Stockchase Opinions

Gordon Reid Freeport McMoran Copper & Gold FCX-N PAST TOP PICK Mar 18, 2025

(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.

$39.770

Stock price when the opinion was issued

non-base metal mining
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WAIT

Can't have a view on this name without having a view on copper. Emerging view that historical cyclicality of copper may be dampened going forward by secular demand of greening the grid and EVs. But the cyclicality is still there. Global GDP growth is slowing, China's economy remains anemic underlying all the "stimulus".

There will be a time to get behind this name, but not right now. FCX would be his #1 choice, TECK.B #2.

BUY

She bought more. FCS is the poster child of China, of which she is suddenly bullish because of their stimulus news. Net cash costs are falling and it trades at 6.9x EBITDA vs. 9.2x 5-year average. 

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)
DON'T BUY

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.

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.