Freeport-McMoRan Standout as Copper Prices Surge

Freeport-McMoRan shines amidst correction in equity markets. High copper prices and potential tariffs create opportunities for investors. With production advantages and projected earnings growth, the stock is one to watch.

Date: 24-03-2025

AI Rating: 7

Market Conditions and Copper Prices

The report highlights that the equity markets are currently undergoing a correction while copper prices are nearing all-time highs. With the Chicago Mercantile Exchange (CME) copper price soaring by 27% year to date, this presents an essential context for an investor looking at copper mining stocks.

Impact of Potential Tariffs

Additionally, a fear of potential tariffs imposed by the Trump administration regarding imported copper points to a sense of urgency among domestic buyers. Importantly, about 45% of U.S. domestic consumption relies on imports, making it a crucial factor in the escalating commodity prices.

Freeport-McMoRan's Competitive Advantage

Freeport-McMoRan stands to benefit significantly given its U.S.-based production. Production numbers reveal they are producing 1.246 billion pounds in North America for 2024, protecting them from potential retaliatory tariffs that could affect international competitors. Their unit net cash cost of production is pegged at $3.04 per pound in the U.S., but due to high copper prices, profits could increase proportionately.

Future Growth Prospects

Freeport's ambitions to increase production in the U.S., especially if protectionist measures are enacted, showcases a robust business strategy. Their goal to produce between 300 million to 400 million pounds via low-cost leaching by 2026 and potential expansions could drive revenue and profitability significantly during the coming years.

Projected Earnings

According to management estimates, if copper prices remain high, Freeport-McMoRan could generate approximately $15 billion in EBITDA in 2026 and 2027, positioning it as an undervalued stock compared to its current market cap of $58.1 billion. This high level of projected earnings indicates a potential upside for investors.

Stocks: FCX