IB Net Payout Yields Model

Freeport-McMoRan: Copper Prices Holding Up

The amazing part of Freeport-McMoRan hitting new lows at $10 is that copper prices have held up relatively well at $2.70/lb. The company highlighted a position of solid cash flows with copper up at $2.85/lb.

The recent weakness gets the copper miner closer to breakeven levels on a free cash flow basis, but all of the upside is in a trade deal with China that boost copper prices. Back above $3/lb, FCX starts generating up to $3 billion in annual FCFs. Much higher prices are all but inevitable as the market weakness derails new mines.

Use this weakness for the ultimate entry point here for a stock with a market cap down to only $14 billion. The only problem here is that the stock could head lower. The chart shows a never ending downtrend.

Originally Published 10/25/18

Freeport-McMoRan hit new multi-year lows.
The copper miner continues to generate solid cash flows despite the weak copper prices.
The long-term investment thesis remains very clear.
As China struggles due to the trade war, Freeport-McMoRan (FCX) has traded to new multi-year lows below $11. With copper prices holding up above $2.80/lb, the copper miner provided investors a solid view of the cash flows the company can provide even during a weak environment as the Indonesian ordeal heads towards a close.
Read the full article at Seeking Alpha. 

Disclosure: Long FCX. Please review the disclaimer page for more details. 


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