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Zinc Highlights
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Commodity prices change when there are unexpected changes to supply and demand of the target commodity. WikiWealth tries to predict these unexpected changes by examining the companies, which supply and demand the commodity (See Fundamental Commodity Analysis). When demand potential is greater then supply potential, then prices will increase; the opposite is also true. WikiWealth's Main Street Analysis captures - along with user help - the impact of supply and demand changes by analyzing the commodity's importance. In general, the more important the commodity, the faster the price will increase when commodity demand increases. A "Buy" rating from both approaches mean the commodity has high potential to increase in value.
Zinc Summary
Zinc Commodity Analysis ► (edit / improve) Zinc is mainly used as an anti-corrosion coating on iron and steel. Commodity Analysis: Zinc is rated a Buy. Zinc demanders have a high potential to increase in value, while zinc suppliers have low potential to increase in value. Investor Survey: Zinc’s long term growth potential is very favorable due to high scores on the SWOT analysis. SWOT Analysis: Strength: zinc has anti-corrosion properties, which will benefit the growth of zinc as emerging countries continue to urbanize. Opportunity to grow: Zinc’s recyclable, non-toxic properties could benefit its growth as environmental concerns increase. Profit Conclusion: The commodity analysis buy rating indicates that zinc should increase in price over the short term, while a very favorable investor survey means zinc should increase in the long term.
Investment Impacts (help)
China Country Analysis ► (edit / improve) China (CNY) is a fast growing communist country with the largest population in the world. Currency Analysis: China’s currency is moderately undervalued. Purchase price parity shows that China’s currency is approximately 40% undervalued, however, the other three valuation approaches show that China is fairly valued. Investor Survey: China’s economic environment is very unfavorable for long term economic growth due to low scores on economic freedom, government transparency, and the SWOT analysis. Trade Analysis: Indonesia, Pakistan, Norway, Singapore, Europe, the US are the top export partners, while the leading industry is industrial goods, usually for export. Commodity Analysis: China produces a significant amount of coal for use at home. The use of coal to provide energy leads to other health related problems. SWOT Analysis: The leading Chinese strength is their cheap labor, while the main weaknesses are political risk and corruption. Renewable energy has the opportunity to propel growth, while general pollution and an aging population could slow growth rates. Profit Conclusion: An undervalued currency, average investment flow potential and an unfavorable business environment leads to a neutral outlook for Chinese investments.
Industry Investment Impact
Industrial Industry Analysis ► (edit / improve) Description: The industrial industry includes companies whose sales originate from the manufacturing of materials into finished goods and services. Valuation Analysis: Based on WikiWealth's Wall Street analysis, this industry is a Hold, with slightly positive potential. The Main Street analysis says a Hold with SWOT strengths much great than weaknesses and SWOT opportunities less than threats. Trade Analysis: The following countries derive much of their income from the industrial sector of the economy: Brazil, Venezuela, USA, Belgium, the EU, Germany, France, China, Hong Kong and Japan. Main industrial commodities include the following: aluminum, copper, lead, nickel, palladium, silicon, steel, tin, and zinc. Profit Conclusion: The industrial industry tends to be sensitive to economic cycles. Look for undervalued industrial investments during economic recessions and sell industrial investments during the late stages of a bull markets. The global economy is currently in a recession, therefore, it is the perfect time to purchase industrial investments.
Material Industry Analysis ► (edit / improve) Description: The materials industry includes companies whose sales originate from the mining, acquisition and sale of physical substances for manufacturing-related purposes. Valuation Analysis: Based on WikiWealth's Wall Street analysis, this industry is a Hold. The Main Street analysis also says Hold, with SWOT strengths much great than weaknesses and SWOT opportunities less than threats. Trade Analysis: Some of the main trade hubs include Canada, Chile, Poland, Australia, Indonesia, Pakistan, Malaysia, and South Africa, while the main material commodities include aluminum, copper, lead, nickel, palladium, silicon, steel, tin, and zinc. Profit Conclusion: The materials industry tends to be sensitive to economic cycles. Look for undervalued material investments during economic recessions and sell material investments during the late stages of a bull markets. Material stocks quickly increase at the conclusion of a recession, because materials are the primary input for the industrial sector. The global economy is currently in a recession, therefore, it is the perfect time to purchase material investments.
- The industrial industry uses many materials to produced manufactured goods.
Importance of the Industry Analysis?
WikiWealth's industry analysis evaluates the major industry characteristics that affect investments within that industry. Company specific factors drive the performance of individual companies, but macro-economic industry factors can affect the performance of entire groups of stocks. For example, government regulation of the financial services industry affects every financial service company in different, but related ways. It is important to understand the large scale issues that affect an industry before examining the affects on every individual company.
Warren Buffett Quote: "When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is the reputation of the business that remains intact."
No matter the quality of your business, industry economics is an important factor in any investment decision.
Edit / Improve Option?
WikiWealth supplies the tools to create the highest quality analysis. However, we rely on users to continuously edit and improve this analysis. More minds working on a problem generates better ideas. WikiWealth professionals happily review each edit to ensure consistency and quality. Find an area to improve, click the "improve - edit" link, make your change, then press "SAVE."
Value to Users?
A professional industry analysis can cost between $150 to $15,000. WikiWealth's industry analysis is free and open to "improve / edit." WikiWealth has a range of skills and experience to complete any industry analysis or related financial request. See our professional services for more information.
Experiment Mode?
Useful for experimenting with the analysis without permanently changing the results for others. Click above to enter the experiment mode. Change any blue text to see how your changes affect the ending value of this company: Experiment Mode. The experiment mode is free and open to manipulate by anyone. Changes are not permanent.
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WikiWealth.com Industry Description: The materials industry includes companies whose sales originate from the mining, acquisition and sale of physical substances for manufacturing-related purposes. Read More.
WikiWealth.com Profit Analysis: The best way to profit from material industry stock investments is to find the most undervalued investments (Wall Street and Main Street buy ratings) during economic recessions. Those investments should be undervalued (see Wall Street Analysis on left side), and have high Main Street Common Sense investment ratings (see Main Street Analysis on right side). When an economic recovery occurs, material industry stocks tend to outperform the general stock market, because consumers and businesses must increase their inventories quickly to meet demand for manufactured goods. Consumers and business delayed purchases on items they wanted, but resisted buying during tougher economic times. Eventually, material company investments become overvalued, because profits and stock prices increase past their fair values. During the last stages of an economic business cycle, just before a recession, it is best to sell material stocks, because they are likely to decrease in price the fastest. Expensive (overvalued) stocks with low Main Street Common Sense ratings should be sold at any time to invest in better stocks. Two buys ratings are the best and two sell ratings are the worst possible stock investments. Click for more information: stock research ratings.
Inflation Hedge: Changes in commodity prices affect material industry investments. When commodity prices are high due to increased demand or lower supply, material stocks increase, because demand for their goods also increases. Inflation occurs when the price of goods and services increases. The price of materials are generally the first inputs into the production of goods, so changes in material prices directly affect the cost of products, which is measured by inflation. Therefore, a good hedge against inflation is to own material stock investments. When inflation increases, so do the profits of material companies, which may have directly contributed to the increase in prices.
WikiWealth.com Industry Analysis: During economic recessions, consumers tend to cut back on spending to save money. Businesses tend to cut back on investments. Industrial companies make the products bought by consumers and businesses, but to make those products, industrial companies must obtain materials. Less spending on goods decreases material business revenue and eventually decreases stock prices. During economic recoveries, consumers and businesses spend quickly to replace or catch up with quickly increasing demand. Material companies quickly receive orders from industrial companies who need to manufacture new products to meet quickly increasing demand. Higher spending increases material business revenue and eventually increases stock prices. During a longer economic expansion, consumer and business demand increases for material companies, but at a slower pace than during the recovery stage.
1 WikiWealth.com only uses the largest 30 companies in each industry for the basis of these financial measures. Each statistic is the market weighted average of the 30 companies.
2 Investment potential (margin of safety) is a weighted average of the discounted cash flow analysis (DCF), the enterprise value (EV) market multiple analysis, and the Warren Buffett investment analysis. WikiWealth obtains 80% of their quantitative investment potential from fundamental investment analysis.
Major Zinc Producers ► Press "Edit / Improve"
China Country Analysis ► (edit / improve) China (CNY) is a fast growing communist country with the largest population in the world. Currency Analysis: China’s currency is moderately undervalued. Purchase price parity shows that China’s currency is approximately 40% undervalued, however, the other three valuation approaches show that China is fairly valued. Investor Survey: China’s economic environment is very unfavorable for long term economic growth due to low scores on economic freedom, government transparency, and the SWOT analysis. Trade Analysis: Indonesia, Pakistan, Norway, Singapore, Europe, the US are the top export partners, while the leading industry is industrial goods, usually for export. Commodity Analysis: China produces a significant amount of coal for use at home. The use of coal to provide energy leads to other health related problems. SWOT Analysis: The leading Chinese strength is their cheap labor, while the main weaknesses are political risk and corruption. Renewable energy has the opportunity to propel growth, while general pollution and an aging population could slow growth rates. Profit Conclusion: An undervalued currency, average investment flow potential and an unfavorable business environment leads to a neutral outlook for Chinese investments.
Australia Country Analysis ► (edit / improve) Australia (AUD) has a highly productive, capitalist economy with an emphasis on commodity exports, especially to Asia. Currency Analysis: Australia’s currency is moderately overvalued with low investment flow potential and negative purchase price parity. Investor Survey: Australia’s economic environment is very favorable for long term economic growth due to high scores on economic freedom and economic diversity. Trade Analysis: Indonesia, China, Singapore, the UK and Japan are the top export partners, while the leading exporting industry is materials. Commodity Analysis: Australia produces a significant amount of uranium, gold, coal, copper, aluminum, lead, zinc, and silver mostly for export to growing Asian countries. SWOT Analysis: The leading Australian strength is their abundant natural resources, while no major weaknesses were identified. Profit Conclusion: An overvalued currency, negative investment flow potential, but favorable business environment leads to a neutral outlook for Australian investments.
USA Country Analysis ► (edit / improve) The United States (US) has a highly productive, capitalist economy and is the largest and most diverse market in the world. Currency Analysis: the US dollar (USD) has the potential to increase in value especially versus the Australian and Canadian dollar because of the significant potential of undervalued companies (see investment flows analysis). Investor Survey: the economic environment is very favorable for long term economic growth due to high scores on economic freedom and economic diversity. Trade Analysis: China, Japan, Mexico, and Canada are the top US trading partners, while the leading export and import are electrical machinery and vehicles, respectively. Commodity Analysis: The US produces a significant amount of coal and wheat for use at home and as an export. However, the US consumes a larger amount of oil, which contributes to their trade deficit. SWOT Analysis: The leading US strength is its entrepreneurial culture, while the main weakness is high health care cost. Energy independence has the opportunity to propel growth, while the housing crisis may lower growth. Profit Conclusion: An undervalued currency, high investment flow potential and favorable business environment lead to a positive outlook for US investments, which will also benefit from positive international actions.
Canada Country Analysis ► (edit / improve) Canada (CAD) has a capitalist, service-based, economy and is one of the wealthiest countries in the world. The services and materials industry are the two main employers. Currency Analysis: the Canadian dollar has the potential to decrease in value especially if export markets for materials do not perform well. Investor Survey: the economic environment is very favorable for long term economic growth due to high scores on economic freedom and SWOT strengths. Trade Analysis: China, UK, Japan, Mexico and the US are Canada’s top trading partners, while the leading exports are energy and materials. Commodity Analysis: Canada has the capacity to produce a significant amount of crude oil. Other commodities include Uranium, lumber, zinc, and nickel. SWOT Analysis: The Leading Canadian strengths include Canada’s free trade policy, oil reserves, and universal health system. Profit Conclusion: An overvalued currency and low investment flow potential are negatives, while the favorable business environment is a significant positive. Canada’s potential is neutral.
India Country Analysis ► (edit / improve) India (INR) has a highly regulated economy; however, recent liberalization has transformed the economy towards a capitalist, market-based system. Currency Analysis: India’s currency is fairly valued with very low investment flow potential combined with very high purchase price parity potential. Investor Survey: India’s economic environment is unfavorable for long term economic growth due to low scores on economic freedom, transparency, economic diversity, and the SWOT analysis. Trade Analysis: Belgium, Pakistan, the UK, Japan, and the US are the top export partners. Commodity Analysis: India produces a significant amount of staples for domestic use and needs to import energy. SWOT Analysis: The leading Indian strength is their supply of natural resources, while the main weakness is a lack of infrastructure. Profit Conclusion: A fairly-valued currency, very low investment flow potential and an unfavorable business environment leads to a negative outlook for Indian investments.
Major Zinc Consumers ► Press "Edit / Improve"
China Country Analysis ► (edit / improve) China (CNY) is a fast growing communist country with the largest population in the world. Currency Analysis: China’s currency is moderately undervalued. Purchase price parity shows that China’s currency is approximately 40% undervalued, however, the other three valuation approaches show that China is fairly valued. Investor Survey: China’s economic environment is very unfavorable for long term economic growth due to low scores on economic freedom, government transparency, and the SWOT analysis. Trade Analysis: Indonesia, Pakistan, Norway, Singapore, Europe, the US are the top export partners, while the leading industry is industrial goods, usually for export. Commodity Analysis: China produces a significant amount of coal for use at home. The use of coal to provide energy leads to other health related problems. SWOT Analysis: The leading Chinese strength is their cheap labor, while the main weaknesses are political risk and corruption. Renewable energy has the opportunity to propel growth, while general pollution and an aging population could slow growth rates. Profit Conclusion: An undervalued currency, average investment flow potential and an unfavorable business environment leads to a neutral outlook for Chinese investments.
USA Country Analysis ► (edit / improve) The United States (US) has a highly productive, capitalist economy and is the largest and most diverse market in the world. Currency Analysis: the US dollar (USD) has the potential to increase in value especially versus the Australian and Canadian dollar because of the significant potential of undervalued companies (see investment flows analysis). Investor Survey: the economic environment is very favorable for long term economic growth due to high scores on economic freedom and economic diversity. Trade Analysis: China, Japan, Mexico, and Canada are the top US trading partners, while the leading export and import are electrical machinery and vehicles, respectively. Commodity Analysis: The US produces a significant amount of coal and wheat for use at home and as an export. However, the US consumes a larger amount of oil, which contributes to their trade deficit. SWOT Analysis: The leading US strength is its entrepreneurial culture, while the main weakness is high health care cost. Energy independence has the opportunity to propel growth, while the housing crisis may lower growth. Profit Conclusion: An undervalued currency, high investment flow potential and favorable business environment lead to a positive outlook for US investments, which will also benefit from positive international actions.
Japan Country Analysis ► (edit / improve) Japan (JPY), the second largest economy in the world, has an industrial, export oriented economy that benefits from its relationship with the USA and proximity to China. Currency Analysis: Japan’s currency (the Yen) is overvalued according to investment flow potential, the purchase price parity analysis, and the interest rate parity analysis. Investor Survey: Japan’s economic environment is moderately favorable for long term economic growth due to high scores on economic freedom and government transparency, but low scores on the SWOT Analysis. Trade Analysis: Indonesia, China, Singapore, the EU, Korea, and the US are Japan’s top export partners, while the leading industry is industrial manufacturing. Commodity Analysis: Japan imports many products because of its lack of arable land and energy resources. SWOT Analysis: The leading Japanese strength is their education system, while the main weakness is a declining birth rate. A major Japanese threat is the continuation of zombie companies. Profit Conclusion: An overvalued currency, low investment flow potential and moderate business environment leads to a negative outlook for Japanese investments.
Germany Country Analysis ► (edit / improve) Germany (EUR) is the largest economy in Europe and relies on a strong and sophisticated industrial base to drive their exports. Currency Analysis: Germany is part of the Euro economic zone, whose currency has the potential to decrease in value on a global scale per the purchase price parity analysis. Investor Survey: Germany’s economic environment is favorable for long term economic growth due to high scores on economic freedom, economic diversity, and government transparency. Trade Analysis: The UK, France, and USA are the top export partners, while the leading export industry is industrial goods. Commodity Analysis: Germany imports many commodities to feed its industrial base: crude oil, coal, copper, aluminum, lead, zinc, and natural gas. SWOT Analysis: The leading German strength is their engineering expertise, while the main weakness is their declining birth rate. Profit Conclusion: An overvalued currency, moderate investment flow potential and favorable business environment lead to a slightly positive outlook for German investments.
Korea Country Analysis ► (edit / improve) Korea (KRW) has a fast growing Asian country with a market-based economy. Currency Analysis: Korea’s currency is undervalued as a result of the purchase price parity analysis. Investor Survey: Korea’s economic environment is moderate, because high scores on economic freedom are offset by low scores on the SWOT analysis. Trade Analysis: Indonesia, China, Singapore, Japan, Hong Kong are the top export partners, while Korea’s emerging industry relates to technology. SWOT Analysis: The leading Korean strength is their shipbuilding expertise, while the main weakness is their bank cross holdings. North Korea is their main threat to long term economic growth. Profit Conclusion: An undervalued currency, high investment flow potential and moderate business environment leads to a slightly positive outlook for Korean investments.
