FCX

Copper prices have soared by 500% in early 2000s and is still experiencing high volatility. Copper prices peaked at $4.89 per pound in 2021 and achieved another all-time high at $5.04 in March 2022, but then scaled back to $3.1 per pound later in the year. Rising demand for green energy solutions and electric vehicles would help the red metal post new price records. One of the ways to benefit from this rally may be to purchase Freeport-McMoRan stocks, which is one of the largest copper producers.

During times of weak activity of copper producers this year, which was also affected by lockdowns in China, copper stocks fell while the demand remained rather stable. Goldman Sachs has forecasted that demand from the transition to the green energy will grow nearly 600% to 5.4 million ton in the base case and 900% to 8.7 million ton in the case of hyper adoption of green technologies.

Freeport-McMoRan stocks are trading 40% off their peak prices, which is not consistent with positive expectations about rising copper prices. According to the company if prices rise to $5 per pound, the company’s EBITDA would increase by $4.25 billion. The company is planning for its capital expenditures to reach $3.3 billion in 2023. Any revenues above this figure would generate positive free cash flow. Freeport-McMoRan has low net debt at $2.1 billion, so the company has abilities to increase copper production.