Freeport-McMoRan, Inc. (NYSE)
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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.
Freeport-McMoRan, Inc. (NYSE)
Ticker | FCX |
Contract value | 100 shares |
Maximum leverage | 1:5 |
Date | Short Swap (%) | Long Swap (%) | No data |
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Minimum transaction volume | 0.01 lot |
Maximum transaction volume | 100 lots |
Hedging margin | 50% |