So, we have the stock market hitting all-time highs again and unemployment falling from 6.3% to 6.1%. This means “all systems are go,” in my book, and you should buy stocks on any dip. The question is now, what do you buy?
Yes you want industrials, financials, and technology stocks in a rising rate environment but, most of those have had big runs lately. What else can you buy that’s not so expensive? Look no further than Freeport McMoran ($FCX), the copper and gold giant, who trades at only 15x earnings and sports a 3% dividend.
This basic materials company, along with other commodity related names, has been hated by Wall Street over the last few years. A low-inflation environment, coupled with aggressive monetary easing measures by the Fed, was not exactly conducive to metal prices.
However, with the positive news coming out lately about the U.S. economy, I believe materials stocks like $FCX will attract buyers again due to the catch-up effect ($FCX has lagged the S&P for 3 years), and forward-looking inflation/growth expectations.
About Freeport McMoran
Freeport-McMoRan Copper & Gold Inc. (FCX) is an international mining company. FCX is one of the largest copper, gold and molybdenum mining companies in the world, in terms of reserves and production.
Its portfolio of assets includes the Grasberg minerals district in Indonesia, mining operations in North and South America, and the Tenke Fungurume (Tenke) minerals district in the Democratic Republic of Congo (DRC).
The Grasberg minerals district contains the recoverable copper reserve and the gold reserve. It also operates Atlantic Copper, its wholly owned copper smelting and refining unit in Spain. FCX has its operations into five primary divisions: North America copper mines, South America mining, Indonesia mining, Africa mining and Molybdenum operations.
In May 2013, the Company completes acquisition of Plains Exploration & Production Company. In June 2013, FCX acquired the remaining 64% interest in McMoRan Exploration Co.
As you can see by the chart, Freeport ($FCX) has recently moved up on strong buying volume. I want to own this thing, but it is now overbought (not expensive though, only trades at 15x earnings).
Wait for Freeport’s stock to come down some, or at least catch up to the 20 day moving average. When it does, I think $FCX can break through $40.00, turn $40.00 into support (used to be resistance), and move to $50.00. Just a hunch. $FCX used to be a high-flyer back in the day too ($FCX has a 2 beta), so don’t miss the move. Buy $FCX on any significant dip, and go long.