Take Profits on FreePort-McMoran Stocks?
๐ฅNow that Copper prices $COPPER are at all time high and our initial investments in FreePort-McMoran $FCX are over 360%, should we take profits? FreePort-McMoran is not only the best performing stock in our portfolio in the last year (ignoring GameStop $GME ), ๐๐ฉ ๐๐จ ๐๐ก๐จ๐ค ๐ค๐ฃ๐ ๐ค๐ ๐ฉ๐๐ ๐๐๐จ๐ฉ ๐ฅ๐๐ง๐๐ค๐ง๐ข๐๐ฃ๐ ๐ค๐ ๐ฉ๐๐ ๐&๐ ๐ฑ๐ฌ๐ฌ $SPX500 gaining over 600%. Since everybody is greedy now, should we be fearful?
๐ฅCopper is the second-best electrical conductor after Silver and is widely used in construction and electrification. The demand for Copper in recent years has been increasing because of construction in China, and renewable energies, and Electrical vehicles. Normally, ๐๐ฃ ๐๐ ๐ช๐จ๐๐จ ๐ฐ ๐ฉ๐๐ข๐๐จ ๐ข๐ค๐ง๐ ๐๐ค๐ฅ๐ฅ๐๐ง ๐ฉ๐๐๐ฃ ๐๐ฃ ๐๐พ๐ ๐ซ๐๐๐๐๐ก๐. The economic recovery and higher inflation can also be a boon for copper.
๐ However, the supply is not here to meet the demand and we are going into a ๐พ๐ค๐ฅ๐ฅ๐๐ง ๐๐ช๐ฅ๐ฅ๐ก๐ฎ ๐๐๐ฅ. When Copper prices peaked in 2011, the inventories were 200 000 metric tons. Today, we only have 130 000 metric tons in inventories.
โ๏ธThe reason why I chose FreePort-McMoran over other copper miners is because of its high production cost and I was very confident that we will have a copper supply gap that it made sense to invest in a ๐๐๐๐-๐๐ค๐จ๐ฉ ๐ฅ๐ง๐ค๐๐ช๐๐๐ง ๐ฌ๐๐๐๐ ๐๐จ ๐ซ๐๐ง๐ฎ ๐จ๐๐ฃ๐จ๐๐ฉ๐๐ซ๐ ๐ฉ๐ค ๐๐ค๐ฅ๐ฅ๐๐ง ๐ฅ๐ง๐๐๐๐จ. However, during a copper bear market, it can be risky to hold FreePort-McMoran.
๐ธ ๐๐ช๐ฃ๐๐๐ข๐๐ฃ๐ฉ๐๐ก๐จ ๐ค๐ ๐๐ง๐๐๐๐ค๐ง๐ฉ-๐๐๐๐ค๐ง๐๐ฃ have improved and they have restarted paying a dividend and considering share buybacks. FreePort-McMoran also produces Gold $GOLD but Copper affects the price more.
๐ฐIn a very conservative analysis, I'll say that it is above its intrinsic value but can still go up because the copper ๐๐ช๐ก๐ก ๐ข๐๐ง๐ ๐๐ฉ ๐๐๐จ ๐ง๐๐๐ก๐ก๐ฎ ๐๐ช๐จ๐ฉ ๐จ๐ฉ๐๐ง๐ฉ๐๐. Of course, copper prices are volatile and in the short term, anything can happen. But over the long term, I'm still bullish on copper and FreePort-McMoran.
Watch the full video on YouTube:
https://www.youtube.com/watch?v=KY4YvpmrVCg&list=UUPO3uUyoXSaFWG-Ldq1mqEQ&index=1
Hereโs the full analysis of FreePort-McMoran:
https://ishfaaqpeerally.teachable.com/courses/662813/lectures/32013337
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