CA - Freeport-McMoRan: Supply/Demand Imbalance For Copper Already Priced In

2024-06-10 13:06:45 ET

Summary

• Freeport-McMoRan Inc. stock price and valuation multiples have significantly increased alongside the rise in copper prices.
• The company is well-positioned to capitalize on the growing demand for copper due to increased use in renewable energy.
• But such optimistic EPS growth, even if it materializes, has already been priced in judging by the stock's PEG ratio.
• There are also other risks to consider, including volatile commodity prices and geographical uncertainties.

FCX stock P/E expanded to 37x

Copper’s supply/demand outlook has rapidly shifted from too much supply to the potential for a supply deficit recently (more on this later). After spending a few months in a price range as low as ~$3.5 in the past year, the price of copper (HG1:COM) has jumped substantially, as illustrated by the chart below....

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