Opinions Dennis da Silva
Capstone Copper CorpCS.TOBUYApr 26, 2023
Dennis da SilvaStock price when the opinion was issued
As of Jun 08, 2026. Market Open.
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The production guidance was disappointing, but they're comfortable waiting for the complete financials on March 2nd. EPS is still projected to more than double this year, which along with sector dynamics maintains their interest. Given the uncertainty, they would shift the rating toward HOLD rather than BUY currently, though production fluctuations are routine in the industry and they don't view the long-term outlook as materially impaired. Unlock Premium - Try 5i Free
The strike is turning a bit ugly, with workers interfering with the water supply this week. But, like most strikes we think it will eventually get resolved. With further weakness we would see CS as a buying opportunity.
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He bought it a few years ago when he saw copper demand from EVs. They are building a more integrated complex in Chile. The Arizona mine could pay off. Most important is the price of copper--shares will move with it. Remember, it takes 5 years for the copper they mine to come to market. The space is getting risky.
Bruce MurrayEveryone knows that copper is going to be needed and mines have been under-built for years. There has been huge growth from 2024 to 2026 and then a little flatter after that. Copper is part of the green build-out and data centre growth. Capstone established a recent good partnership and is one of the best copper names in Canada. Trades at 14 times 2027.
Copper is one of the reasons he thinks we're starting a new cycle. Both silver and copper have broken out to new highs; both have industrial uses and should benefit from a strengthening economy. If cyclical commodities are breaking out to new highs, then copper should continue to work into 2027.
His firm's fundamental analyst has it rated Outperform. On the chart, you can see the 4-year cycle reset in 2022 as well as the cycle reset in April 2025. If he's correct that we're starting a new cycle, this name should have similar upside to the last one. Sees upside into 2027; 20-30% over the next 12-18 months. No dividend.
Likes it for a project in Chile that will combine several properties. Also a property in Arizona that could come on, and should be very economic. The tariffs won't matter, because AI will consume every piece of copper that we can find.
Bruce MurrayWill grow 30% in 2025 due to continued growth in core asset. FCF becomes an inflection point in 2025. Bit of geopolitical risk in Chile. Looking for a partner for its next major project to drive growth from 2030 on.
Dennis da SilvaEmerging play in South America. Not the quality asset of a FCX, but it is safer. He's not a mining expert, but thinks there's some money to be made here.
Bruce MurrayInsider selling is never a 'great' sign but there can be lots of reasons for it. Insiders still own more than $200M in stock. We can also live with a bit of insider selling on a stock that has risen 41% in the past year. The future will likely still be dictated more by copper prices than any trading activity. EPS is expected to more than triple in 2025. If CS can achieve this growth, the stock should do well.
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We recently added more CS to our model portfolio and consider it a buy. We are not fond of targets, especially short term, but $13 to $14 we think is possible.
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We can't do much about the cyclicality of the metals sector. It will always be cyclical, and nothing should be considered a 'buy and forget' stock. Much will depend on economic growth, particularly in China. It is interesting right now in that China is weak but copper is strong. It is possible investors are seeing China as 'bottoming' and there are also supply concerns (i.e. the recent closure of a large mine in Panama). The sector is cyclical, and thus valuations are usually low. CS is more expensive at 16X earnings, because it is growing fast. From a loss last year it is expected to earn 28c a share this year and then a near-double to 54c next year. Debt is fairly high but cash flow is also growing nicely. We would be comfortable owning it in a size reflective of its risk. We might not add to a current position as the price rise naturally brings position size up.
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Good takeout target. Cost structure has come down. Better than average, but not top tier. Pretty good balance sheet. Leveraged play on copper. China reopening plus the need for copper gives real leverage to better copper prices.