Freeport-McMoran $FCX is the best performing stock in the S&P 500 $SPX500 since the crash of March 2020, gaining 300% since then. It is one of the largest copper $COPPER miner in the world and I took the opportunity to buy the stock as copper prices crashed during the recession. But now copper prices are higher than they were last year. Is Freeport-McMoran still a good investment?
Copper is the second best electrical conductor after Silver $SILVER but it is more abundant and cheaper. In the developed world and China, there is a high demand for renewable energies and electric vehicle and this if going to increase the demand for copper as an EV uses on average 4 times as much copper as an ICE vehicle.
In the developing world, demand for copper is increasing because of construction and electrification.
Freeport-McMoran is not one of the best copper miner as they are quite high on the cost curve. I think Southern Copper is the best copper company. So why did I invest in FCX? Because the company is very sensitive to copper prices and I'm bullish on copper because of a possible supply gap.
Copper prices peaked in 2010 which lead to an oversupply and many copper companies failed. Now, we have limited productions which can eventually lead to a supply gap in copper.
Copper prices are cyclical and this recent rally was unexpected. It is possible that in the short-term, copper prices may have a correction but in the long-term, I'm still bullish on copper and Freeport-McMoran.
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