Will the Fortescue (ASX:FMG) share price outperform in 2021?

Could the Fortescue share price continue to climb higher in 2021 and beyond? Here we take a closer look at the Aussie iron ore producer.

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I think the Fortescue Metals Group Limited (ASX: FMG) share price can outperform in 2021. The Fortescue share price is up 49.9% this year and is streaming ahead of the S&P/ASX 200 Index (ASX: XJO).

That might make some investors wary of buying in, but I think there’s a lot to like right now.

What does Fortescue do?

Fortescue is one of the largest iron ore producers in the world. It’s part of the ‘big four’ alongside BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Brazil-based Vale.

The Aussie mining group recently reported full-year production of 178.2 million wet metric tonnes of iron ore. That saw Fortescue’s revenues increase by 29% to US$12,820 million as net profit after tax jumped 49% to US$4.7 billion.

Why the Fortescue share price can outperform in 2021

I think there’s a lot to like about the Fortescue share price for 2021 and beyond.

Strong iron ore prices are being predicted by not only the market but the federal government. The commodity is reportedly set to underpin the FY21 budget and help pull Australia through a recession.

If that proves to be the case, it would be good news for Fortescue. The Aussie miner has managed to dodge much of the scrutiny faced by the likes of Rio Tinto thus far.

The BHP share price has lagged Fortescue largely due to its petroleum segment struggling thanks to weak oil prices.

I also think Fortescue has the history and tact to manage its relationship with China. China is by far the largest purchaser of Australian iron ore products which makes it a key customer.

There’s also the metrics to support the Fortescue share price being a buy. The Aussie miner’s shares are trading at a price-to-earnings (P/E) ratio of just 7.4x with a 10.9% dividend yield.

BHP shares trade at 16.6x earnings with Rio Tinto at 15.3x, both with lower dividend yields. That to me says that Fortescue shares could outperform and be an option for both dividend and growth investors in 2021.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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