The Fortescue Metals Group Limited (ASX: FMG) share price has risen over the past 12 months, up 24%. And this doesn't even include the juicy dividends that the company pays shareholders every time it reports its bi-annual results.
Understandably, Fortescue has been a hot topic since the spot price of iron ore has surged to astronomical levels. During July, the steel making ingredient hit US$219.77 per metric tonne – an all-time high. However, as all good things must come to an end, the spot price of iron ore has settled to around US$171.91, down 5.81% today.
Nonetheless, you may be wondering if you invested 5 years ago in Fortescue shares, how much would you have now?
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Quick take on Fortescue
Recognised as the world's fourth largest iron ore miner, Fortescue has become a dominant player in the mining industry. With world-class assets located in the Pilbara region of Western Australia, the company has been booming in recent times.
Fortescue traditionally enjoys a close trade relationship with China, which has been a major consumer of iron ore for the past decade. Although until recently, strained ties between Australia and China have sought to put a dent in the iron ore industry.
How has the Fortescue share price performed in 2021?
In the past 8 months, the Fortescue share price has been swinging both up and down throughout the period.
The company reported a strong quarterly result that drove its shares to a record high of $26.58 in late July. Yet this was only to be met by Chinese rhetoric about cutting its iron ore reliance on Australia. Since then, Fortescue shares have been off a cliff, declining 12% in just 1 week.
What would be the value of Fortescue shares buying from 5 years ago?
If you had invested $2,000 in Fortescue shares in 2016, you would have bought them for around $4.59 a piece. This gives you approximately 435 shares, without reinvesting the dividends received over those years.
Fast-forward to today, the current Fortescue share price is at $22.98. This means that those 435 shares would be worth $9,996.30 (435 shares x $22.98). When looking at percentage terms, this implies an upside of close to 400%.
Are Fortescue shares a buy today?
A number of brokers rated the company with varying price points following its June quarter results in late July.
JPMorgan cut its 12-month price target by 3.3% to $29 for Fortescue shares. Following suit, both Credit Suisse and Goldman Sachs also reduced their rating, down 4.3% to $22, and down 2.9% to $19.90 per share, respectively.
