Copper might not be the first thing that comes to mind when you think about electric vehicles (EVs) and renewable energy, but it’s one of the most crucial materials powering the shift to a cleaner future. From EV batteries and charging networks to solar panels and wind turbines, copper is everywhere, and demand for it is only getting stronger.
With the rising investment in electric vehicles and the government’s incentives to lower carbon emissions, strong copper stocks like BHP Group Limited (BHP), Rio Tinto Group (RIO), and Southern Copper Corporation (SCCO) could benefit substantially.
Copper prices rose more than 6% in the first six trading days of the year, fueled by China’s economic stimulus and increasing investments in clean energy. According to S&P Global, global copper mine production is expected to peak at 23.5 million tons between 2025 and 2026 before declining, raising concerns about long-term supply constraints.
The red metal is widely used in electric vehicles, with each EV requiring nearly four times the amount of copper used in a conventional internal combustion engine vehicle. Beyond vehicles, the electrification of transportation networks, battery storage systems, and charging stations all heavily rely on copper. Meanwhile, the transition to renewable energy sources like solar and wind power further fuels copper demand.
Analysts estimate that copper demand from energy transition sectors will grow at a CAGR of 10.7%, with the EV sector alone driving a 14.3% increase, solar power 5.6%, and wind applications 9.3%. Overall, the demand for copper is projected to grow at a CAGR of 2.6% through 2034.
With these strong tailwinds, let’s analyze the fundamental aspects of the three Industrial – Metals picks, beginning with the third choice.
Stock #3: Southern Copper Corporation (SCCO)
SCCO is an integrated producer of copper and valuable by-products. It operates mining, exploration, smelting, and refining facilities in Peru, Mexico, Argentina, Chile, and Ecuador. Its operating segments include Peruvian operations, Mexican open-pit operations, and Mexican underground mining operations.
On January 23, 2025, backed by its strong financials, the company announced a quarterly dividend of $0.70 per share and a stock dividend of 0.0073 shares per share of common stock. This dividend is payable on February 27, 2025, to shareholders of record at the close of business.
SCCO pays an annual dividend of $2.80, which translates to a yield of 3.06% at the prevailing price levels. Its four-year average dividend yield is 4.51%. The company’s dividend payments have grown at a CAGR of 5.8% over the past five years.
The stock’s trailing 12-month gross profit margin of 57.11% is 96.5% higher than the industry average of 29.06%. In addition, its trailing 12-month net income margin and ROCE of 27.67% and 36.34% are considerably above the industry averages of 4.74% and 5.72%, respectively.
SCCO’s sales for the third quarter (ended September 30, 2024) increased 17% year-over-year to $2.93 billion. The company reported an operating income of $1.45 billion, indicating a 35.6% growth from the prior-year quarter, while its adjusted EBITDA came in at $1.68 billion, up 30.5% year-over-year. SCCO’s net income grew 44.7% and 43.8% from the prior-year quarter to $896.70 million or $1.15 per share, respectively.
The consensus revenue estimate of $2.87 billion for the fiscal fourth quarter (ended December 2024) represents a 24.8% increase year-over-year. The consensus EPS estimate of $1.01 for the to-be-reported quarter indicates a 78.2% improvement year-over-year. The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in three of the trailing four quarters.
SCCO shares have surged 12.4% over the past year to close the last trading session at $91.62.
SCCO’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has an A grade for Quality and a B for Stability. Among 32 stocks in the Industrial - Metals industry, it is ranked #8. Click here to see SCCO’s ratings for Growth, Value, Momentum, and Sentiment.
Stock #2: Rio Tinto Group (RIO)
London-based mining and metals company RIO is involved in the global exploration and production of materials through four segments: Iron Ore; Aluminum; Copper; and Minerals. Its business also includes diamond mining, sorting and marketing, and lithium exploration.
On January 30, 2025, the company partnered with Hydro to explore carbon capture technologies for aluminum production. It will invest $45 million over five years to advance decarbonization efforts. This move aligns with RIO’s broader sustainability goals and enhances its leadership in low-carbon metals.
On December 12, 2024, RIO approved a $2.5 billion expansion of its Rincon lithium project in Argentina. The project aims to produce 60,000 tonnes of battery-grade lithium carbonate annually, with the first production expected in 2028. This investment solidifies the company’s long-term commitment to the EV battery supply chain, positioning it as a major player in the global lithium market.
These strategic initiatives reinforce RIO’s competitive edge, driving future growth while advancing environmental and energy transition goals.
RIO’s trailing 12-month EBITDA and levered FCF margins of 36.26% and 12.73% are 118.5% and 142.5% higher than their respective industry averages of 16.60% and 5.25%. Likewise, its 20.11% trailing-12-month ROCE compares to the 5.72% industry average.
For six months of fiscal 2024 that ended on June 30, 2024, RIO reported consolidated sales revenue of $26.80 billion, indicating a marginal year-over-year increase. The company’s operating profit for the same period rose 14% from the year-ago value to $8.26 billion. In addition, profit after tax for the period and EPS came in at $5.89 billion and $3.56, up 19.1% and 13.3% year-over-year, respectively.
Street expects RIO’s EPS and revenue for the fiscal year ending in December 2024 to come in at $6.76 and $53.19 billion, respectively. Over the past month, the stock has gained 1.9%, closing the last trading session at $60.41.
It’s no surprise that RIO has an overall rating of B, equating to Buy in our POWR Ratings system. It also has a B grade for Value, Stability, and Quality. Within the same industry, RIO is ranked #5.
Beyond what is stated above, we’ve also rated RIO for Growth, Momentum, and Sentiment. Get all RIO ratings here.
Stock #1: BHP Group Limited (BHP)
Headquartered in Melbourne, Australia, BHP operates as a resources company in Australia, Europe, China, Japan, India, South Korea, the rest of Asia, North America, South America, and internationally. It operates through Petroleum; Copper; Iron Ore; and Coal segments.
In July last year, BHP and Lundin Mining Corporation agreed to jointly acquire Filo Corp. and its Filo del Sol copper project through a Canadian plan of arrangement. As part of the deal, both companies will form a 50/50 joint venture to manage the FDS and Josemaria projects in Argentina and Chile. BHP will contribute $2.1 billion to the transaction, which aligns with its strategy of acquiring early-stage copper assets and forming strategic partnerships for long-term growth.
In terms of the trailing-12-month gross profit margin, BHP’s 82.28% is 183.1% higher than the 29.06% industry average. Likewise, its 17.68% trailing-12-month Return on Common Equity compares favorably to the 5.72% industry average.
BHP had a strong start to FY 2025, with production rising across all major commodities. In its recent operational report for the quarter that ended on September 30, 2024, the company posted a 4% year-over-year increase in copper production to 476.3 kt, driven by improved feed grades at Escondida. Iron ore production at WAIO grew 2%, aided by the completion of the Port Debottlenecking Project and South Flank ramp-up, while energy coal production rose 2% to 3.7 Mt.
For the fiscal year ended June 30, 2024, BHP’s revenues increased 3.5% year-over-year to $55.70 billion. Its underlying attributable profit grew 2.2% from the year-ago value to $13.70 billion, while its underlying EBITDA came in at $29 billion, up 3.6% year-over-year, with a margin of 54%. Also, the company’s free cash flow increased to $11.90 billion from $5.60 billion recorded last year.
Analysts expect BHP’s EPS for the current year (ending June 2025) to be $4.45 and grow by 3.5% year-over-year to $4.61 next year. Meanwhile, its revenue for the fiscal years 2024 and 2025 is forecasted to reach $50.77 billion and $50.36 billion, respectively.
The stock has gained marginally over the past month to close the last trading session at $49.15.
BHP’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system.
It has a B grade for Value, Stability, and Quality. Of the 32 stocks in the Industrial - Metals industry, it is ranked #3. Click here to see the other BHP ratings for Growth, Momentum, and Sentiment.
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BHP shares were trading at $49.06 per share on Monday afternoon, down $0.09 (-0.18%). Year-to-date, BHP has gained 0.47%, versus a 2.33% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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