The numbers vary a bit depending on the timeframe used, as well as spot vs. futures prices, but the fact remains that the shares of Freeport-McMoRan (NYSE: FCX) more or less track the price of copper with a great deal of fidelity and consistency. While many analysts have tried to point out the organic growth potential of Freeport and argued that the quality of its asset base deserves better treatment, the reality is that the stock is a proxy for copper.
Looking out across 2012, though, that doesn't seem like such a bad thing. True, there are ample economic worries in all corners of the globe. It's also true that production costs are rising and companies are bringing on enough capacity that there may be a global surplus in 2013. All of this is already in the market, though, and the reality is that about the only way to make money in a stock like this is to buy when it's unpopular and there are explicit worries about copper prices. For instance, in just one month the average analyst EBITDA estimate for Freeport in 2012 has dropped by one-quarter.
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With Worries About Global Growth, Consider Freeport-McMoRan
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