Why Emeco’s Share Price is up 9% Today

Emeco Holdings Ltd [ASX:EHL] is up 9.3% today, trading at a share price of $.375 on the back of a high volume of trades.

Emeco is up 62% for the year, which is strong performance by any measure.

Take a look at its one-year chart below:

emeco holding chart

Source: marketindex.com.au

Understanding what Emeco does is the key

First we need to understand what Emeco does.

Emeco rents out equipment to the mining industry, in particular heavy earth moving equipment.

Previously we covered the resilience of mining stocks amid rising tension in the market.

Well part of this is down to commodity prices, which includes iron, copper etc.

Have a look at commodity prices over the past year and you will start to get a sense for what’s driving Emeco forward.

emeco trading view graph

Source: tradingview.com

As commodity prices rise, mining stocks stand to benefit.

They increase exploration and mining activity to take advantage of rising prices.

To do this they need to rent out the heavy earth moving equipment that Emeco specialises in.

These 10 mining stocks could perform like Emeco, check out our free report here.

Emeco’s credit rating improves, revenue up significantly

As noted by the company, an improved balance sheet has seen its credit rating improve recently.

Meanwhile, its group operating revenue is up 63.5% over last financial year.

These were peak mining years, and as geopolitical tensions rise, commodity prices could be set to edge higher.

To get a sense for what is meant by this connection have a look at this handy chart which overlays commodity prices with major geopolitical events.

CR8 Index trading view graph

Source: tradingview.com

Any further tension would only be good news for Emeco, as it in a sense ‘piggy backs’ on any growth in the mining sector.


Ryan Clarkson-Ledward,
For Money Morning

PS: We’ve got a list of 10 other mining plays for you right here, in our free report.

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

Ryan is also the Editor of Australian Small-Cap Investigator, a stock tipping newsletter that hunts down promising small-cap stocks by dissecting the latest events affecting the world.

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