The Fortescue Metals Group Limited (ASX: FMG) share price is on fire as it rallied to a more than one-year high to become the best performing iron ore major on the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) index.
The FMG share price surged 2.9% to $5.89 this morning and has gained over 40% since I highlighted the stock as a buying opportunity in November last year (click here to find out why).
It's larger brother, the BHP Group Ltd (ASX: BHP) share price, has also hit a more than 52-week high this morning but Fortescue's shorter-term performance is more impressive as its recent rally pushes the stock ahead of BHP and Rio Tinto Limited (ASX: RIO) on a 12-month basis.
Fortescue clocked up gains of close to 19% over the past year compared to BHP's and Rio Tinto's share price gains of around 17% each.
Ugly duckling to swan
Fortescue has been a woeful laggard for most of 2018 as investors were worried that Chinese buyers would continue to shun its lower quality ore.
This caused the price discount between Fortescue's exports and those from BHP and Rio Tinto to blow out and investors feared that the change was structural and not cyclical in nature.
It took longer than expected, but the gap started to narrow late last year and it appears to be returning to the norm. This has caused a massive re-rating in the stock and has allowed Fortescue's share price to play catch up with the big boys.
Meanwhile, the tragic dam collapse at one of Vale's Brazilian mines has sent the price of iron ore surging higher as the iron ore major had to stop production at several of its other mines so its dams could be inspected.
Most analysts believe the price surge is temporary but the turn in sentiment towards Fortescue isn't, not in my opinion.
Foolish takeaway
However, I don't see much value in the stock at current levels and I am not expecting its profit results on February 20 to give the stock another leg up.
This means we are probably close to the point where I would be tempted to take some profit off the table.
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