum is a TSX stock that trades 61% below all-time highs. However, the mining stock still trades at a…

Read more »

nugget gold
Metals and Mining Stocks

The Best Gold Stock to Invest $1,000 in Right Now

Here are two of the best Canadian gold stocks that can yield some eye-popping returns in the long run.

Read more »

nugget gold
Stocks for Beginners

The Ultimate Mining Stock to Buy With $1,000 Right Now

This mining stock just saw a drop, but don't let that keep you from diving in. This miner is due…

Read more »

A plant grows from coins.
Metals and Mining Stocks

Canadian Mining Stocks: Buy, Sell, or Hold?

Explore 2025’s top Canadian mining stocks – gold, uranium, and base metals offer big potential in a dynamic, commodity-driven market.

Read more »

farmer holds box of leafy greens
Metals and Mining Stocks

3 Reasons to Buy Nutrien Stock Like There’s No Tomorrow

Nutrien stock has lost 34% of its value just this year alone and looks incredibly cheap today. Yet, secular trends…

Read more »

Canada national flag waving in wind on clear day
Tech Stocks

Trump Trade: Canadian Stocks to Watch

With Trump returning to the presidency, there are some sectors that could boom in Canada, and others to watch. But…

Read more »