Stockchase Opinions

Bruce Murray Freeport McMoran Copper & Gold FCX-N DON'T BUY Jan 16, 2025

If you look at the quality assets, you'd say own it. But copper's located in a lot of countries you don't want to be in. Just told by Indonesia that it wants more from mines than previously agreed. He owns HBM.

$39.810

Stock price when the opinion was issued

non-base metal mining
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BUY ON WEAKNESS

Copper supply is tight. Each 10-cent/pound rise in price means $200 million in cash flow. Expects great cash flow. Shares always fall before a quarter, so it's an opportunity now. China stimulus could be a big boost to sales.

BUY ON WEAKNESS

If sentiment changes in China, this will move up sharply. As a cyclical, you can enter this stock at this point now. He likes FCX, which controls 8% of global copper production. Well-managed. The long-term secular story for copper is very strong--used in data centres, EVs, green energy. 

TOP PICK

It's oversold and finding support near current levels; it seems to be bouncing. This is why he just bought a position. Old support from 2023 was $33. If shares don't hold currently, this could fall to $35. Is currently bouncing and heading to resistance at $45, or 15% higher. The risk/reward looks good. He bought one tranche and will buy more if shares move up.

(Analysts’ price target is $52.24)
PAST TOP PICK
(A Top Pick Jan 04/24, Down 9%)

Worked for much of the year, then disappointing. He trimmed some. Thought China would do a bit better. Thought there'd be a green agenda, but now there's Trump. Earnings this morning seem weaker at first glance. Very whippy. Should be higher due to the AI buildout. Traded at a wide price to NAV, a risk if copper didn't do well or execution was poor.

You don't need to own this one forever.

PAST TOP PICK
(A Top Pick Mar 13/24, Down 16%)

A cyclical, and last year was poor for them all due to China's weakness. Deferral of EV adoption. Have to be patient. Story is still intact. Copper demand still rising at 2-3x what GDP is growing at, and supply is finite.

PAST TOP PICK
(A Top Pick Feb 08/24, Up 3%)

Bought, in part, on prospects of a greener world. Came down on weaker China and on the (much less green) Trump victory. Didn't execute as well in Q4, softer sales, higher capex. Copper's a good long-term bet. Trades at 15x with 19% growth.

Still likes it. USA really needs to grow its way out of this deficit.

PAST TOP PICK
(A Top Pick Mar 13/24, Down 7%)

China's comeback didn't happen in the past year while EV adoption has slowed, but will still happen. The copper spot price is up 25% this quarter. So, FCX will have a great quarter, given their link to that price, but the market won't anticipate that due to fear of tariffs and the impact on copper prices. Will copper be a protected mineral? Tariffs on foreign/Chinese copper? Don't know yet, but long term the secular tailwinds are intact. Copper usage will double over 7 years.

DON'T BUY

It's fallen off a cliff since tariffs. Watch FCX as an economic indicator, but would not buy this. At best, this is a short-term trade, but he's a long-term investor.

TOP PICK

Taken a big hit. Divergence between copper prices and company's performance. Generational opportunity to buy a company like this. Secularly, we're using more and more copper for electrification. Analysts see 7-8% compound  growth rate in copper usage over next 10 years. Yield is 2.01%.

The negative is that 50% of copper is used by China. If tariffs don't get sorted out, something's gotta give. It's not easy to bring mines on quickly. Good risk/reward at current levels.

(Analysts’ price target is $46.78)