This Magnificent Mining Stock Is Down 37%. Buy It Before It Sets a New All-Time High.

4 months ago 43

Unlock banal picks and a broker-level newsfeed that powers Wall Street.

Lee Samaha, The Motley Fool

Thu, Mar 27, 2025, 6:45 AM 5 min read

Copper miner Freeport-McMoRan's (NYSE: FCX) banal is down 37% from its all-time high, yet the terms of copper is astir astatine an all-time high. While the company's quality hasn't been wholly affirmative implicit the past year, the stock terms show and valuation disparity suggest that the banal looks large and is worthy picking up successful the wide marketplace downturn. Here's why.

Let's commencement by knowing wherefore determination mightiness beryllium specified a cardinal disconnect betwixt the terms of copper and the stock's show and the terms of copper; aft all, the metal's terms is the cardinal operator of its earnings. There are 2 reasons, and some of them look unjustified.

First, Freeport suffered a occurrence astatine a precocious opened smelter successful Indonesia. This is problematic for the institution due to the fact that the state has imposed an export prohibition connected copper ore (effective Jan. 1, 2025) to promote home processing. As such, Freeport volition present request a licence to export copper concentrate, and fixed that its smelter isn't moving astatine afloat capableness owed to the fire, it's apt to tally retired of retention capability.

That said, the bully and caller quality is the authorities volition contented a six-month licence to export concentrates portion Freeport repairs the smelter, according to Energy Minister Bahlil Lahadalia.

Second, the banal mightiness beryllium sold disconnected connected fearfulness that the caller emergence successful the U.S. terms of copper is chiefly owed to importers and speculators buying up of a imaginable tariff connected copper imports. That whitethorn beryllium true, but it's challenging to foretell wherever the terms of copper is heading. In immoderate case, the planetary terms of copper (as represented by the London Metal Exchange price) is besides up importantly successful 2025.

I've discussed elsewhere wherefore the miner is ideally placed to woody successful an situation of tariff struggle and besides payment from a concerted, and likely, determination by the existent U.S. medication to promote the accumulation of a important metallic similar copper.

Freeport produces for the U.S. successful the U.S. and neither imports importantly into the U.S. nor exports its U.S. production. Its planetary accumulation is sold internationally, with Indonesian accumulation earmarked for Asia. As for encouraging U.S. production, Freeport already has plans for brownfield expansions to existing mines successful Arizona, which absorption believes could adhd up to an incremental summation of 650 cardinal pounds of copper per annum successful the future.

Similarly, absorption estimates its U.S.-focused leaching inaugural (recovering copper from existing stockpiles) volition effect successful 800 cardinal pounds of copper recovered annually by 2030. These figures are important for a miner acceptable to nutrient 4 cardinal pounds of copper successful 2025.